January 1, 1970 (Vol. , No. )

Yuichi Iwaki, M.D., Ph.D. MediciNova

How a U.S.-Japan partnership can provide pharma potential.

Over the last decade, U.S. pharmaceutical companies have expressed a steadily increasing interest in forging partnerships with pharma companies based in Japan. This essay surveys the motivations behind this trend, details how a small U.S. pharma might overcome the challenges, and shares some insights for pharma executives interested in conducting business across the Pacific.

A substantial source of inspiration for trans-Pacific partnerships of this type is the collaboration of two pharma giants, U.S.-based Pfizer and Japan-based Eisai, in the marketing of Aricept® (donepezil HCl) for the treatment of Alzheimer’s disease. Research leading to the creation of the drug started in 1983 at Eisai. In 1996, Eisai obtained approval from the U.S. Food and Drug Administration for donepezil under the Aricept name, which it co-marketed with Pfizer. As of 2011, Aricept was the best-selling Alzheimer’s disease treatment in the world. Other fruitful collaborations have included Bristol-Myers’ blockbuster antipsychotic Abilify® (aripiprazole), which was discovered by Japan’s Otsuka Pharmaceutical; the two companies have a promotional partnership on that drug through 2015. And when it bought U.S.-based Sepracor (now Sunovion Pharmaceuticals), Dainippon Sumitomo obtained access to the former’s 1,200-strong sales force.

Despite the fact that Japan is currently the second-largest pharmaceutical market, the majority of foreign companies have not yet captured the full opportunity available there. But the rapidly evolving pharma landscape is creating renewed interest in alliances. Almost all major pharma companies are seeing their revenues decrease due to weak pipelines, patent expiries, and the rise of generics. Japanese companies are experiencing these forces more severely than most and are thus more aggressively searching for alliances with foreign partners. Pharma companies in Japan that have relatively large cash reserves may be tempted by the weaker U.S. dollar to seek such partnerships.


Yuichi Iwaki, M.D., Ph.D.

In a January 2012 interview with the National Bureau of Asian Research, B.T. Slingby, director of global partner solutions at Eisai, identified an “interesting trend” in Japan pharma right now: proactive globalization, in which Japanese companies are actively assessing how they can open up and expand into overseas markets. He added, “to move forward means…new business models—organic growth. New business models have to be integrated, they have to be innovative, they have to look at volume instead of profit margin, they have to address the unique needs of the healthcare system as a whole, and they have to look at how patients in each country access healthcare and medicines.” An ideal opportunity seems clear for U.S. pharma companies interested in partnerships.

Considering that the majority of headlines so far regarding U.S.-Japan partnerships have involved Big Pharma, executives at smaller-to-midsize pharma companies based in the U.S. might be unsure about their own prospects for success. In fact, these chances have never been better.

It is crucial that such a firm be dedicated to the worldwide development and commercialization of innovative pharmaceutical products. To date, significant success has been enjoyed by companies whose strategy has been to build a robust product portfolio via alliances not only with Japanese biotechnology and pharmaceutical firms but also with other companies based in Europe and North America.

Among Japanese companies, Kyorin Pharmaceutical and Meiji Seika Kaisha of Tokyo, Kissei Pharmaceutical of Matsumoto City, and Mitsubishi Tanabe Pharma of Osaka are among the prominent ones that have shown great interest in collaborations with U.S.-based companies and have already established such partnerships.

Interestingly, the first U.S. company to be publicly traded solely in Japan, MediciNova was a pharmaceutical firm interested in strengthening ties with its business partners who had provided its drug candidates. Any U.S. pharma company that is interested in being listed on a Japanese exchange should be aware of the challenges that have historically been encountered in making American companies’ shares available to institutional and private investors in Japan. These challenges have been based in longstanding restrictive rules about how shares in foreign firms could be traded, and how the shares could be bought and sold. For example, many Japanese funds have traditionally considered U.S. companies to be foreign stock, and they thus would not become holders of that stock in Japan. Having a dual listing in both Japan and the U.S. would permit a company to attract institutional and retail ownership from both the U.S. and Japanese markets, and could allow access to capital, which is vital in overseeing world-class clinical development for a company’s portfolio of products.

Based on developments to date, certain general insights emerge for U.S. firms. For example, fostering a sense of trust between your company and your prospective partner is far and away the most important ingredient in determining the eventual success of the partnership—even more so than the precise financial details. Trust is paramount in any long-term relationship, and especially so in one that involves guiding a novel drug through a successful marketing campaign. Second, if you don’t already have one, set up a company representative in Japan who is tasked with assessing compounds currently now under development and building relationships with those companies within the country. Third, instead of focusing only on drug development at Japan’s largest drug companies, it is wise to play close attention to smaller companies, who are just as involved with the next wave of innovative drugs as their larger counterparts. Fourth, if you decide to list your shares in Japan, be aware of the differences in how the market operates in that country. Finally, consider attending the monthly meetings in Tokyo of the Japan Pharmaceutical Licensing Association, which addresses topics germane to the industry.

What lies in store for the future? As mentioned earlier, competition within the pharma industry for new sources of revenue is bound to increase, and this will work as greater incentive for U.S.-Japan partnerships among even smaller companies. A “snowball effect” might even occur as insights regarding such partnerships and the challenges they present, become better defined and better known throughout the industry.

To sum up, there are substantial rewards for U.S. pharma companies, both large and small, that wish to partner with pharma companies in Japan. Success, however, will hinge on a variety of factors including a strong understanding of how the Japanese pharma industry works, an ability to navigate the Japanese markets if you opt to list your company on a Japanese exchange, and the ability to acquire the long-term confidence of your new partners. The future belongs to the bold.


A trend in Japan pharma right now is proactive globalization, in which Japanese companies are actively assessing how they can open up and expand into overseas markets. [Vladislav Gajic – Fotolia.com]

Yuichi Iwaki, M.D., Ph.D. is founder, president, and CEO of MediciNova, a company founded upon acquiring and developing novel, small molecule therapeutics for the treatment of diseases with unmet need.

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