Generic OTC Opportunities in Japan

An Expert's View about Sales in Japan

Last updated: 27 Jan 2011

Brief overview of opportunities in the generic OTC pharmaceutical market for Japan.

Generic OTC Market Opportunities in Japan Summary 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 releases. 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). Contact Larry Deem 1.513.575.2641 Report Written March 2009
Posted: 26 January 2011, last updated 27 January 2011

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