The Japanese Pharmaceutical Industry: The New Drug Lag and the Failure of Industrial Policy (Elgar Monographs)

Japan has succeeded in many industries through its renowned production system. Competitive advantage, however, in the new economy is shifting from production to demand-based capabilities. One such new industry is pharmaceuticals, where Japan has been a resounding failure, both from public policy and corporate strategy perspectives. This is a detailed examination of how Japan has socially constructed its pharmaceutical industry, the economic and political bases of this construction and the consequences for corporate innovation and performance. Perhaps the starkest indication of this failure of Japanese public policy is the emergence of a new drug lag in that nation. Almost 90 percent of recent important new drugs are unavailable in Japan, despite their widespread diffusion throughout the rest of the world. Analysis of this drug lag confirms that it is not due to government discrimination against Western firms, but rather is only one of many consequences of failed Japanese industrial policies. The author presents an analysis of the nature, causes and consequences of the new drug lag in Japan. He contrasts the problem with the one experienced in the USA and looks at the powerful role played by domestic politics in shaping the pharmaceutical industry. The last chapters look at the various remedies available.