Check out how Japan provides favourable conditions to local generic drugmakers

Generic drugs's volume share stands at 59% in Q42015.

Generic drug penetration in Japan is on the rise, boding well for companies as they expand their manufacturing capabilities, said BMI Research.

In the long run, it anticipates more firms developing biosimilar products as the generic drug market becomes more competitive due to the growing presence of Indian and multinational generic drugmakers such as Aspen Pharmacare.

According to BMI, the outlook for Japanese generic drugmakers will remain constructive over the coming fiscal years.

For Q116, leading Japan-based generic pharmaceutical firms reported positive results, with Sawai Pharmaceutical growing revenues by a robust 12% year-on-year (y-o-y) to amount to JPY33bn, while Nichi-Iko Pharmaceutical increased sales by 9% y-o-y. This stands in contrast to the majority of innovative drugmakers in Japan, which saw mixed results for the quarter: Eisai and Astellas Pharma reported a y-o-y decline of 2%, and only a select few such as Shionogi & Co outpaced the growth rates of their generic peers.

Here's more from BMI:

The growing traction of generic medicines in the Japanese healthcare market will continue unabated. The volume share of generic drugs has risen robustly over the past quarters, standing at 59% in Q415. This bodes well for Japan-based generic pharmaceutical firms in the medium term, with Itsuro Yoshida, president at Towa Pharmaceuticals, noting in September 2016 that they have benefited from the government's promotion of generic drugs and the expansion of the sub-sector in Japan. The emphasis on branding in the Japanese pharmaceutical market further supports the prospects of domestic generic drugmakers, as authorised generics are preferred. In an April 2015 survey, a survey by Nextit Research Institute showed that 40% of respondents choose an
authorised generic of Plavix (clopidogrel) as their first choice, followed by generics versions from Sawai Pharmaceutical and Towa Pharmaceutical.

Over the long term, we expect growth to taper as the market becomes highly competitive. Due to the attractiveness of the Japan generic drug market - with its favourable government policies, robust growth prospects and high per-capita pharmaceutical spend - other leading generic pharmaceutical firms have forayed into the market. This extends beyond the India-based drugmakers such as Sun Pharmaceutical a nd Lupin to include South African Aspen Pharmacare, which formed a joint venture with GlaxoSmithKline in October 2014. Teva Takeda - a joint venture between Teva Pharmaceutical and Takdea Pharmaceutical that was incorporated in 2016 - further accentuates the growing presence of leading generic drug companies.

In a reflection of the competition ahead, 32 companies - including Sawai Pharmaceutical and Elmed Eisai, the generic division of Eisai - received approval for their generic copy of Sanofi' s Plavix (clopidogrel) from the Ministry of Health, Welfare and Labour (MHLW) in February 2015. Additionally, 90 generic copies of Asahi Kasei Pharma's dysuria treatment, Flivas (naftopidil), were approved by the MHLW