The Journal The Authority on Global Business in Japan

COVER STORY | HEALTH

June 2014
Innovation for a Better Life
Pharma giant’s advances promote longer and improved lives
Custom Media
Photos by Antony Tran

The past 12 months have seen innovation and advances here for Bayer Yakuhin, Ltd., the Japanese arm of the Germany-based pharmaceutical giant, but Dr. Carsten Brunn believes there are still many more ways in which his company can help people to live longer and enjoy a better quality of life.

“Our mission is, quite simply, Science For A Better Life,” said Dr. Brunn, who was based in Beijing for two years before taking up the post of company president in Osaka in March 2013.

“The science part of that revolves mainly around breakthrough innovations. Bayer has a strong ‘innovation portfolio,’ and we are addressing new growth areas,” he told the ACCJ Journal.

That commitment to innovation is not only visible in new products that are brought to market, he emphasized, but also in the technologies and processes that are used to develop them, as well as the business strategies and models that maximize the company’s reach.

“And it is all about improving people’s quality of life, especially for patients,” said 43-year-old Dr. Brunn.

An unrivalled understanding of human, animal, and plant health also ties in with the company’s position on corporate sustainability and respect for people and nature.

“This year, we introduced our Better Life Initiative, which requires our approximately 2,760 employees here in Japan to spend a minimum of 1 percent of their time working directly with our customers, to see the impact of what they do on the people who use our products,” he said. “While our sales forces have been facing customers, probably more than 50 percent of their work time, this initiative includes those working in functions that do not usually see that part of what we do.

“We want to make it clear that for us as a company, it’s not only about the numbers,” he added. “It’s all about a better life for patients.”

Founded in 1863 as a company that made textile dyes, Bayer’s core businesses today are in the healthcare, crop science, and material science sectors.

Bayer HealthCare is headquartered in the city of Leverkusen, Germany, and has around 56,000 employees globally. It reported revenue of €18.92 billion in 2013.

The company made its initial foray into Japan in 1911, and the Bayer Yakuhin joint venture was formalized in 1973, with the new entity based in Osaka, which remains the heart of Japan’s pharmaceutical industry.

Originally from the town of Tuebingen, Dr. Brunn studied at Germany’s University of Freiburg before attending the University of Washington, the University of Hamburg, and the London Business School. He now lives with his wife and son in Kobe, where he is able to indulge his passion for wine, cooking, and Muay Thai boxing.

“For us at Bayer, it is very important that we have a long-standing history and [sense of] trust with our partners,” Dr. Brunn said.

Accounting for fully 10 percent of the company’s annual pharmaceuticals sector turnover in 2013, Dr. Brunn emphasized that Bayer is “fully committed to Japan.”

In 2013, the company achieved ¥221.5 billion in sales on a National Health Insurance price basis, an impressive 16.5 percent increase on the previous year’s figures and making Bayer Yakuhin the most rapidly expanding company among the top 20 companies in the pharmaceutical industry in Japan.

“Fundamentally, this is a very attractive market for us,” he said. “Japan has a large and rapidly aging population, and that is a social issue as well as a business opportunity.

“Life science is a key focus for this government and there is a stable environment in terms of regulations, intellectual property rights, and the law,” he said.

And while some see the Chinese market as the next big opportunity, Dr. Brunn pointed out that the sector there is dominated by generic products and traditional Chinese medicine. In China, under 20 percent are branded products in which Bayer specializes. In the Japanese market, meanwhile, about 70 percent are branded products. Japan continues to be the second-largest market.

Dr. Brunn believes there have been some very positive regulatory developments in Japan in recent years, most notably in the virtual elimination of the delay in bringing drugs that are available in other countries to market here due to local testing requirements.

“In some cases, we see drugs being approved here faster than in Europe and we have to applaud the Japanese government for doing that,” he said.

“We also appreciate the fact that the government has introduced a price premium for innovative products, providing rewards for innovation on a trial basis,” Dr. Brunn said. “We hope to be able to convince them to make it a permanent policy.”

A number of innovative Bayer products have been launched in Japan in recent years, with the percentage of “protected products” soaring above the 60 percent threshold in 2013.

In the cardiovascular sector, Xarelto has swiftly grown to become the market leader for oral anti-coagulants, being prescribed to more than 200,000 patients in Japan and recording sales of ¥18, 671 million in 2013. Global peak sales are anticipated to come to about €3.5 billion.

According to the company, the drug was tweaked for the Japanese market, with the dose reduced from 20 mg in other countries to 15 mg here to achieve the appropriate balance of safety and efficacy.

A total of 10,000 Japanese patients are taking part in the Post-Marketing Surveillance (PMS) that commenced in 2013, making it one of the largest-ever PMSs in Japan.

Eylea has also been well received by the market here as a treatment for age-related macular degeneration, which can lead to severe impairment of central vision. That, in turn, has a significant impact on a person’s quality of life, when they have difficulty reading, driving, watching television, or even seeing their family and friends.

Within 20 weeks of being released, Eylea was the leading product in the ocular antineovascularization product market, and had a unit share of more than 50 percent in the first two months of 2014.

Yet another innovative new release is Stivarga, which was launched in May 2013 and provides new options for people with colorectal cancer. Since its release, Stivarga has been added as a standard therapy in the Japanese guidelines for colorectal cancer treatment, following similar acceptance in the United States and Europe.

Now recognized as a global standard therapy for the disease, Stivarga also won approval in August 2013 as a treatment for gastrointestinal stromal tumors (GIST). Even before the medicine was approved for GIST, Stivarga was provided as an investigational drug to GIST patients for investigator-sponsored studies.

“I am pleased that we were able to contribute to patients’ health in this way and in response to strong requests from medical institutions and the GISTERS patient group,” Dr. Brunn said.

Bayer also has a strong development pipeline in Japan, with no fewer than 42 clinical trials in phases two and three planned for 2014. The drugs are designed to treat everything from chronic heart failure to anemia, pneumonia, skin infections, and cancer.

In tandem with the creation of new drugs, Bayer has announced plans for an Open Innovation Center in Japan to underline its strong commitment to this country.

“This will not be a bricks-and-mortar laboratory, but exploratory collaborations at a high level with academia and venture companies. Japan has a high number of patents, but has some issues in making them commercially viable,” said Dr. Brunn.

“Research here is often done in silos; we want to foster dialogue between the government, researchers, and industry,” he said. “I believe this is an extremely exciting time to have come to Japan, because it is a dynamic time, a time of change,” he said.