Updated on 12 June 2013
Japanese PM Mr Shinzo Abe's cabinet in May 2013 adopted bills focused on promoting regenerative medicine technologies
Singapore: Assuming the role of Prime Minister of Japan in December 2012, Mr Shinzo Abe has provided a boon for Japanese biotechnology stocks, with half of the top 10 movers on JASDAQ in 2013 coming from that sector. To help fuel biotechs, the Japanese government will provide $1.17 billion (110 billion Yen) in cash for the regenerative medicine industry over the next decade. Japan's own version of quantitative easing now includes $68 billion (7 trillion Yen) in debt buying, bringing buyers into speculative plays like biotechnology stocks as well. Further, Mr Abe's cabinet in May 2013 adopted bills focused on promoting regenerative medicine technologies, as the nation looks to establish itself as a world leader in the space.
Mr Abe's vow to reform the Pharmaceutical Affairs Law to encourage biotech R&D, including stem cells, will be monitored closely by investors as the health ministry is expected to submit an amendment for the law to the parliament on June 27. Once regarded as a nation lagging in biotechnology, there is a major effort to reverse this by changing regulations to expedite new drug development and putting its pricing system under review that could lead to far greater compensation for drug developers than current standards.
Japan's initiatives dovetail nicely with efforts in the US to support the development of new therapies that can potential deliver a vast improvement over existing therapies. In July 2012, the 'Food and Drug Administration Safety and Innovation Act' went into effect, adding a 'breakthrough therapy' designation as a high-priority complement to other FDA programs meant to hasten the pace of development for new therapies that address areas of great unmet medical need. So far, 13 new 'breakthrough therapy' designation have come from the FDA.
Investors are not ignoring the potential future revenue that can come relatively quickly through initiatives by regulatory agencies to accelerate the development of treatments that can address serious and life threatening conditions. In fact, they appear to be staring firmly at the potential, particularly in Japan, where many biotechs are delivering robust gains in 2013, including companies like Japan Tissue Engineering, which has risen about 900 percent since receiving approval for insurance reimbursement from Japan's Health Ministry.
Leaders in the Japanese drug business have been expanding quickly to stay competitive. For example, Takeda Pharmaceuticals has made seven acquisitions in the past two years, including spending $14 billion to buy Switzerland-based Nycomed.