Japan : Pharma/Biopharma Market Overview

Roger Moore Special Advisor to Austrade Japan Health/Biotechnology

July 2009

Biotechnology Market Overview

Second largest market after USA: A$ 38 billion (2008) Number of bioventures: 577 (2007) *9 Biopharmaceuticals market: A$ 8 billion *2 Bio share of total pharma growth 200408: 24%

A$ 1 = JPY 75

Pharmaceutical Market - Overview

Second largest market after USA ethical pharmaceuticals: A$ 110 billion (2008) *3 Japan share of global market: 9.1% (2008) *4 Largest share of Asia Pacific market: 67.3% (2007) *2 Drug spend per capita - the worlds highest: approx US$ 540 (2008) *5 High number of prescriptions per patient Strong patented drugs market

Top 15 Pharmaceutical Companies by Sales *6

Top 15 Companies by Consolidated Net Sales
Company FY 2007 (A$ Million) Growth 06-07 (%)

1 2 3 4 5 6 7 8 9

Takeda Astellas Otsuka Daiichi Sankyo Eisai Pfizer Mitsubishi Tanabe Chugai Novartis

18,331 12,968 12,380 11,735 9,790 5,815 5,459 4,597 3,540 3,520 3,329 2,923 2,857 2,588 2,488 102,319

5.3 5.6 8.7 -5.3 8.9 5.1 1.1 5.7 6.7 1.1 3.1 9.4 7.3 0.5 9.5 4.8

10 Dainippon Sumitomo 11 Taisho 12 GlaxoSmithKline 13 Shionogi 14 Banyu 15 Astra Zeneca Total / Average Top 15
FY2007: Apr/06 Mar/07 FY 2006: Apr/05 - Mar/06 (Japanese FY)

Top 10 Japanese Pharmaceuticals Overseas Sales *6

Top 10 Companies by Overseas Sales Top 10 Companies Overseas Sales % of Total Sales and Growth Company 1 2 Eisai Takeda FY 07 (%) 61.9 50.5 50.3 40.8 38.5 19.2 17.6 14.3 13.9 9.3 31.6 FY 06 (%) 60.9 49.3 48.9 38.4 36.0 18.1 13.0 13.3 3.3 8.4 29.0 Growth 06-07 (%) 1.02 1.02 1.03 1.06 1.07 1.06 1.35 1.08 4.21 1.11 1.40

Company 1 2 3 4 5 6 7 8 Takeda Astellas Eisai Daiichi Sankyo Otsuka Kyowa Hakko Shionogi Mitsubishi Tanabe

FY 07 (A$ Million) 9,256 6,528 6,061 4,782 4,767 1,003 502 369 327 198 33,792

Growth 06-07 (%) 7.9 8.8 10.7 0.5 16.3 17.2 44.5 60.4 11.8 11.2 18.9

9 Dainippon Sumitomo 10 Santen Total / Average Top 10

3 Astellas 4 Daiichi Sankyo 5 Otsuka 6 Kyowa Hakko 7 Shionogi 8 Santen 9 Toyama Chemical 10 Dainippon Sumitomo Average Top 10

Japanese Pharmaceutical Companies - R&D Spending *6

Top 10 Companies by R&D Spending
Company FY 2007 (A$ Million) Growth 2006-2007 (%) % of Sales

1 2 3 4 5 6 7 8 9 10

Takeda Eisai Daiichi Sankyo Astellas Otsuka Mitsubishi Tanabe Chugai Dainippon Sumitomo Shionogi Ono Total/Average Top 10

3,677 3,005 2,180 1,792 1,357 964 723 631 536 519 15,385

42.7 108.2 -4.2 -19.9 -3.3 -4.5 -0.7 15.7 7.6 10.2 15.18

20.1 30.7 18.6 13.8 11.0 17.7 15.7 18.0 18.8 26.7 19.11

Key Pharma Franchises (Sales & Growth) *7

High growth: Oncologics (+9%), CNS (+5.7%) Major growth drivers:

Avastin (bevacizumab, Chugai, 04/2008) Nexavar (sorafenib, Bayer, 04/2008) Tarceva (erlotinib, Chugai, 12/2007) Velcade (bortezomib, Janssen, 12/2006) Erbitux (cetuximab, Merck Serono, 09/2008) Sutent (sunitinib, Pfizer, 06/2008) J-Zoloft (sertraline, Pfizer, 07/2006) Abilify (aripiprazole, Otsuka, 06/2006) Lonasen (blonanserin, Dainippon Sumitomo, 04/2008)

Top 10 Pharmaceutical Companies By Key Therapy Areas*7

Japanese Pharma - M&A and International Collaboration

Major M&As & Collaboration in 2008: - Takeda - Millennium Pharmaceuticals (US$ 8.8 billion) - Takeda Amgen Japan (13 molecules development and commercialisation) - Daiichi Sankyo - Ranbaxy (US$ 4.6 billion); U3 Pharma AG (US$ 235 million) - Eisai MGI Pharma (US$ 3.9 billion) - Shionogi Sciele (US$ 1.1 billion) Pharma in-licensing from bioventure companies (preclinical to registration, by No of items) *8
(Origin of Bio venture) US Europe Canada Australia Japan Other US 136 59 14 4 1 9 Europe 141 85 9 7 2 3 Japan 57 21 6 5 7 3

Challenges for all Companies

Launch lag / PMDA capacity Environment for clinical studies ICH - GCP

Expand MRA with EU/US to the quality & non-clinical areas of pharmaceuticals Pricing reform more reward for innovation Continual progress on IP protection

Why be in Japan
10% of global pharma market NHI system universal access for 127 million

Ageing population / increase in chronic diseases Strong patented market / respect for innovation High wish to prescribe & receive medicines Japanese big pharma strong & global ambitions Japanese middle size pharma weak R&D pipelines Strong growth in biotech products

Austrade Japan Team: Aiko Nishide BDM, Austrade Osaka, Japan Aiko.Nishide@austrade.gov.au Airi Sakaguchi BDM, Austrade Tokyo, Japan Airi.Sakaguchi@austrade.gov.au)

Health/Bio/Wellbeing Industry Team, Austrade Brisbane Janelle Casey Sydney Rika Sasaki

Sources
*1 *2 *3 Biotechnology 2009, Nikkei BP 2008 Japan Pharmaceutical Market Review, IMS Japan K.K. 2008 Pharma Delegates Market Summary, Copyright 2009 IMS Japan K.K., JSTR 2008 Dec MAT Reprinted with permission <Calculated at own currency rate> 2008 Pharma Delegates Market Summary, Copyright 2009 IMS Health. All rights reserved. MIDAS Quantum 2008 Sept MAT, Reprinted with permission Japan Self-Medication Industry (JSMI), IMS Japan, BMI Monthly Medical Information eXPress Medical Rankings 2008, Elsevier Japan IMS Japan Monthly Market Insights 2009 June Edition, IMS Japan K.K. Pharmaprojects (Jan 2009) Japan Bioindustry Association

*4

*5 *6 *7 *8 *9

Growth Opportunity Areas

Oncology Diabetes Hyperlipidemia, Hypertension, Artherosclerosis CNS

Introduction of the PPSR would attract pharmaceutical companies more to the Japan market; consequently, patients would be able to access many useful drugs without lag
Sales image after introduction of the PPSR*1 Sales (volume x price) Generic launch Introduction of the PPSR

Price protected special rule

Pharmaceutical companies could recoup investment quicker Japan market becomes more attractive and less risky Pharmaceutical companies could reinvest on development of novel drugs needed for Japan, which would have not been embarked thus far, at the same time of global development As a result, patients would access many useful drugs w/o lag from the global launch

Current pricing rule

Year after launch

*1 The price protected special rule (PPSR): Yakka Iji Tokurei
(Source: Pharmaceutical Research and Manufacturers of America)