Key facts
- 35% of investment plans in Japan face downsizing or relocation.
- Japan's share of global value added in the pharmaceutical sector declined by 70% from 1995 to 2018.
- In 2023, Japanese biotech VC investment was $913 million, versus $28 billion in the US.
- Japanese biotech companies average 2.5 R&D pipelines, with few advancing to late-stage trials.
- No globally approved drug originated from a Japanese domestic emerging biopharmaceutical company between 2013 and 2022.
Global pharmaceutical companies are increasingly hesitant to invest in innovative drug research and manufacturing in Japan, according to government data released on October 16, 2026. This trend is raising concerns about the nation's capacity to maintain a steady supply of crucial medicines.
Japan was once a frontrunner in life-sciences innovation, contributing nearly 30% of new drugs in the 1980s. However, its global standing has declined significantly, with its share of pharmaceutical value added dropping by 70% between 1995 and 2018. Factors contributing to this slump include reduced government investment in basic research, weak university-industry ties, and lower levels of entrepreneurship. A key policy cited as detrimental is the persistent drug price control system, which began in the 1980s.
Industry observers note that Japan's biotech startup ecosystem remains underdeveloped. As of June 2025, Japan had 679 biomedical startups, a fraction of the United States' total. Furthermore, funding remains a significant hurdle, with Japanese venture capital investment in biotech in 2023 reaching $913 million, compared to $28 billion in the US. The average financing scale for Japanese biotech companies is also considerably smaller than their US counterparts.