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ECONOMY

Japan drugmakers struggle to effectively invest in R&D

  • February 26, 2018
  • , Nikkei , p. 5
  • JMH Translation

A ranking of the efficiency of investment in research and development compiled by The Nikkei shows that pharmaceutical companies, a pillar of Japan’s manufacturing industry along with electrical machines, are struggling. Generating revolutionary new products is getting more and more difficult as it requires massive R&D spending. Drug makers are challenged to build a highly efficient business model, such as entrusting development or production to other companies, without sticking to totally independent management.

 

The efficiency of major drug companies Takeda Pharmaceutical Company and Eisai was only 0.2 times and 0.3 times [the total investment of past five fiscal terms], respectively. The comparable figure for both Astellas Pharma and Mitsubishi Tanabe Pharma was about 1.0. Drug development requires funding of hundreds of billions of yen and takes more than a decade. Further, the success rate is said to be 1 in 30,000, which shows that it is difficult to get investments to lead to profits. 

 

The Japanese pharmaceutical industry, as exemplified by Astellas Pharma and Daiichi Sankyo, has been repeatedly engaged in mergers in pursuit of scale to cover massive investments. But the current R&D efficiency indicates that the industry is far from achieving results. (Abridged)

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