The size of the Japanese market has been expanding for the past 10 years, and it reached a total size of ¥133B, or $213bn, in 2012, according to a report from Research and Markets. When broken down by service, the report found that monitoring services from CROs accounted for 54% of the total market, which was followed by data management and statistical analysis with 23%.
As large-scale new drug development becomes more difficult in a country that has the second largest pharma market in the world, keeping many staff in clinical development area has become an operational risk, the report found. As a result, it has been now common to see that both foreign and domestic firms in Japan utilize CROs for their clinical development.
The report found that there are about 50 CROs in the Japanese market now, though the largest 4 companies, EPS, CMIC, Quintiles and Parexel, “are dominating the market, and the rest of firms have faced stagnation or decreasing number of projects.”
Back in 2010, Quintiles saw the beginning of the rapid growth in Japan and relocated one of its central labs to Tokyo.
The report notes several factors behind this recent growth including:
- Pharma firms are increasingly looking to work with full-service CROs;
- Domestic pharma companies are now beginning to select specific CROs as preferred vendors; and
- Companies are looking to an exclusive partnerships model with CROs, such as Pfizer and Parexel/Icon, Eisai and Quintiles, etc., to seek more benefit in economics and shorter time to market.
On the whole, the report revealed the obvious: that local Japanese CROs get local projects, while global CROs take global studies, as Japanese CROs can leverage their low cost and ability to interact with clients in Japanese, to get domestic studies.
But large Japanese CROs have also been trying to expand the operations in Asia to get multinational studies, the report found, while outsiders, such as CMIC, “are moving into horizontal business expansion” and positioning themselves as one-stop service providers for an entire pharmaceutical business.
Large foreign-owned CROs are meanwhile strengthening regional capability, investing in facilities and resources in functional services such as central laboratories, imaging, and clinical supply to take domestic projects away from local CROs.
In recent months, mid-size CROs INC and inVentiv have pushed into Japan to offer more of their consulting and regulatory services to the growing market.
“Demand for outsourcing clinical development works has remained strong. Therefore, Japanese CRO market will likely continue to grow for a while,” the report says. More concentration into the top four companies is also expected in the near future as the environment for small- and mid-sized CROs “will become difficult more and more over the time.”