position

A sluggish market in Japan, favorable sales overseas

Due to favorable exports, progress made in the disposal of bad debts, corporate structural reform, and other factors, there was a clearly noticeable basic recovery in corporate performance during the first half of last year. During the second half of the year, however, the influence of factors such as the rapid increase in crude oil prices, decrease in the value of the dollar, and increase in the value of the yen together with apprehensions concerning employment and government debates on tax increases was reflected in a leveling off of personal consumption and stagnation of production in the mining and manufacturing industries as the economy worsened.

In conditions such as these, despite a persistently severe environment due to drug price reductions, a sluggish domestic market, increasing research and development expenses, and other reasons, the Japanese pharmaceutical industry managed, with the help of favorable sales overseas, to maintain an underlying trend of increased revenue and profit last year. Nevertheless, in the American market, which has supported continued favorable sales to date, the curtailment of medical expenses, strengthening of pharmaceutical price regulations, and other moves underway prior to the scheduled implementation of Medicare drug benefits next year do not present conditions that foster optimism.

Anticipating drug pricing based on "Innovation Value"

As a leading industry in the 21st century, Japan's pharmaceutical industry is expected to play a central role in the creation of a nation of science and technology. To achieve this, various industrial policies have been drawn up and implemented such as the "Pharmaceutical Industry Vision", "Biotechnology Strategy", and "Intellectual Property Strategy", but many issues, including drug pricing system reform and consolidation of the clinical trial system remain unresolved.

In particular, full-scale debate concerning the realization of "drug pricing based on "Innovation Value", which the R&D-oriented pharmaceutical industry has long demanded, has not yet begun. This year, however, debates covering issues such as radical reform of the healthcare system, review of the medical service fee system, and review of the drug pricing system including evaluation of innovative drugs have been scheduled, and it is anticipated that a drug pricing system that will promote research and development will be achieved.

Approval review system expansion and acceleration

Among measures implemented to promote research and development, transformation of university research institutions into independent administrative institutions is proceeding and a system for industry-academia-government collaboration is being organized. Steady progress has been seen in the organization of a clinical trial system based on the 3-Year Nationwide Clinical Research Activation Plan but there are still many unresolved problems such as incentives for physicians and promotion of patient understanding. Furthermore, since the establishment of the Pharmaceutical and Medical Devices Agency last April, expansion and acceleration of the drug approval review process was expected but many problems remain such as achieving transparent review standards and increasing the number of review staff. It is hoped that problems like these will be solved this year and that a system will be established in which investment in innovation, the discovery of novel drugs, and new investment in research will result in the development of an R&D-oriented pharmaceutical industry that will contribute to healthcare worldwide.

Gaining the understanding of the people through public relations

In the move toward patient-centered healthcare, there has been substantial progress towards improving patients' awareness of their rights, the speedy provision of a wide range of healthcare information through the use of IT, and other measures, with the pharmaceutical industry taking on the role of drug information provider. From now on it is necessary to further deepen the understanding between the pharmaceutical industry and the people through dialogue with patient associations and medical consumers, and other public relations activities.

The revised Pharmaceuticals Affairs Law will be fully enforced from April 2005. Focusing on compliance with the new regulations for post-marketing safety measures and quality assurance, it is our intention to make every effort to achieve a system that operates smoothly and effectively in line with the revised law with the cooperation of the relevant authorities.

A thorough approach to corporate ethics and compliance

In the present situation where considerable importance is attached to corporate social responsibility, as corporations related to people's lives, pharmaceutical manufacturers must maintain even higher ethical standards than corporations in other industries. For this reason, the JPMA Charter of Corporate Behavior was revised last November. Revision of the JPMA Compliance Program Guidelines is scheduled for this year in an integrated approach to corporate ethics and legal compliance that includes promotion of understanding among member corporations and compliance with the Law Concerning the Protection of Personal Information.

Cooperation with the IFPMA to promote international cooperation

Looking at the situation worldwide, there are a huge number of important issues facing the pharmaceutical industry such as the issues of access to medicines, intellectual property rights, countermeasures for infection, and public-private partnerships with WHO for the governments of developing nations. In response to these issues, the International Federation of Pharmaceutical Manufacturers and Association (IFPMA) decided to strengthen its organization. While moving ahead with globalization, the pharmaceutical industry in Japan, as an R&D-oriented pharmaceutical industry, must also cope with problems such as access to medicines and other international issues. Achieving this requires cooperation with the IFPMA to further promote international alliances and collaboration.

Facing so many issues like this, the role of JPMA as an R&D-oriented pharmaceutical industry group is becoming increasingly important.

In closing, I would like to ask all member companies and healthcare professionals for your continued understanding and support of the association.