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The availability of necessary drugs in Japan may take a hit, as low prices are prompting foreign firms not to seek approval for new drugs in the country, Japanese pharmaceutical industry leader Yasushi Okada said in a recent interview.

“Approvals in Japan are decreasing, and the country is seeing trends of a drug lag,” said Okada, president of the Japan Pharmaceutical Manufacturers Association and chief operating officer of Eisai Co.

A total of 176 new drugs were approved in the United States and Europe but not in Japan in the five years to 2020, up from 117 in the five years to 2016, according to the association.

Japan is the only major country expected to see its pharmaceutical market shrink.

The country’s “priority is falling,” Okada warned.

Okada took particular issue with a system in which drug prices are lowered when sales go up, even during patent periods.

“An industry will not prosper unless technological innovation is rewarded,” Okada said. “We barely feel any advantage from being based in Japan.”

U.S. and European pharmaceutical giants are setting up basic research and development facilities in China while pulling them out of Japan.

Even major Japanese drugmakers are moving their development bases overseas or profiting mainly from foreign sales.

Okada expressed his opposition to a proposal to tie the maximum increase in drug prices to the growth rate of Japan’s nominal gross domestic product.

“We need to discuss the efficiency of overall medical expenses,” he said.

“The pharmaceutical industry has the potential to make money,” Okada said. “It must lead GDP growth instead.”

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