Lessons From the Rise and Fall of Japan’s Life-Sciences Innovation Ecosystem

Japan was once a global leader in life-sciences innovation, producing nearly 30 percent of all new drugs introduced in the 1980s. But then it faltered. Its share of global value added in the pharmaceutical sector declined by a staggering 70 percent from 1995 to 2018. Several factors coincided with the slump, including reduced government investment in basic scientific research, underdeveloped university-industry linkages, and stagnating levels of entrepreneurship. Yet no policy has been more deleterious to the Japanese pharmaceutical industry’s innovation capacity than the drug price controls the country introduced starting in the 1980s, and which persist to this day. To be sure, Japan possesses the economic capacity and scientific infrastructure to achieve a turnaround, but it will take a strategic, balanced, and coherent set of policies, including regarding pricing, to reestablish itself as a competitive biopharmaceutical innovation ecosystem. What lessons can U.S. policymakers draw from Japan’s experience as they seek to sustain America’s own life-sciences innovation ecosystem and globally competitive biopharmaceutical sector?

Please join ITIF for an expert panel discussion examining where Japan faltered in this sector, what it must do to restore its life-sciences innovation leadership and competitiveness, why that would be in the best interests of both Japan and the United States—and what America must do to avoid following in Japan’s footsteps.

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