It takes many years before a new drug can be distributed on the market. On average, it takes between nine and 17 years, and only one in approximately 19,817 candidate compounds actually becomes a drug.*

(1) Basic Research (2-3 years)
  During this period, new substances (candidate compounds) or ingredients that have the potential to become drugs are discovered or chemically produced and evaluated.

(2) Pre-clinical Research (3-5 years)
  The efficacy and safety of candidate compounds are evaluated using cultured cells and animals.

(3) Clinical studies (3-7 years)
  During this phase, the efficacy and safety in humans of the candidate compounds that passed the pre-clinical research phase are confirmed. The following steps are performed at hospitals and other healthcare institutions on individuals who consent to participate in the clinical trial.

(4) Application for Approval and Review (1-2 years)
  After the efficacy, safety and quality of the candidate compound are confirmed, an application is submitted to regulatory agencies such as the Ministry of Health, Labour and Welfare in Japan, and the agency conducts a review.

(5) Approval and Sales
  Approval to manufacture and market the drug is obtained after going through a regulatory review. The methods for determining the price of the drug vary from country to country, but in many cases, the government determines the price. In Japan, the categories and prices of prescription drugs that are covered by national and social health insurance are determined by the Ministry of Health, Labour and Welfare in accordance with a drug pricing standards system.

(6) Post Marketing Studies: Phase IV
  Information concerning adverse events that can be discovered only after a drug is used by numerous patients at healthcare institutions, as well as information concerning appropriate usage, is continuously collected. This information can be used for subsequent improvements as well as to provide hints for future drug development.

The efficacy and safety of new drugs are confirmed through extensive research and development at considerable expense, and drugs receive approval for sale from national governments as described above. There are periods, which vary from country to country, during which the manufacturer has the exclusive right to sell the effective ingredients of a drug, such as the valid period of a composition of matter patent or the renewal period of such a patent, but when those periods expire other pharmaceutical companies can manufacture and sell drugs with the same active ingredients. These drugs are called “generic drugs.”

Given the massive development costs that it faces, the pharmaceutical industry in Japan is undergoing changes, such as restructuring through mergers and acquisitions, and as a result the business environment in which pharmaceutical companies find themselves is transforming rapidly. However, of the approximately 30,000 known diseases (as classified by the WHO), treatments are known for only about one third. Under these circumstances, much is expected of Japanese pharmaceutical industry as a strategic industry in the twenty-first century.