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Innovation in Japan’s regenerative sector

20 October 2020 Sophie Cairns

Over the last few months, the world's focus has understandably been on the tumult of the novel coronavirus 2019 (COVID-19) pandemic. However, in the meantime, quiet progress continues to be made in terms of R&D into innovative pharma sectors - with Japan's regenerative sector as a prime example.

Japan has been a pioneer of regenerative medicine, after the country's Diet (national legislature) passed a law in November 2013 classifying stem-cell therapies as a regenerative medicine under the country's Pharmaceuticals and Medical Devices Law. Not only that - after setting up "regenerative medicine products" as a new product category, Japan also introduced a "conditional and time-limited approval system" that enabled regenerative medicine to gain approval while their efficacy was still only "presumed". A year later, the country also approved insurance coverage for regenerative medicines after they receive conditional and time-limited approval.

This year, those regulations continue to bear fruit in the form of several 'firsts' in the regenerative sector. In March 2020, Japan's Ministry of Health, Labour and Welfare (MHLW) approved the country's first ophthalmology-focused regenerative treatment: Japan Tissue Engineering (J-TEC, Japan)'s Nepic (autologous cultured corneal epidermis, EYE-01M), for the treatment of corneal epithelial stem cell deficiency. In June, the MHLW approved the first clinical research programme for the transplantation of induced pluripotent stem (iPS) cell retinal sheets in patients with retinitis pigmentosa. Japan has now approved nine regenerative medicines, including Novartis's gene therapy Zolgensma (onasemnogene abeparvovec) in March 2020 for the treatment of spinal muscular atrophy.

All these decisions point to a country that is anxious to maintain its reputation as a pro-innovation pharma market, even as major pharmaceutical associations and drugmakers increasingly protest that the contrary is true. In particular, Japan's government - with an eye on its soaring healthcare spending - has implemented increasingly robust drug pricing regulations. In November 2018, the Pharmaceutical Research and Manufacturers of America (PhRMA) association warned that Japan's pharmaceutical sector risks becoming deprioritised by overseas drug makers if the "wrong type" of policies is implemented. The statement echoed similar concerns from other major pharma trade associations, including the European Federation of Pharmaceutical Industries and Associations (EFPIA) and the Japan Pharmaceutical Manufacturers Association (JPMA).

While Japan is not expected to take its foot off the drug-pricing pedal in its bid to reduce healthcare spending, the country's attractiveness is expected to grow as an investment and approval destination for pharma multinationals developing regenerative treatments. The country looks set to further cement this approach. Last month, a Japan government council held its first meeting focusing on progress in the country's R&D into regenerative medicine and cell and gene therapies. The meeting, which brought together the MHLW, the Ministry of Education and the Ministry of Economy, Trade and Industry, discussed Japan's 2030 roadmap for R&D of regenerative treatments, with the aim of setting out concrete proposals from April 2021. The council, which was set up in July 2020, will help to accelerate the formulation of Japan's health and medical strategy for FY 2020-24.

Looking ahead, pandemic notwithstanding, Japan's regenerative sector is expected to continue to create ripple effects - including attracting overseas interest and knowledge-sharing, as well as providing further opportunities for international mergers and acquisitions. So far, Australian biotech firms Mesoblast and Regeneus have significantly expanded their presence in Japan. Interest goes both ways: in October 2019, Astellas also agreed to invest USD12.5 million into two of US firm LabCentral's cell and gene innovation startups. Overall, case studies such as Japan's regenerative sector strike a hopeful note that when the COVID-19 pandemic finally leaves centre stage, the right foundations will have been put in place to drive future growth in the life sciences sector.

Posted 20 October 2020 by Sophie Cairns, Senior Research Analyst, Life Sciences, IHS Markit

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