Profit pressure from drug price revisions and a review of the medical insurance system

「Meanwhile, downward pressure on prices from annual drug price revisions continues, and the industry as a whole is required to make further improvements in management efficiency.」

「At the same council's meeting held on 16 January 2026, revisions to the drug price calculation rules for the 2026 drug price revision were approved. The minimum drug price will be increased by 3.5%, excluding products whose gap rate exceeds 12.1%, the average gap rate for minimum-price products in fiscal 2024. The special revaluation of unprofitable products will apply only to medicines, including essential medicines, for which stable supply is necessary and whose manufacturing and marketing costs and other costs are recognized as having risen substantially. In addition, for authorized generics (AGs), whose composition, dosage form and manufacturing process are deemed identical to those of already listed products, the drug prices of products newly listed from October 2026 onward will be set at the same level as those of the originator products.」

「From fiscal 2021 onward, fundamental reform of the drug pricing system changed regularly implemented drug price revisions from once every 2 years to once a year.」

「Meanwhile, in addition to the regular drug price revision once every 2 years, revisions have also been implemented in the intervening years from fiscal 2021. For fiscal 2025, the special revaluation of unprofitable products will be temporarily implemented for essential medicines and stable-supply medicines, categories A and B, for which stable supply is particularly required. The minimum drug price is also scheduled to increase by 3% based on indicators including the consumer price inflation rate. However, the revision will target drugs with a gap rate exceeding the 5.2% average gap rate, a measure of the divergence between drug prices and prevailing market prices, and further efforts to improve management efficiency will be required.」

「Under this fiscal year's drug pricing system, the special revaluation of unprofitable products was exceptionally applied to products with a gap rate of 7.0% or less between the official drug price and the prevailing market price, to address sharply rising raw material costs and stable supply issues. A total of 699 ingredients and 1,911 products were eligible.」

「Under this fiscal year's drug pricing system, the special revaluation of unprofitable products was exceptionally applied to products requested by companies, excluding products with a gap rate exceeding 7.0% between the official drug price and the prevailing market price. This measure was introduced to address sharply rising raw material costs and stable supply issues. The number of eligible products increased from approximately 1,000 in the previous fiscal year to approximately 2,000, and the company is proceeding with its response.」

「The company is working to mitigate risks through measures including its response to essential medicines that are unprofitable products.」

「In addition to the regular drug price revision once every 2 years, annual drug price revisions, including revisions in the intervening years, have been implemented from fiscal 2021. The Ministry of Health, Labour and Welfare's document, Overview of the Fiscal 2023 Drug Price List Revision, published on 3 March 2023, reported that the average gap rate between drug prices and prevailing market prices for fiscal 2022 was approximately 7.0%. By route of administration, the gap rates were 8.2% for oral drugs, 5.0% for injectable drugs, 8.0% for topical drugs and negative 4.3% for dental drugs. In addition, the special revaluation of unprofitable products was applied to 1,100 products in this fiscal year's revision to address sharply rising raw material costs and stable supply issues, and several products of the Group were included.」

「In addition to the regular drug price revision once every 2 years, annual drug price revisions, including revisions in the intervening years, have been implemented from fiscal 2021. Meanwhile, for this fiscal year's revision, the special revaluation of unprofitable products will be applied as an exceptional measure to address sharply rising raw material costs and stable supply issues, and the company is proceeding with its response.」

「In addition to the regular drug price revision once every 2 years, annual drug price revisions, including revisions in the intervening years, have been implemented from fiscal 2021, making the business environment for the pharmaceutical industry increasingly challenging.」

「In the drug price revision implemented on 1 April 2022, the overall drug price revision rate, representing the portion attributable to revisions based on prevailing market prices and other factors, was a relatively large reduction of 6.69% on a drug expenditure basis. Although some products in the Group were subject to drug price cuts, the medical needs of certain products were recognized and measures were taken to mitigate their unprofitability in order to ensure a stable supply. As a result, the impact on the Group as a whole was relatively limited.」

「In addition, drug price revisions will be conducted annually from fiscal 2021. At the general meeting of the Central Social Insurance Medical Council held on 3 December 2021, the average gap rate between drug prices and prevailing market prices for fiscal 2021 was reported at approximately 7.6% on a preliminary basis. By route of administration, the gap rates were 8.8% for oral drugs, 5.6% for injectable drugs, 7.9% for topical drugs and negative 2.4% for dental drugs.」

「Meanwhile, drug price revisions will be conducted annually from fiscal 2021, and increasingly challenging conditions are expected.」

「Following the government's fundamental reform of the drug pricing system, generic drugs have in principle been consolidated into a single price band 12 years after the initial listing of the generic, and drug price revisions are now conducted annually. The generic pharmaceutical industry is therefore required to further strengthen its profitability.」

「Meanwhile, drug price revisions were implemented over a short period, including a revision accompanying the consumption tax rate increase in October 2019 and the regular revision in April 2020. In addition, the Basic Policy on Economic and Fiscal Management and Reform 2020 (Basic Policy 2020) states that the 2021 fiscal-year drug price revision, to be based on this year's drug price survey, will be studied and decided after taking into account the impact of COVID-19 in addition to the contents of Basic Policy 2018 and other policies. Increasing downward pressure on prices and other challenging conditions have consequently emerged.」

「Meanwhile, the policy of conducting drug price revisions annually from fiscal 2021, instead of once every 2 years, was approved, and increasingly challenging conditions have emerged, including growing downward pressure on prices.」

「Meanwhile, the policy of conducting drug price revisions annually from fiscal 2021, instead of once every 2 years, was approved, and increasingly challenging conditions have emerged, including growing downward pressure on prices.」

「In the pharmaceutical manufacturing and marketing business, sales were ¥868 million, down 14.5% year on year, and the segment loss was ¥136 million, compared with a loss of ¥90 million in the same period of the previous fiscal year, due to inventory adjustments for certain products ahead of drug price revisions and lower order volumes.」

「In the API sales business, sales for the current fiscal year were ¥11,784 million, up 0.2% year on year. This was despite lower unit prices for APIs used in hyperlipidemia treatments following drug price revisions and lower demand resulting from inventory adjustments, due to increased demand for APIs used in antineoplastic drugs and antibiotic preparations.」

「In the active pharmaceutical ingredients (API) sales business, sales of APIs for antineoplastic agents and antibiotic preparations performed well. However, lower unit prices resulting from drug price revisions for APIs used in hyperlipidemia treatments and other products affected results, and sales for the nine-month cumulative period of the current fiscal year were ¥7,979 million, down 3.4% year on year.」

「Meanwhile, the policy of conducting drug price revisions annually from fiscal 2021, instead of once every 2 years, was approved, and increasingly challenging conditions have emerged, including growing downward pressure on prices.」

「Regular drug price revisions were changed from once every 2 years to once a year, and an impact is expected if drug prices are reduced for products with strong sales and other products.」