Japan’s Ministry of Health, Labor, and Welfare (MHLW) announced a new 10-year government fund in January 2025 to support innovative drug development. The initiative signals a stronger push towards pro-innovation policies, aiming to strengthen drug discovery capabilities and build a more resilient pharmaceutical ecosystem in the country, says GlobalData.
This new fund is part of a series of supportive steps Japan took over the past few years to enhance its pharmaceutical sector since the establishment of the Japan Agency for Medical Research and Development (AMED) in 2016 to accelerate medical research and development.
Sasmitha Sahu, Pharma Analyst, GlobalData, comments, “In recent years, Japan has recognised the need to bolster its pharmaceutical industry to remain competitive globally. This initiative reflects Japan’s commitment to enhancing its drug discovery capabilities and fostering a robust pharmaceutical ecosystem.”
According to GlobalData Pharma Intelligence Center drugs database, Japanese companies have 62 innovator drugs in the pre-registration phase, with 174 drugs in Phase III and 213 drugs in Phase II, as of 20 March 2025.
Sahu adds, “Japan’s aging population is driving demand for innovative treatments in regenerative medicine, personalised therapies, and AI-driven drug discovery. Despite challenges, government-backed R&D incentives and digital health advancements are fostering a competitive and evolving pharma landscape. The growing government funding amid the changing regulatory scenario in Japan is going to be conducive for the growing number of innovator drugs lined up in the pipeline and will provide a smooth access to market once they are successful through the clinical trials.”
Many other initiatives include the Pharmaceutical Industry Vision 2021, announced by the MHLW, revisions to the Price Maintenance Premium (PMP) in 2023 and 2024, the Integrated Innovation Strategy 2023, approved by Japan’s Cabinet, the amendment of the Pharmaceuticals and Medical Devices (PMD) Act in 2024, the unveiling of a roadmap in 2024 to double private investments in drug discovery startups by 2028 and enhance the clinical trial system in the country.
Sahu adds, “Japan had started reviewing its lengthy regulatory approval processes and time to reduce drug lag and supply shortages to lessen reliance on imported medicines and improve patient access to critical treatments. Financial pressures from the rising healthcare costs have led to strict drug pricing reforms, pushing pharma companies to develop cost-effective solutions. The amendments further aim to streamline approvals and strengthen domestic production to mitigate these challenges.”
Australia and South Korea have similar government funds focussing on innovative drug development.
Sahu concludes, “While Japan’s initiative aligns with other Asia-Pacific countries in terms of government support and innovation, it is specifically designed to address its unique challenges, including drug lag and pricing reforms. This initiative not only promises economic growth but also holds the potential to bring groundbreaking medical advancements to the world. The success of this initiative will depend on its ability to attract global investments and enhance Japan’s competitiveness in the pharmaceutical sector.”