2013-02-02 16:00:39 - New Healthcare market report from Business Monitor International: "Japan Pharmaceuticals & Healthcare Report Q1 2013"

BMI View: Japan's ageing and affluent population represents strong opportunities for foreign drugmakers. However, given its weak macroeconomic, there is a risk that the country will not be able to sustain its generous welfare for the people and will seek to save costs through the use of more generic drugs and price cuts. Nevertheless, the current profile broods well for generic drugmakers as well as companies focusing on eldercare and chronic disease management.

Headline Expenditure Projections

* Pharmaceuticals: JPY10,157bn (US$127.4bn) in 2011 to JPY10,206bn (US$130.9bn) in 2012; +0.5% in local currency terms and +2.7% in US dollar terms. Our forecast is unchanged since Q312.
* Healthcare: JPY47,810bn (US$599.60bn) in 2011 to JPY49,305bn (US$632bn) in 2012; +3.0% in local currency terms and

+5.4% in US dollar terms. Our forecast has been revised upwards slightly from Q412 following reassessment of historic data.
* Medical Devices: JPY2,220bn (US$27.8bn) in 2011 to JPY2,212bn (US$28.4n) in 2012; -0.5% in local currency terms and +1.9% in US dollar terms. Forecast slightly downgraded from Q412 due to reassessment of historic values.


Full Report Details at
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Risk/Reward Rating: In Q113, Japan's score on BMI's Asia Pacific Pharmaceutical Risk/Reward Ratings maintains at 77.0 and continues to enjoy its status as the most attractive pharmaceutical market in the region. The country scores highly for all indicators in the proprietary model, including an ageing population, large pharmaceutical market, lack of corruption and extensive bureaucracy and will continue to be targeted by multinational drugmakers both innovative and generics.

Key Trends And Developments

* In October 2012, consumer electronics firm Sony has acquired a minority stake in the beleaguered Olympus for JPY50bn (US$640mn). The two companies will develop advanced medical devices and will cooperate in the field of digital cameras. It is BMI's core view that nonhealthcare companies, particularly technology firms, will increasingly enter the medical services sector.
* In September 2012, the Ministry of Health, Labour and Welfare in Japan granted reimbursement approval to Roche Diagnostics, Eisai and its diagnostics subsidiary EIDIA for a specially controlled medical device, CoaguChek XS Personal. The device is designed for use in the selftesting of patients fitted with a nonpulsatile left ventricular assist system. The device is scheduled to be released on September 25 in Japan. Roche Diagnostics will be responsible for the production and distribution of CoaguChek XS Personal, while further distribution and copromotion will be managed by EIDIA and Eisai respectively.

BMI Economic View: We believe that Japanese real GDP will decline to 1.2% in 2013, from 1.5% in 2012, as the country struggles to find sources of growth as it faces weakening demand both at home and abroad. Moreover, we expect the political impasse to impair the government's ability to stimulate the economy and expect the public sector to shrink its contribution to growth as the current rate of debt growth is unlikely to be sustained. In addition, we see growing downside risks to our downbeat growth forecasts as the deterioration in economic data from Japan's trading partners suggests that another global recession could be at hand.

BMI Political View: Although the ruling Democratic Party of Japan (DPJ) continues trail behind its competitors in opinion polls, we believe other parties face obstacles as well, which could work to the DPJ's advantage. Nonetheless, we believe the most likely outcome of an early election would be a coalition led by the opposition Liberal Democratic Party (LDP). Although the LDP would once again be in control of both the upper and lower houses, we expect the legislation enactment process to be equally difficult, as the likely coalition partners would not share similar agendas.

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