Q67 Why is the Japanese pharmaceutical industry realigning?

A67 One of the main reasons is that Japan has some 1,400 large and small pharmaceutical manufacturing companies. There are so many because Japan's Public Health Insurance System has helped maintain drug prices, as medical institutions pay fixed prices that are determined according to an official drug pricing system known as yakka. This has allowed even small pharmaceutical com-panies to survive and has curtailed competition.

Since the decoding of the human genome, the international pharmaceutical industry has been using new drug discovery techniques based on genetic information. This genome-based drug discovery method has intensified competition in new-drug development, and the massive investment required has led to a series of cross-boarder mergers. Overseas pharmaceutical companies that have grown as a result of M&As are now targeting the Japanese market.