周末医疗动态：日本药品定价方案惹恼制药公司；可能最终损害患者利益

Miki Sogi, Ph.D.+81 3 6777 6991miki.sogi@bernsteinsg.comRebecca Liang, Ph.D.+852 2123 2656rebecca.liang@bernsteinsg.comJustin Smith+44 20 7762 5899justin.smith@bernsteinsg.comEve Burstein+1 917 344 8313eve.burstein@bernsteinsg.comLee Hambright+1 917 344 8429lee.hambright@bernsteinsg.comSusannah Ludwig+41 582 723 127susannah.ludwig@bernsteinsg.comLance Wilkes+1 917 344 8501lance.wilkes@bernsteinsg.comDelphine Le Louet+33 1 42 13 92 93delphine.le-louet@bernsteinsg.comCourtney Breen+1 917 344 8407courtney.breen@bernsteinsg.comWilliam Pickering, MD+1 917 344 8340william.pickering@bernsteinsg.comNandan Kulkarni+91 22 6842 1436nandan.kulkarni@bernsteinsg.comJeffrey Walch+1 917 344 8613jeffrey.walch@bernsteinsg.com EXHIBIT 1:Today Japan is the fourth pharmaceutical marketand less than a tenth size of the US, tumbling from beingthe second-biggest market with a third of the US’s back in2012 LOW DRUG PRICES IS MAKING JAPANPHARMACEUTICAL MARKET UNATTRACTIVE ANDJAPANESE COMPANIES’ OVERSEAS BUSINESSEXPANSION IMPERATIVE FOR GROWTH Today Japan is the fourth pharmaceutical market based on drugsales and less than a tenth size of the US market, tumbling fromsecond in global ranking with a market size a third of the US back in2012 (Exhibit 1). Thus it is no surprise that Japan’s pharmaceuticalmarket growth has been the weakest among the key markets(Exhibit 2). One of the key drivers of Japan market’s diminishingpresence is low drug price—Japan’s drug price is the lowest amongthe key markets when compared as % of the US price (Exhibit 3).Given this unattractive market situation, key Japanese pharmacompanies are expanding their overseas business to seek growth(Exhibit 4). 8). So containing the healthcare spending has been one of the keypriorities of the debt-ridden Japanese government. EXHIBIT 5:The productivity of Japan’s healthcare system isbetter than that of peer countries, delivering the longest lifeexpectancy without spending more... EXHIBIT 4:Given the unattractive domestic market situationwith low drug prices, key Japanese pharma companies areexpanding their overseas business to seek growth Health expenditure as % of GDP in 2022 The bubble size represents PPP-adjusted GDP per personSource: OECD, World Bank, Our World in Data, Bernstein analysis EXHIBIT 6:… yet its fast-growing aging population ischallenging healthcare expenditure... Japan is the fastest agingsociety─% of >65 yrs old increased from 22%to 29% over the past 15 years IN JAPAN, DUE TO THE PRICING SCHEME, DRUGPRICE IS AN EASY LEVER FOR HEALTHCARE COSTCONTAINMENT JAPANESE GOVERNMENT HAS BEEN UNDER PRESSURETO CONTAIN HEALTHCARE EXPENDITURE IN THE FACE OFFASTEST AGING POPULATION When measured based on the input and output, the productivity ofJapan’s healthcare system is arguably better than peer developedcountries as Japan delivers the longest life expectancy withoutspending more in terms of % of GDP (Exhibit 5; we acknowledgethat Japanese people’s healthier diet and other factors - e.g.,genetics, lifestyle - also contribute to their longevity). Yet Japan’shealthcare system’s productivity has been under enormouspressure due to its fast aging population, which is drivinghealthcare expenditure increase (Exhibit 6, Exhibit 7). Plus 38%of the cost is funded by the federal and local governments (Exhibit EXHIBIT 9:Drug spending onlyaccounts for 16% of overallhealthcare expenditure... EXHIBIT 8:In Japan, 38% ofhealthcare expenditure isfunded by the federal or localgovernment Data in 2024Source: Japan Ministry of Health, Laborand Welfare, Bernstein analysis Data in 2024 EXHIBIT 10:… yet was the fastest growing category within thehealthcare expenditure Health insurance funding representsemployee contribution and the insured’spremiumSource: Japan Ministry of Health, Laborand Welfare, Bernstein analysis DRUG SPENDING IS AN EASY LEVER FOR THE JAPANESEGOVERNMENT TO PULL IN ORDER TO CONTAINHEALTHCARE EXPENDITURE While drug cost accounts for only 16% within Japan’s overallhealthcare expenditure, it was previously the fastest growthcategory unti the mid-2010’s (Exhibit 9, Exhibit 10). Thus, itbecame a clear target for the government's cost containmentefforts. In Japan, the government has a full control of drug pricesbecause almost all the drugs approved in Japan are reimbursedthrough the national health insurance (NHI, Japan has a universalhealth insurance system) and the government determines drugs’NHI price, i.e., the amount drug dispensers (i.e., pharmacies,hospitals, clinics) are reimbursed. There are a few exceptions,including erectile dysfunction drugs such as Viagra. On the otherhand, reducing the cost of inpatient and outpatient medical carecost is politically difficult despite these categories accounting for70%+ of the overall healthcare expenditure. For example, the JapanMedical Association, a clinic-based physicians group, is a powerfulpolitical constituency. IN JAPAN, THE GOVERNMENT HAS FULL CONTROLOF DRUG PRICING: PRICING AT LAUNCH ANDDOWNWARD