Pharmaceutical innovation in the APAC region

 First-of-its-kind study ranks companies

The Asia Pacific (APAC) region, already a strong contributor to global market growth for the pharmaceutical, is poised to make continued gains in the coming years.  To understand what is on the horizon, we undertook an extensive, data-driven analysis of innovation in the region – the first such analysis to focus exclusively on the APAC region with a methodology designed specifically for the industry and for less mature markets. Working with a cohort of 929 companies (out of a universe 46,509) in 14 countries/regions, we aimed to understand:

  • Which countries are most conducive to innovation?
  • Which companies are leading the way?
  • Which companies are on the cusp of seizing growth fueled by innovation?
  • How does a company’s innovation profile affect its success?

 

Methodology

Our methodology for measuring innovation at the country/region and company level was bespoke, as there is no agreed-upon definition of what constitutes innovation, much less what are the surrogate markers of it. We developed a set of largely quantitative parameters that encompassed a company’s broad innovation ecosystem. We then grouped the individual data parameters into three major indices: Early-stage Partnering, Drug Development and Maturity.

Country-level results

 Of all countries we studied, Japan has the highest number of drugs in active development (nearly 2,000), which is not surprising given the country’s market maturity. Less predictable is the large number of drugs in development in both Mainland China (1,598) and South Korea (1,088).

As Figure 1 shows, Japan earned the highest score on a country/region level, having achieved high scores in all three indices. South Korea is a strong challenger to Japan’s dominance, lagging only slightly in terms of Drug Development and Early-stage Partnering. The country’s low Maturity score indicates that it has yet to deliver on its potential. The other APAC countries/regions, while relatively strong in Drug Development, are weaker in Early-stage Partnering.

 

Figure 1: Ranking by country / region

The three major innovation indices are indicated here: Drug Development on the horizontal axis, Early-stage Partnering on the vertical axis, and Maturity in the size of each bubble.
“Other” includes Hong Kong, Indonesia, Malaysia, New Zealand, The Philippines, Singapore, Taiwan, Thailand, and Vietnam.

Source: Cortellis Competitive Intelligence,™ Derwent World Patents Index,™ Derwent Patent Citation Index,™ Web of Science™

 

Company-level results

Within our data set, Mainland China has by far the largest number of pharmaceutical company headquarters, as shown in Figure 2.

We separated out the larger, more established companies – for our purposes, defined as those that have launched 10 or more products (this included many multi-national companies).  We labeled this grouping as “top-tier” companies and ranked them by their overall innovation score. All of the top-tier companies garnered high marks across all three indices. These companies scored the weakest on Early-stage Partnering, which suggests there is still opportunity for them to increase the number of their partnerships with academic institutions. Three observations were immediately apparent from the list of top-tier companies:

  • There is a link between innovation scores and revenue
  • Japanese companies dominate
  • Mainland China is underrepresented – for now

Those companies with fewer than 10 marketed products were considered “Small and Medium-sized Enterprises” (SMEs). In looking at a rank-ordered list of the top 100 SMEs, we see that:

  • The correlation between each of the three indices is less pronounced in this tier (many on the list have yet to bring a product to market or expand internationally)
  • Mainland Chinese companies figure most prominently with more than a quarter of the entrants
  • The top-ranked SMEs score especially high on Early-stage Partnering, suggesting that this element is integral to their success
  • All of the top 10 SMEs earned high scores on Drug Development
  • The top 10 SMEs show much greater variability between their Maturity and composite scores than on other measures

 

Figure 2: Country/region breakdown based on headquarters location

 

“Other” includes New Zealand, Malaysia, Vietnam, Philippines, Thailand and Indonesia. Each contributes < 1% of companies.

 

Innovation outlook

Although there will be continued pressure on healthcare spending in Mainland China, the future looks promising overall for R&D there, and the number of innovative drugs introduced is likely to increase. In particular, Mainland China’s heavy investment in cancer therapies should pay dividends in terms of new product launches, and government reforms should speed new drug approvals.

In Japan, we expect that ranking scores for companies will differ more widely by company size, with market pressures affecting SMEs more dramatically than top-tier companies. There may be a drop in the country’s scores for Early-stage Partnering and Drug Development. Cancer will remain a growth market, although Japan will ultimately experience the same price containment pressures as other countries.

The outlook for innovation in South Korea is largely positive, thanks to government incentives to encourage foreign investment. For the country to raise its Maturity score, it will need to carry more drugs successfully through to commercialization, a goal that should be helped by the government’s investment in artificial intelligence (AI) systems.

 

Conclusion

The APAC region is a rich source of innovation, but in most countries/regions – Japan being the exception – this is not translating into a strong global footprint. Currently, the world as well as local entities are not benefiting fully from companies’ innovative activities.

For a complete list of company rankings and analysis of innovation drivers, download the full report.

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