TOKYO – The government of Prime Minister Shinzo Abe plans to bring together government institutions, private companies and academia to assist with the commercialization of Japan's first-class drugs and medical devices.
The plan is built into the Ministry of Health, Labour and Welfare (MHLW)'s record-high budget proposal for 2015, released publicly on Aug. 26. The MHLW has requested ¥31.7 trillion (US$302 billion), including ¥74.8 billion to promote the "commercialization of world-first innovative drugs and medical devices." In addition, ¥56.6 billion will be allocated to the future Japan Agency for Medical Research and Development, expected in 2015.
"It's part of Prime Minister Abe's economic growth strategy," said Teppei Kiuchi, director of the MHLW's Science Division. "We plan to compete in the world under Abe's administration."
The budget would include funds for the development of a clinical trial research network with a centralized patient registry, a network that would improve and speed up the process of recruiting candidates for clinical trials, which has been an ongoing challenge in Japan.
"There is a continuing problem of obtaining subjects for clinical trials," said Reed Maurer, a Japanese pharma industry watcher and president of International Alliances Ltd.
Other projects to be funded include the joint development of drugs by pharmaceutical companies and academia and a series of research databases for use in regenerative medicine.
The databases will be used to compile research results obtained by different institutions and to promote collaboration between medical and research institutions providing regenerative medicine treatment. Kyoto University and Osaka University were designated for that purpose through a supplementary budget in 2013, but the MHLW now wants to designate two more facilities to further promote the practical application of regenerative medicine.
The MHLW may also request a tax credit, which allows a maximum deduction on R&D of up to 30 percent of total corporate tax. That would help promote research by drugmakers and companies in other industries.
"It's difficult to name another government in the world that intends to build up world-class pharma and medical device industries," Maurer noted. "Many governments want to promote generics, which is akin to developing a vibrant used car market. But Japan intends to develop new cars."
However, some outside the industry remain wary of Abe's commitment to fiscal discipline. For the first time, the government's budget has topped the ¥100 trillion mark.
"All the ministries are stretching their budgets and taking advantage of the expansive economic policies of Prime Minister Shinzo Abe," said Shigeo Shimizu, author of New Japanese-style Management. "The MHLW is not exceptional. The question is the virtue and viability of the projects. For instance, a subsidy for development of robots for nursing may be a must to meet needs in the nation's aged society with the shortage of labor. After all is said, can Japan survive the terrible red-ink finance?"
This expansionary budget comes just as the Cabinet Office warned that the economic recovery might be slowed by the adverse effects of a 3 percent increase in the country's consumption tax to 8 percent in April.
At the same time, the government has downgraded its assessment of corporate profits, noting that the ongoing improvement has stopped temporarily as the tax hike hits spending.
Meanwhile, Japan's medical spending in March 2014 rose 2.2 percent from the previous year to ¥39.3 trillion, a new high for the 11th straight year. The increase is due to a graying population and costly advanced medical services.
According to Ira Wolf, Japan representative of the Pharmaceutical Research and Manufacturers of America, health care remains one of the most important priorities for the government.
"Funds spent on health care, including drugs, prevent disease, ameliorate the effects of disease and illness, raise the productivity of the work force, improve the quality of life for all citizens, including both patients and their caregivers who are often spouses or other family members, and increase the healthy life span of individuals," Wolf said.
Wolf said it is critical that the government supports and promotes innovation in health care, including new and innovative pharmaceuticals, to deal with unmet needs of patients.
Budget requests from all the Japanese ministries will continue until decisions on final budget allocations are reached in a few months' time.