Patheon explains importance of new Japanese subsidiary

Patheon KK will be based in Tokyo and will serve as a hub to support customers in both Japan and other Asian markets, according to Andrew Davis, Patheon's senior business development manager for the Asia-Pacific region. The move is another sign that Patheon is once again looking ahead after a period in which problems related to the 2004 purchase of Puerto Rican company Mova Pharmaceuticals focused its attention on internal restructuring efforts. Prior to that the firm had a great record of growth, and its recent second-quarter results statement indicates that a recovery is in full swing. Japan is a key growth market for contract manufacturing, in part because of the changes to the Pharmaceutical Affairs Law in 2005 which allowed Japanese license holders to outsource 100 per cent of the manufacturing of drugs. "That 100 per cent threshold was a significant barrier because outsourcing only part of a manufacturing process can be complicated and inefficient​," said Davis, adding that companies in Japan and elsewhere are increasingly turning to companies that can offer a full suite of services, from development to manufacturing. "The change provided Patheon with an opportunity to prove itself as a reliable pharmaceutical development and manufacturing service provider​," said Davis. As a result, the company already plays a role as the North American and European based development and manufacturing arm for many Japanese pharmaceutical companies. One factor that presents a high barrier to entry for contract manufacturers in Japan is the stringent quality demands of the Japanese consumer. "Japanese customers have very high expectations for drug product physical appearance, especially when it comes to product destined for the Japanese market. The demand is for a cosmetically appealing drug product in shape, size, and colour​," according to Davis, and imperfections that might be acceptable in other countries are not tolerated. But it is not just in contract manufacturing that Japan's appetite for outsourcing is being whetted. "We think there's a push to outsource all aspects of the pharmaceutical business that are not a part of a company's core competence such as sales and marketing​," said Davis. "Functions such as of discovery, research, and very early stage development will likely remain in Japan, with later stage development and manufacturing being outsourced. We also see continued demand for outsourced API manufacturing, particularly to India​." Patheon has been working with Japanese clients for over 10 years, and the new subsidiary does not signal a change in the breadth of services offered, rather an opportunity to provide "more timely and accurate project related communication to our Japanese based customers​," according to Davis. For the last few years Japanese pharmaceutical companies have been working to internationalise their businesses, after decades of being able to rely on a lucrative domestic market. Government efforts to cut a swingeing healthcare bill - in part directed at the price of pharmaceuticals with biannual reviews and enforced price cuts - have forced companies to look to overseas markets for growth. "With a site network of 11 manufacturing facilities in North America and Europe, Patheon is well positioned to support Japanese pharma's movement into these important strategic markets​," said Davis. "We offer a very wide range of conventional and specialty dose form development and manufacturing capabilities including liquid filled hard capsules, pre-filled syringes, lyophilisation, high potency etc, which our Japanese clients find especially useful in getting their products into these important markets​. " Patheon KK will also be a key base to provide improved services to other clients in Pacific Rim countries, such as Korea - one of the key 'Pharmerging' markets identified by market specialist IMS - and Australia, he said.