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Reconsidering Japan's Underperformance in Pharmaceuticals: Evidence from Japan's Anticancer Drug Sector

Published online by Cambridge University Press:  18 February 2015

Maki Umemura
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Abstract

Unlike its automobile or electronics industries, Japan's pharmaceutical industry did not become a global leader. Japan remains a net importer of pharmaceuticals and has introduced few global blockbuster drugs. Alfred Chandler argued that Japan's pharmaceutical firms remained relatively weak because Western firms enjoyed an insurmountable first first-mover advantage. However, this case study of the anticancer drug sector illustrates that Chandler's explanation is incomplete. Japanese medical culture, government policy, and research environment also played a substantial role in shaping the industry. In the 1970s and 1980s, these factors encouraged firms to develop little few effective drugs with low side effects, and profit from Japan's domestic market. But, these drugs were unsuitable to foreign markets with more demanding efficacy standards. As a result, Japan not only lost more than a decade in developing ineffective drugs, but also neglected to create the infrastructure necessary to develop innovative drugs and build a stronger pharmaceutical industry.

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Enterprise & Society , Volume 11 , Issue 3 , September 2010 , pp. 560 - 593
Copyright
Copyright © The Author(s) 2010. Published by Cambridge University Press on behalf of the Business History Conference. All rights reserved.

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