In an effort to implement a series of healthcare reform programs including increased patient payment and fixed-sum policy, the Japanese regulatory authorities are looking for solutions to encourage hospitals to increase proportion of generic drug usage, in order to minimize the healthcare cost. These solutions include 2002 introduction of added reimbursement rates as incentives for hospitals to increase the proportion of generic drugs of all prescriptions, in addition to numerical goal-setting for generic usage as part of their promotion programs targeting national hospitals. As feasible policies were adopted for the first time ever, we see an increasing number of companies opting to take active measures after a decade of hard time suffering a series of regulatory policies that worked against them.

While some companies are growing significantly, polarization is increasing rapidly in this market segment. This trend is reflected in the recent increase in mergers and acquisitions, handover of distributorship to focus on their production capabilities, acceptance of investment from major trading companies, and even those who closed their business. Under the circumstances, generic producers are facing a crucial point for their survival in the increasingly competitive market, now that more than 20 companies poised to enter the generic market all together, following the launch of big-name drugs such as Guster, Mevalotin and Lipovas during 2002 to 2003.