Pressure On Japan's Drugmakers To Rationalize

Japanese health payment reforms in the last year and rising costs for research and development have combined to put pressure on pharmaceutical companies in that country to rationalize their resources.

Changes in the government reimbursement system to hospitals for the drugs they dispense have now created financial incentives for Japan's drugmakers to develop breakthrough products, according to a Reuters report. Lower-priority projects at companies such as Yoshitomi Pharmaceutical, Taisho and others are getting the axe, according to analysts.

"Drug companies are responding to a series of reforms in the drug reimbursement system since 1992 aiming to promote innovative new drugs and discourage not-so-new ones, which are often just improved versions of existing drugs," said Yoshiko Yamamoto, senior analyst at Salomon Bros Asia Ltd.