As the stable supply of medicines becomes an increasingly prominent social issue, the new business model proposed by Towa Pharmaceutical feels like an initiative that could prompt a reassessment not only of the generic drug industry but of the structure of the pharmaceutical industry as a whole. The collaboration with Otsuka Pharmaceutical goes beyond a simple contract manufacturing arrangement; its defining feature lies in its attempt to build an ecosystem that cuts across both originator and generic drugs, centered on the new concept of “patent-expired medicines.”
A Shift in Perspective: Viewing “Long-Listed Products × Generics” as One
Until now, long-listed products and generic medicines have been clearly distinguished, both institutionally and in terms of business strategy. In reality, however, both are medicines whose patents have expired, and from the standpoint of manufacturing, quality, and stable supply, they share common challenges. The framework of “patent-expired medicines” presented by Towa Pharmaceutical can be seen as an attempt to relativize these conventional distinctions and reorganize the industry around the axis of supply responsibility.
What is particularly noteworthy is the effort to resolve challenges related to manufacturing process patents and quality assurance—long faced by generic manufacturers—by inheriting manufacturing technologies and know-how from originator companies. Even after substance patents expire, process patents often remain, and this has been a less visible but significant hurdle in generic development. If collaboration enables this barrier to be overcome, the prospect of simultaneously reducing development costs and improving quality becomes far more realistic.
Balancing Rationality and Responsibility for Originator Companies
From Otsuka Pharmaceutical’s perspective, the benefits are also clear. By outsourcing the manufacturing of long-listed products, it can reallocate personnel and production lines to more profitable areas such as new drugs. At a time when sales of long-listed products have been increasingly divested, choosing contract manufacturing premised on the transfer of approvals also signals a commitment not to abandon responsibility for stable supply.
In an environment where price cuts and the introduction of selective medical coverage have eroded the profitability of long-listed products, how to handle these products has become a core management issue for originator manufacturers. This collaboration can be evaluated as one realistic response that aligns with both business logic and social expectations.
Institutional Constraints and the Challenges Ahead
That said, it is also true that this scheme is not a panacea. Institutional constraints—such as the rule that a single company cannot hold approvals for both long-listed and generic products with the same active ingredient—will inevitably become obstacles as collaborations expand. Should companies limit themselves to contract manufacturing, discontinue generics and take over long-listed products, or choose the reverse? Decisions will need to be made on a product-by-product basis, taking into account market conditions and social necessity.
This issue goes beyond inter-corporate coordination; it also raises the broader question of whether institutional design itself is keeping pace with realities on the ground.
Toward a Contest for Leadership in Restructuring Centered on Stable Supply
Within the generic drug industry, multiple alliances aimed at consolidating manufacturing sites and product lines have already begun to emerge. Most of these movements are premised on collaboration among generic manufacturers. Towa Pharmaceutical’s approach, however, stands apart in that it actively involves originator companies.
Considering structural issues such as small-lot, multi-product manufacturing, supply risks during disasters or periods of tight demand, and the problem of aging factories where know-how is gradually being lost, the idea of building an industry-wide “backup system” for manufacturing and quality management is highly pragmatic. This represents not merely restructuring, but a new answer to the question of “who should bear responsibility for stable supply, and how.”
Conclusion
The collaboration between Towa Pharmaceutical and Otsuka Pharmaceutical can be seen as a survival strategy for generic manufacturers, a measure for management rationalization by originator companies, and above all, an experiment aimed at rebuilding a stable supply system that supports clinical practice. How far the concept of “patent-expired medicines” will be accepted across the industry, and whether it will drive changes in institutions and practices, remains to be seen. The future expansion of this collaboration is likely to become an important touchstone for envisioning the future of Japan’s pharmaceutical industry.