Pharmaceutical Business

(As of September 2017)

We will continue making an effort to ensure growth in Japan and overseas.

Business Results and Plans

Business Results and Plans

FYE March 2017 Results

In fiscal 2016, ended March 31, 2017, net sales of ¥161.6 billion and operating income of ¥5.7 billion were significantly below targets and the previous fiscal year’s results. This decrease was attributable to a slump in Japan’s pharmaceutical market, which reflected the greater-than-expected National Health Insurance (NHI) drug price revisions. In addition, as we launched three new drugs in this fiscal year, sales promotion expenses for these drugs increased significantly.

Effect of NHI Drug Price Revisions

The effect of NHI drug price revisions was ¥9.2 billion. Initially, we planned to offset the decrease in revenues and earnings by selling more brand-name drugs and generic drugs as well as three newly launched drugs. However, competition became fiercer and generic drug prices dropped significantly due to NHI drug price revisions. Consequently, increase in sales volumes did not produce revenues and earnings growth.

Annual NHI drug price revisions from the fiscal year ending March 31, 2019 are being discussed because high medical costs have become a serious issue for increases in Japan’s social security expenditures. Implementation of such a system would cause great concern in the pharmaceutical industry.

Japan's Systemic Antibacterial Drug Market Size*

Japan's Systemic Antibacterial Drug Market Size*

Copyright©2017 QuintilesIMS.
Calculated based on JPM from March 2013 to March 2017 MAT Reprinted with permission
*Market scope as defined by Meiji Seika Pharma

Japan's Antidepressant Drug Market Size*

Japan's Antidepressant Drug Market Size*

Copyright©2017 QuintilesIMS.
Calculated based on JPM from March 2013 to March 2017 MAT Reprinted with permission
*Market scope as defined by Meiji Seika Pharma

Slump and Fiercer Competition in Japan’s Pharmaceutical Market

Japan’s pharmaceutical market slumped as a result of NHI drug price revisions and increase in the volume of generic drug. Competition with other companies intensified for newly launched products. Meanwhile, in the generic drugs business, authorized generic drugs established competitive advantages. Other factors affecting the market included restrictions on unused drug management and polypharmacy for psychotropic drugs in the revisions of medical fee reimbursement.

Japan's Generic Drug Market Size*

Japan's Generic Drug Market Size*

*Market size based on Meiji Holdings’ research

Sales of Three Newly Launched Drugs

We marketed three brand-name drugs: SYCREST*1, BILANOA*2, and ULTIBRO*3. We assumed the sales rights of ULTIBRO from Novartis Pharma K.K. SYCREST and BILANOA made a slow start because of tough initial sales promotion and a two-week limit on the prescription period during newly launched products’ first fiscal year on the market.

*1 SYCREST: Schizophrenia drug

*2 BILANOA: Anti-allergic drug

*3 ULTIBRO: Treatment for chronic obstructive and pulmonary disease (COPD)

Increase in One-Time Expenses

R&D expenses were higher than in normal years because we incurred significant development expenses for ziprasidone*1 and safinamide*2, which are in the late stages of clinical development. Expenses arising from the in-licensing of BILANOA counteracted royalty revenues resulting from the conclusion of a safinamide out-licensing agreement with Eisai Co., Ltd.

*1 ziprasidone: Schizophrenia drug

*2 safinamide: Anti-Parkinson’s disease drug

FYE March 2018 Plans

In fiscal 2017, ending March 31, 2018, realizing returns on fiscal year ending March 31, 2017’s prior investments will be our main challenge.

In the current fiscal year, we will concentrate efforts on three tasks: 1) increase sales of brand-name drugs, 2) expand the generic drug business, and 3) increase earnings of international businesses.

Increase Sales of Brand-name Drugs

We will promote brand-name drugs and generic drugs with our Speciality and Generic, fusion strategy in the priority fields of infectious diseases and drugs for central nervous system (CNS) disorders. We will grow sales by stepping up promotional activities targeting large hospitals in our strategic therapeutic fields, otolaryngology and psychiatry. In Japan we will keep our No. 1 market share of systemic antibacterial drug sales as well as the No. 2 combined market share for antidepressant drugs and antipsychotic drugs.
We will increase sales of the mainstay product REFLEX. As for the newly launched SYCREST and BILANOA, the lifting of the two-week limit on the prescription period in this fiscal year will allow us to grow sales significantly. Brand-name drugs call for the provision of highly specialized information. Accordingly, our newly established Medical Science Section will accumulate scientific evidence to maximize product value and garner prescriptions.

Antibiotic MEIACT
Antibiotic MEIACT
Antidepressant drug REFLEX
Antidepressant drug REFLEX

The Meiji Group's Sale of Drugs for Infectious Diseases

The Meiji Group's Sale of Drugs for Infectious Diseases

The Meiji Group's Sale of Drugs for CNS Disorders

The Meiji Group's Sale of Drugs for CNS Disorders

Expand the Generic Drug Business

We will maintain the No. 1 sales of generic drugs among brand-name drug companies. Japan’s government has set out an increase in the use of generic drugs to 80% by early 2020 as a target. Thus, annual NHI drug price revisions are likely to lower generic drug prices significantly. While demand will rise, stable supplies at low prices are crucial.
Our strategy to increase generic drug business is to split it into two categories: speciality generic drugs and essential generic drugs. For speciality generic drugs, our medical representatives will promote both our generic and brand-name drugs with our fusion strategy in the infectious diseases and CNS disorders fields. As for essential generic drugs, we will provide stable supplies of products at low prices without using the resources of our medical representatives in the lifestyle related diseases and gastrointestinal fields. Indian subsidiary Medreich Limited will play a major role in this effort. By importing products that Medreich manufactures at low cost, we will build a business model that can win out in price competition in Japan’s generic drug market. We believe it is a social responsibility for us to provide stable supplies at low prices for patients taking drugs over long periods of their lives.

Calcium channel blocker AMLODIPINE TABLETS MEIJI
Calcium channel blocker
AMLODIPINE TABLETS MEIJI

The Meiji Group's Sales of Drugs

The Meiji Group's Sales of Drugs

Increase Earnings of International Businesses

The pharmaceutical markets in ASEAN countries are expanding as they develop social security systems. Our subsidiaries, PT. Meiji Indonesian Pharmaceutical Industries and Thai Meiji Pharmaceutical Co., Ltd. will accelerate business expansion. Further, we will expand our exporting business to Vietnam. Medreich of India will also add ASEAN countries to its existing sales areas of Europe and Africa.

Biopharmaceutical Business

Biopharmaceuticals have greater growth potential than small molecule compounds. We established DM Bio Limited, a joint venture with Dong-A Socio Holdings Co., Ltd. of South Korea. DM Bio will conduct research and development focused on biosimilars. It began Contract Manufacturing Organization (CMO) operations for biopharmaceuticals in fiscal year ended March 31, 2017 and plans to increase the range of products that it manufactures.

For Sustained Growth

In Japan, the number of people aged 75 or over is projected to rise markedly. In 2020, the number of people in this category will surpass those aged between 65 and 74. By 2025, there will be 20 million people aged 75 or over. As the elderly increase in number, medical and healthcare demands will grow. The sales volume of generic drugs will increase but further drug price revisions will continue as the government is keen to reduce its fiscal burden in Japan.

In response to these conditions, Meiji Seika Pharma has been making an effort to ensure growth in Japan and overseas. In Japan, we will promote brand-name drugs and generic drugs with the Speciality and Generic, fusion strategy and steadily expand sales, as mentioned above. We will manufacture generic drugs in Medreich and provide a stable supply of high-quality products at low prices. Thus, we will secure profits despite frequent NHI drug price revisions. In international businesses, Medreich will grow CMO and contract development and manufacturing organization (CDMO) businesses and increase sales in the ASEAN region.

Through collaborations with academic institutions, we will use open innovation to acquire technology, discover new drug candidates, and build networks of contacts.