The Journal The Authority on Global Business in Japan

Japan has positioned itself as a leader in medical innovation, but to hold that position and move advancements beyond the lab requires continued investment. On October 31, Eli Lilly and Company Chairman and CEO David A. Ricks spoke at Tokyo American Club to members of the American Chamber of Commerce in Japan about his company’s investment in local medical research.

US-based Eli Lilly, a global pharmaceutical company which develops and sells medicines to treat diabetes, cancer, and other diseases, has made significant investment in Japan, including upgrades to its manufacturing site, the addition of a development center, and construction of a new head office in Kobe. Ricks emphasized the critical role that Japan plays in the company’s mission, and how confident he is that the country will spearhead progress in biomedicines.

He also shared his opinion on how to leverage the benefits of medical innovation and the policy environment that he believes is necessary to sustain that innovation.

ECONOMIC IMPACT
“Japan has an aging population,” Ricks said, “and one major consequence of this according to [global management consultant McKinsey & Company] is that the demand for medical care in Japan is on course to triple from 2005 to 2035.” And while aging is also expected to reduce labor productivity and slow economic development, he believes wise investments in healthcare can save the country.

Ricks explained that new medicines to address countless unmet medical needs could have a dramatic and positive impact not only on the quality of human life but also the capacity of healthcare systems to meet growing demand.

According to one study, new treatments that delay the onset of Alzheimer’s disease for five years could save the US government $140 billion in healthcare costs by 2030. And research conducted by Columbia University spanning 30 countries found that the introduction of new medicines saves at least two and half times the cost of paying for innovative treatments.

Regarding economic growth, Ricks pointed out that—in Japan—the pharmaceutical industry alone accounts for 10 percent of the nation’s private sector investment, and this contributes directly to the country’s economic growth.

Amy Jackson, John W. Carlson III, and Patrik Jonsson present speaker David A. Ricks (center right) with a certificate of appreciation.

POLICY CHANGES
Ricks raised the point that, while the potential of pharmaceutical science is greater than ever, the wall for developing innovative medicines is also much higher. For example, the cost of development per medicine has skyrocketed from $300 million in the mid-1980s to more than $2 billion today. Even more challenging is the shortened lifecycle brought about by innovation. The period during which pharmaceutical companies can sell new medicines before they are replaced is shrinking, making drug development riskier.

“Japanese leaders recognize the importance of encouraging medical innovation,” Ricks said. “Our company appreciates the progress we have seen under Prime Minister Abe’s leadership.”
The key major progress is the reduction of approval times, he explained, saying it is now possible to launch new medicines in Japan and bring innovations to patients more quickly, making Japan a true partner in the process of simultaneous global release.

He also said the industry welcomes improvements to the pricing system that create greater price stability in Japan.

THE FUTURE
Looking ahead, Ricks highlighted one of Eli Lilly’s goals: to eradicate Alzheimer’s disease by 2025. “We strongly believe that the first person that will be cured of Alzheimer’s is alive today,” he said, adding that Eli Lilly will work closely with regulators and policymakers to support innovation.

“The more than 20 years of experience I have in this industry tells me that we can do this, we have done this, and—for the sake of the patients here in Japan—we must do this.”

Jennifer Wooden is a writer at Custom Media, publisher of The ACCJ Journal.