Japan tightens pharma supply chain margins Pharmaceutical companies have had to improve operational efficiency and rationalize their sourcing and distribution in Japan as a result of the country's aging population, drug price changes and patent expirations, according to a new report from GBI Research.

The recently released report showed that Japan's supply chain participants are still following a traditional supply chain model, in which drugs produced by pharmaceutical companies are only distributed through wholesales to patients from retailers. However, a price quotation system that led to heightened competition among wholesalers led to an industry-wide reorganization in which the number of wholesalers dropped significantly. Monopolization is now an issue, as only four wholesalers dominate the market.

While there are fewer wholesalers in the country than in the past, affecting pricing and profit margins, drug manufacturing has also suffered, impacting distribution. Government regulations that are unfriendly to foreign drug makers have led to an insular supply chain that was severely crippled by the earthquake and tsunami in 2011. Since then, according to the GBI report, manufacturers have instituted changes to ensure continued production in the event of a disaster, improving supply chain stability.

The report keys in on the main trends impacting the pharma supply chain in the near-term as it grapples with these issues. An abstract states, "Globalization, free trade agreements between countries, growing demand for secure packaging, and M&As are some of the key drivers for the Japanese pharmaceutical supply chain."
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