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On May 11, 2022, Japan’s Diet passed the ground-breaking “Act on Promotion of Economic Security by Integrated Implementation of Economic Measures” apropos to the government’s policy push reform considering the global unrest and increasing geopolitical risks.
In talks since 2021, the Act was finally approved on May 11, 2022. It is expected to enter into force on or before February 18, 2023.
Overview of the Act
The framework of the Economic Security Law is based on four domains that drive the policy and are as follows:
1. Supply Chain Procurement
To reinforce stability in the supply chain of goods designated vital to businesses and people’s lives. The government intends to financially support the companies handling goods such as semiconductors, pharmaceutical drugs, and rare earth elements.
To promote the creation of a more resilient supply chain, the Japanese government enforced part of the Economic Security Law on August 1, The idea is to strategically plan the supply chain and procurement for these goods that are fundamental to the national economy but dependent on overseas sources.
Suppliers of designated resources may apply for government certification and financial aid for stable supply. As for the most critical materials, the government will further stockpile strategic reserves.
2. Patent Sensitivity
The Economic Security Law subjects’ sensitive patents designated to limited nuclear technology and high-tech weapons will be subjected to non-disclosure measures. Such patent applications for inventions in Japan must be first filed in Japan unless the applicants have been given a government-approved clearance.
3. Basic Infrastructure
The following infrastructure services, namely- power supply, gas supply, oil & gas refinery and import, water supply, railroad transport, road transport, maritime transport, air transport, operation of airports, telecommunication and broadcasting, mail services, financing, and payment card services will be designated as ‘critical operators’ by the government.
Prior filings and commissioned maintenance will be required from these operators to take up security measures to prevent disturbance to such facilities from foreign sources outside Japan.
4. Propagating Public-Private Cooperation on Developing Cutting-Edge Technology
Advanced technologies that are strategically important such as Aerospace, Maritime, Quantum Mechanics, and Artificial Intelligence, will be funded for R&D and public-private partnerships; to beef up National Security.
How Does this Affect the Pharmaceutical Industry?
1. Stringent Regulations
Under the Economic Security Bill, pharmaceutical goods, along with semiconductors and rare minerals, will be termed “critical items.” This makes the delivery of pharmaceutical drugs in and out of the country heavily regulated and supervised.
Providing a stable supply of the said goods to the country will be fiscally supported according to local accounts. This means that pharmaceutical companies aiming to do business in the Japanese market will have to be backed by a strong Regulatory base and local filing systems.
2. Essential Macro-Management
To receive support and approval from the Japanese government for the supply of pharmaceutical drugs as specified under the bill, the companies will have to propose a plan or Business Continuity Plans (BCPs) that will assure the government of a stable and secure supply of the goods. This will require high-level management decisions that will drive the procurement of approval and certification.
There are multiple elements of the Economic Security Bill that have a direct and indirect impact on the pharmaceutical industries in Japan. Given that Japan is the world’s third-largest hub of pharmaceutical industries, an aging Japanese population hints towards a perennial demand for pharmaceutical drugs and goods in the country.
In an ever-evolving world, to stabilize growth, the government introduces various policies to adapt to the transforming demands of healthcare. These policies prominently impact the Health Authorities, i.e., the Regulatory bodies. Thus, the Regulatory landscape is constantly affected, which makes it highly dynamic.
A life sciences manufacturer must always stay on top of these continuous changes and Regulatory reforms. Having a seasoned Regulatory partner in Japan can help develop a comprehensive strategy for entering the Japanese market.
Freyr specializes in assisting Healthcare and Lifesciences companies with comprehensive Regulatory affairs for new product and market authorizations, Health Authority submissions, Chemistry, Manufacturing and Controls (CMC), and lifecycle management. Additionally, our experts in market access and Regulatory intelligence enable life sciences organizations to reach global markets with impeccable product, market, and Regulatory pathway strategies.
If you are looking to streamline your business in Japan and enable end-to-end Regulatory partnerships, then Freyr is here to help you. With Freyr’s on-ground team in Japan, our experts will usher you through each step of the way and help your company get a clean ticket to do business in the country.
