Japan will soon take significant steps to support its domestic antibiotics industry as part of efforts to mitigate the supply chain’s heavy reliance on China. The measures include subsidies for manufacturers of active ingredients and the establishment of a government purchasing scheme. The new program is expected to be launched as early as the current fiscal year, marking a strategic move to secure the country’s medical supply chain. This initiative is a crucial response to previous disruptions that highlighted vulnerabilities in Japan’s dependency on Chinese suppliers for essential antibiotics components.
Japanese companies currently produce finished antibiotics domestically, but the production of active ingredients is mostly handled abroad due to high costs. Active ingredients for beta-lactam antibiotics, essential in surgeries, predominantly come from China. In 2019, Japan faced an antibiotics shortage due to a production shutdown in China, causing delays in surgeries. To address this vulnerability, the Japanese government designated antibiotics as a critical product under the economic security legislation passed in 2022, qualifying them for support. This legislative move underscores the importance of ensuring a stable and secure supply of medical essentials, especially those critical for surgical procedures and infection control.
Subsidies and Financial Support
Certain Japanese manufacturers, such as Meiji Seika Pharma and Shionogi Pharma, are already investing in capital projects to produce active ingredients for antibiotics. The health ministry has committed roughly 55 billion yen ($341 million) in assistance towards this initiative. Despite this investment, full-fledged supplies are not expected until fiscal 2025 or later.
Chinese suppliers currently hold an advantage in producing these ingredients efficiently and at low cost, presenting a significant challenge for Japanese producers to compete profitably. To prevent manufacturers from abandoning domestic production, the ministry plans to launch a comprehensive assistance program to ensure continued production of active ingredients in Japan. This financial support aims to bridge the cost gap and encourage domestic manufacturers to invest in the necessary infrastructure and technology.
Support Program and Industry Challenges
The government is considering providing subsidies to both ingredient makers and drug companies, along with setting up a purchasing program to buy products at fixed prices. A ministry expert panel will discuss the specifics of these measures. Antibiotics are essential for combating bacteria and preventing hospital-acquired infections, with the global market for these drugs valued between $40 billion to $50 billion
The World Health Organization has urged countries to secure sufficient supplies, highlighting the importance of stable production. Unit prices of imported active ingredients have surged multiple times over the past five years, underscoring the need for stable supplies. These considerations make the support program crucial for maintaining the supply chain’s integrity and ensuring that Japan can meet its domestic demand for antibiotics.
Other countries are making similar efforts to secure their antibiotic supplies. In 2023, the U.S. announced plans to increase investment in the domestic production of essential drugs under the Defense Production Act. In 2024, the U.K. fully implemented a subscription program that provides fixed payments to drug companies in exchange for access to antibiotics.
International Efforts and Long-term Viability
whether Japan can sustain domestic production of active ingredients over the long term with subsidies alone remains uncertain. Some pharmaceutical companies argue that government-set drug prices are too low to “expect improved earnings from domestic production.” This sentiment suggests that while the subsidies may provide short-term relief, the long-term viability of domestic production will require further strategic measures and possibly adjustments in pricing policies.
The government assistance program is unlikely to drastically reduce Japan’s dependence on China for active ingredients. Manufacturing these ingredients requires adherence to strict environmental regulations to avoid contamination from toxic by-products. In addition to promoting domestic production, Japan will need to collaborate with friendly countries to ensure supplies during emergencies. The strategic approach to boosting domestic production and reducing reliance on Chinese imports will be crucial for Japan’s healthcare security. These efforts will involve balancing environmental responsibilities with the need to maintain a robust and responsive supply chain.
Japan’s initiative to support the domestic antibiotics industry marks a critical step towards securing the country’s medical supply chain. With substantial government support, Japanese manufacturers are expected to enhance their production capabilities for active ingredients, reducing dependence on imports. However, the long-term sustainability of this initiative will depend on continuous government support and strategic collaborations with international partners. The success of this program will play a significant role in ensuring Japan’s healthcare resilience and preparedness for future challenges. By addressing both economic and strategic factors, Japan aims to build a more self-reliant and secure pharmaceuticals sector.
Resource: NIKKEI Asia, July 05, 2024
This article has been prepared with the assistance of AI and reviewed by an editor. For more details, please refer to our Terms and Conditions. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author.
