Towa: Incentives key for Japan generics

By Edwina Gibbs

OSAKA, Japan (Reuters) - Japan's No. 2 generic drug maker Towa Pharmaceutical Co Ltd (4553.T: Quote, Profile, Research, Stock Buzz) said on Monday that government plans to make generic drugs the default option on prescription forms was a major step forward, but incentives were also needed for pharmacies to dispense them.

Shares in Japanese generic drug makers soared on Friday after the government, eager to trim swelling healthcare costs, put its proposal to a body charged with discussing changes to the national health insurance system.

The move reflects a global trend by governments and insurers to maximize the use of generic medicines, which are becoming increasingly available for a range of drugs as patents expire or are overturned in legal cases.

Towa President Itsuro Yoshida said, however, it was still too difficult to predict how much of a boost this would be for Japan's generics market, given that incentives for pharmacies to dispense them are still under discussion.

"It's not clear how they are going to pan out," he said in an interview for the Reuters Health Summit. "Though I do expect we will get them in some form or other."

Japan, the world's second-biggest drug market, has a very low rate of generic drug use compared with the United States and Europe, and is seeking to raise the proportion of generic drugs prescribed to 30 percent in 2012 from around 17 percent now.

In value terms, generics still only account for 5 percent of drugs prescribed in Japan and the market is still only worth a very small $3 billion.

By contrast, they account for 63 percent of drugs prescribed and 13 percent in value terms in the United States, while in Britain the rate is 59 percent of prescriptions and 26 percent in value terms.  Continued...