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This article by Barbara Fox was prepared for the October 3, 2001

edition of U.S. 1 Newspaper. All rights


Rising Sun in Princeton

The United States represents a pot of gold for any

pharmaceutical firm, and for many of them, New Jersey is the end of

the rainbow where that pot sits. Pharmas from around the globe are

setting up shop here to tap the United States market, the largest

in the world. That’s a big plus for the 80 Princeton-area companies

that serve the pharmaceutical industry, particularly the clinical

research organizations (CROs) that shepherd drugs through the testing


Japanese companies are among the most eager to relocate here. Half

of the 40 Japanese firms that opened pharmaceutical offices in the

United States have come to New Jersey. Though northern New Jersey

has been the preferred location, these companies began to filter into

Princeton several years ago. Takeda America was the first big one;

it was at the Carnegie Center from 1993 to 2000. Recently Akros Pharma

and Kyowa Pharmaceutical moved to the Carnegie Center. Very new here

are Ono Pharmaceutical at Princeton Pike Corporate Center, and Teijin

America in Alexander Park. Also, an American firm, North


Quintiles, has opened a Japanese desk at Princeton Overlook.

Japan is well represented for the usual good reason: An office here

helps Japanese firms set up business deals in an area rich with


companies. "This is the lifeblood of research throughout the


says Bill Healey, executive vice president of the HealthCare Institute

of New Jersey. "The Japanese pharmaceutical industry over the

last 15 years has made a conscious decision to come to New Jersey

because of all the possible partnerships New Jersey brings to the


The climate for bringing new drugs to market is better here than in

Japan for three other good reasons, financial, cultural, and


Japan’s pharmaceuticals, as it turns out, operate under very different

rules in their home country, and they like working here better.

For starters, the Japanese model for financing drug development is

unlike the American one. "In Japan, ethical drugs are paid for

by taxes," says Tetsushi Inada, president of Kyowa


"It is a different business game. The price in Japan is decided

by the government and not by the market."

In Japan, which has universal health insurance, the government pays

for all prescriptions, says Takahiko Iwaya, director of the health

and welfare department of the Japan External Trade Organization


in Manhattan.

In contrast to the United States, where pharmaceutical companies must

merge to survive in the open market, small companies in Japan manage

to stay in business thanks to the government assistance. In addition

to about 100 big firms, Japan has 2,000 smaller ones, some very local,

having only one or two products in a very specific area, says Iwaya.

Pricing is different also. In the United States, when an old drug

goes off patent, its price falls and it must compete with generic

look-alikes. But in Japan, partly because of the insurance


policy, the drug price doesn’t go down very quickly. Old drugs fetch

higher prices than they would in America. And brand-new drugs are

not marked up as high as they are here. "Relatively speaking,

drugs can be sold longer in Japan than in the United States,"

says Iwaya. "Some people say the smaller and less strong drug

companies can survive better in Japan under this system."

"For 10 years the ministry tried to change the system," Iwaya

says. Putting low prices on new drugs does not promote investment

in research.

Cultural differences add to the financial ones. Like any drug, new

Japanese drugs on their way to market in the United States must go

through rigorous clinical testing by the Food and Drug Administration.

"In Japan, the culture and the religion make it very difficult

to try a new approach," says Kyowa’s Inada. "Americans have

more open minds about participating in clinical evaluation of


"It is said that, in Japan, people don’t want to take big risks

in any activity," says Iwaya. "There is no economic incentive,

so not as many people want to take the risk of participating in



Another area in which the cultures clash is on how to

treat terminally ill patients. Aggressive "long shot"


at the end of life are not as common in Japan, where making the


feel comfortable is more likely to be the standard.

Just running clinical trials is also more difficult in Japan, and

not only because they have to be repeated in the United States. When

investigators assign patients to clinical trials, they must be sure

that the group getting the drug to be tested is identical to the


group. "Because the United States is a country where there is

a mixture of many different cultures," says an insider, "it

needed stringent regulations. In the past, Japanese regulations were

less stringent but everybody was supposed to do the same thing.


years ago, Japan adapted the international regulations, and Japanese

investigators — and patients — are taking time to adapt to


Before, patients did not have to sign "written informed


forms to enter a drug trial. Arrangements were more informal. Now

administrators must make a lot of effort to get patients to join.

"There is more paperwork, more guidelines, and perhaps some


says the insider. Frustration with the additional red tape slowed

down the pipeline.

Says Inada: "The hospitals here have better infrastructure; they

have the doctors willing to run the clinical trials."

Among the prominent Japanese companies in New Jersey is Eisai, which

came to Teaneck in the late 1980s ( Sankyo is in


Yamanouchi in Paramus, and Daiichi in Woodcliffe Lakes. Mitsubishi

has a pharmaceutical division, Mitsubishi Chemicals, in Warren


Other companies in New Jersey, according to the state commerce


are Ajinomoto, Asahi Berr Pharmaceutical Company, Dainippon, Fuji

Chemical Industries, Kirin, Kissei Pharmaceutical, Marubeni


Nippon Chemiphar Co., Suntori, Taisho Pharmaceutical, and Tanabe


Here are the Japanese companies in Princeton.


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