A free-trade agreement between the US and Japan could open up a lucrative market to overseas firms while conferring broad economic benefits, said Eli Lilly chief executive Sidney Taurel in a speech last Thursday in Japan.
Taurel told the American Chamber of Commerce in Japan that an Economic Integration Agreement makes sense because of its big-picture benefits: boosting the $200 billion annual trading relationship between Japan and the US, while strengthening their overall economic competitiveness.
It would also spur growth in emerging industrial economies such as China and India by accelerating the pursuit of partnerships with other countries, he said.
Taurel also outlined how Japan’s regulatory and healthcare systems thwart the efforts of drug companies to market products there. Lilly would save 40% of its cost for clinical research in Japan if that country would lift its ban on non-Japanese people participating in clinical trials, he said. Due to the Japanese-only clinical trial restriction, it takes about five extra years to gain approval to sell new drugs.
Policies of Japan’s National Health Insurance system also make the market less attractive to overseas firms because they don’t assure price premiums when new products come to market. This hurts Japan’s own pharmaceutical industry as well, Taurel said, describing how not one Japanese firm makes the list of top 10 global drug companies. He said Japan’s global market share in pharmaceuticals is less than 10%, despite being one of the most innovative in the world.
An agreement could improve the business environment. “One goal of bilateral trade negotiations should be to reduce artificial constraints on pricing and market access for biopharmaceuticals in Japan,” Taurel said.