Japan’s drugmakers diversify in healthcare to save bottom lines
JAPANESE DRUGMAKERS are diversifying into different areas of healthtech to spur growth and defend their profit margins.
There is increasing pressure on drug companies to keep the costs of their products low due to the desire to ensure continuous access to healthcare by all, reports Bloomberg. However, the sluggish pace of the pharmaceutical market is making it hard for these large corporations to keep their profit margins healthy, and continue to fund expensive research projects into new drugs.
Pill-Popping Is a Business Worth Watching for Japan's Drugmakers https://t.co/q9oKoUV2eG pic.twitter.com/Mn7kmzipIE
— Bloomberg Asia (@BloombergAsia) July 10, 2017
Now, the companies are turning to an ancillary industry usually occupied by small healthtech startups: compliance technologies aimed at ensuring patients are following their doctors’ prescriptions. The strategy aligns well with the aging populations in Japan, many of whom do not have family caregivers to do simple tasks, like remind them to take their pills, as well as a market where health costs are climbing every year.
As a result, pharmaceutical companies are taking a two-pronged approach: producing new services and products to tap into a previously underserved market, as well as marketing those new products directly to the customer, rather than to doctors.
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“Drugmakers are diversifying the ways in which they market medicines so patients stay on their products longer and more consistently,” Toshio Miyata, an executive director at the Health and Global Policy Institute in Tokyo, told Bloomberg.
“They can’t keep focusing on marketing to hospitals — they must work with the system, governments, medical professionals, and caregivers.”
This unbundling of the medical industry could lead to more profits for the healthcare companies, while also providing a much-needed service to patients. Companies such as Otsuka Pharmaceutical Co. and Eisai Co. are working with technology companies to produce compliance solutions for mobile and IoT devices, as well as wearables, indicating a shift in drug companies’ approach to healthcare products.
The developments reflect a growing need for pharmaceutical companies to differentiate their products, demonstrate health benefits in patients who consistently take their medications, and to justify the drug prices they seek, said Olivier Leclerc, a senior partner at McKinsey & Co. in Los Angeles.
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“There’s clearly recognition from pharmaceutical companies that just delivering products isn’t going to be enough going forward,” Leclerc told Bloomberg
Bloomberg reported on some examples of compliance tech currently in development, including Eisai’s pill storage and reminder device, which could potentially solve the massive problem doctors are facing with regards to patients failing to take medication on time. Today, roughly US$440 million worth of medication are not being consumed by adults over the age of 75, leading to pharmacists recording a 90 percent leftover drug rate.
#VirtualReality on the Gartner Hype Cycle. Is this why big #tech giants are increasing spending? #VRTU #startup #healthtech pic.twitter.com/5p4n76bj4d
— VRTU (@VRTU_tech) July 11, 2017
Pharmacists have begun to see positive results from Eisai’s device, which has kept both patient and doctor informed of their progress, as well as improved general communication, which can be the difference between success and failure.
“At first, I was skeptical as I was convinced patients forget to take pills because of their dementia, and that the situation couldn’t be helped,” pharmacist Masashi Ohtake said, with regards to a patient who now takes her pills correctly 98 percent of the time, rather than the 70 percent he registered before using the device.
“But it works brilliantly. The data helps me track [their] drug patterns and better communicate with [their] doctors.’’
Others are going even more innovative and granular, such as Otsuka, who’s producing smart packaging devices that prompt patients with reminders to take their medication, while automatically alerting doctors and caregivers. On the other hand, Takeda Pharmaceutical Co. is taking a big picture approach with a wearable program aimed at monitoring patients with inflammatory bowel disease consuming their Entyvio drug.
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“We are collecting information in real time in the United States. so that we can provide the right services at the right time,’’ head of Takeda’s Japanese unit Masato Iwasaki said in an interview with Bloomberg.
“We need to look at end-users’ behaviors more. Digital technology will help us do that.’’
The application of digital technology could potentially pull down the cost the government currently spends on caring for their sizeable senior population. Japan counts the highest number of elderly citizens in the world as well as the lengthiest hospital stays, which has driven up the cost of healthcare for the country. Technology could have a significant effect
Technology could have a significant effect in Prime Minister Shinzo Abe’s efforts to cut the country’s medical subsidies.
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