Brief overview of opportunities in the generic OTC pharmaceutical market for Japan.
Generic OTC Market Opportunities in Japan
The MMR Group is focused on business development in Japan for US companies. We
have studied the Japanese market and believe there are growth opportunities for private
label OTC pharmaceuticals.
Current Environment in Japan
We performed a basic study of the current state for private label OTC pharmaceuticals in
Japan by contacting regulatory agencies, potential customers and reviewing press
Our first contact was with the Ministry of Health, Labour and Welfare (similar to the
FDA). A phone interview was conducted with Mr. Ishikawa, Evaluation and Licensing
Division, Pharmaceutical and Medical Safety Bureau of Ministry of Health, Labour and
Welfare. We learned that the Ministry allows drug stores to manufacture and sell any
type of drugs if they can obtain approval. In order to be approved, the item has to
explicitly describe a manufacturer's name on a package (among other labeling
requirements). It is then acceptable that the selling company can put their name on the
package. In other words, private label branding is acceptable in Japan.
Japans two largest supermarket chains have recently started selling private label OTC
drugs. AEON (the largest supermarket chain in Japan) and Seven & i Holdings (the
second largest supermarket chain in Japan). A May 29, 2009 article about Aeon and
Seven & i Holdings was titled ?An era of discount price for Over-the-Counter drug has
come of age?
AEON started selling private brand OTC drugs under the brand name "Hapycom" at 10
of their drug stores on 1 June 2009. These drugs are 20 - 40% cheaper than the brand
name products. Currently they sell 190 items with annual sales of $170 million. AEON is
planning to add additional items (including drugs for colds) and is targeting 300 items
with sales of $300 million by February 2012. A review of current ?Hapycom? products
shows several pharmaceutical manufactures are making the products. They do not appear
to be tied to a single pharmaceutical manufacturer.
We contacted Costco Tamasakai and learned that they only carry nutritional supplements
under the "Kirkland Signature" brand. They do not carry any private label OTC drugs.
We also contacted Seiyu, a chain of supermarkets owned by Wal-Mart. Seiyu does not
carry any private label OTC drugs.
Japanese consumers are very conscious about product quality; they will use a company?s
reputation along with a products country of origin as proxies for product quality. We
believe Japanese consumers will be reluctant to purchase pharmaceuticals made in China
or India unless the product is significantly less expensive. ?Made in America? products
will be considered to be of higher quality than India or China made products and
consumers will be willing to pay a higher price (albeit less than brand name products).
Report Written March 2009