An industry veteran outlines the background to Japan’s declining drug-discovery capabilities and efforts to foster the growth of drug-discovery startups. Drawing on observations by ITIF and changes in the drug-development process, the article highlights the key areas to watch going forward.
For many years, Japan has been unable to maintain its position as a drug-discovery powerhouse. According to ITIF, its global share of novel compounds fell from 29% in 1981–1990 to 7% in 2011–2020. Biotech startups play a central role in the discovery of novel substances and early-stage trials, but some observers say Japan is lagging behind the US, Europe and China in developing such companies.
The drug-discovery process comprises ① discovery and basic research on novel substances, ② preclinical testing for safety and efficacy, ③ Phase 1–3 clinical trials, and ④ regulatory approval, insurance coverage and launch. The role of biotech startups handling these early stages is becoming increasingly important. In the US, acquisitions by major companies and out-licensing at the early clinical stage are common, and many startups are founded with an exit in mind.
In Japan, biotech startups are smaller in both quality and quantity than those in Europe, the US and China, and the country is falling behind the trend in Europe and the US, where more specialists from universities and research institutions are starting companies. Large pharmaceutical companies are increasingly entrusting early-stage development to startups with drug-discovery technologies in specific fields and acquiring the most promising candidates.