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Global marketing strategies and the business opportunities in Japan
Though the number of specialty drugs promoted in the United States is set to outpace primary care products in 2008, according to IMS Health, specialty pharma companies are struggling just to get off the ground in Japan. In fact, of the 500 start-ups in Japan, there are just four companies with drugs in clinical development, says Steve Engen, CEO of JapanBridge.
Steve Engen, CEO, JapanBridge
Engen joined JapanBridge from Purdue Pharma (known as Mundipharma outside the United States), where he established the company's Tokyo and Osaka offices and served as president. JapanBridge is fueled by MPM Capital, the world's largest healthcare venture-capital firm; Japanese-based Itochu Corporation; and their latest investor, Kyowa Hakko, a Japanese company focused on therapeutic antibodies. These investors hope JapanBridge can gain Japanese rights to promising drugs in US companies' pipeline and become a specialty pharma company in its own right.
JapanBridge is still searching for its first asset, but it represents the type of company that can take off, given the changing regulatory environment in Japan. Here, Engen sits down with Pharm Exec to discuss the business opportunity in Japan, and its government's new take on using data from around the world.
Which pharmaceutical companies are having success in Japan?
The big companies—Glaxo, Pfizer, Novartis, Schering-Plough—are there and doing very well. In fact, they are growing far faster in Japan than Japanese companies. There's also Mundipharma, Lundbeck, Amgen, and Biogen. But there aren't a lot of new startups.
Why is that?
The venture-capital money just isn't there. In 2006, the total amount of VC spent in healthcare was about $160 million. That scale of capital is not going to give you what it takes to build a company. It's a very young market, and the VCs have invested only minimally.
That's a stark difference from the United States.
Sure. In the States, almost daily you see specialty pharma companies being formed and doing very well, like King or Endo. This just doesn't happen in Japan. Those companies are focused on the United States, and they see Japan as an afterthought. It's only once they've reached a certain scale that they will think about Europe and then maybe Japan. Take Celgene. Celgene is doing very well with Revlimid in the States. They're building a business now in Europe, and now they have the scale to start building a business in Japan.
Why has Japan been such an afterthought?
Traditionally, the Japanese MHLW [Ministry of Health, Labor, and Welfare] has required all Phase I through Phase III studies be replicated in Japan. That's resulted in five to 10 years of a drug lag, with a lot of pharmaceutical products that are available in the United States but not available in Japan.
But more people, particularly younger people, are starting to speak up. Now you have grassroots advocacy—especially with cancer patient groups—saying, "We're suffering. We're trying to get these drugs from overseas. Why does it take so long to get these drugs when Europe and the United States have them?"
You also had the [Japanese legislator] Takashi Yamamoto, who has cancer himself, who got up in front of the Parliament and said Japan's patients were cancer refugees. Things like this are really making the Japanese government realize the problem.
Can you quantify the problem?
Some say [the delay is] about 4.6 years—others say it's over six years. But what companies need to think about is, What is the value lost to companies who don't have their drugs in the second-largest market of the world? Japan's a $60 billion market—so it's huge. We also have to realize the patient side. Avastin, the cancer drug which was approved in the United States in 2004, just was approved in Japan this year.
What's been the government's reaction?
It is allowing companies to use a lot more foreign data now. Iressa was one of the very first drugs to be approved using foreign data, back in 2002. The Japanese government is also pushing for global studies and has opened up a separate window for people to talk about that.
Pfizer's Detrusitol was approved last year with a global study. It used patients from Japan as well as from Taiwan and Korea and showed how companies can supplement studies using data from outside the country.
What are global studies, and how do they work?
The idea behind global studies is to get things approved at the same time so Japanese patients don't have to wait.
The time to think about trying to leverage Japan as part of a global clinical strategy is no later than Phase I or maybe early Phase II. And then the clinical team builds the protocols together. Instead of studying 600 patients in the United States, you study 200 patients in America, 200 in Europe, and 200 in Japan simultaneously. It doesn't speed up FDA approval, but it does speed up things in Japan because instead of waiting till the study finishes, you can conduct the clinical trials at the same time. So the idea is to do Phase II and Phase III as part of a global study and file the New Drug Application simultaneously in each region. That's the holy grail that everyone's shooting for.
Is there anything companies can do if a compound is further along in its clinical development?
Bridging is a concept that applies to drugs that are already in late-stage development and are undergoing clinical trials outside of Japan. It means you already have the data, and now you have to somehow bridge it to Japan. Instead of redoing the whole Phase III study, companies can bridge that data by doing a small study to just prove things are similar in the Japanese and Caucasian populations. If the American, European, and Japanese protocols are similar, companies can leverage the international data as part of the Japanese filing.
The International Conference of Harmonization (ICH) was the wind behind all this. It was built on the concept of safety, efficacy, and quality. E5 was the guideline of ethnicity. It stated that researchers don't have to replicate studies as long as they can prove that there's no intrinsic or extrinsic differences between the regions.
That's sometimes difficult to prove in practice, because you may have a great Phase III program done in the States, but how do you make sure that the data really is applicable to Japanese people? It became pretty difficult. But it is possible, especially in oncology. ICH has been a real godsend in that respect.
How many companies are currently bridging a study?
Most pharma companies are really thinking about it. The Western biotechs want to now get value from Japan quickly instead of having to wait a long, long time. They want to see what Japan can bring.
Steve Engen is currently CEO of JapanBridge, which aims to gain rights to oncology drugs and market them in Japan. Previously, he was president of Mundipharma in Japan and helped establish the company's headquarters there. Engen graduated from the University of Utah in 1990 and received his MBA in 2000, from Temple University. He is a former chairman of Pharma Delegates Japan.