Japan is the world's second largest pharmaceutical market after the US on the basis of total revenue. But according to Business Monitor International (BMI), a London-based analyst firm, Japan's overall pharmaceutical market is stagnating, and the devastating 9.0-magnitude earthquake that struck in March has introduced new uncertainties. In its initial review, published in early March, BMI stated that factors such as the government's cuts to subsidies for prescription medicines and its pro-generics stance will conspire to lower annual growth rates going forward. Presently, pharmaceutical expenditure is 1.8% of the country's gross domestic product and BMI predicted that through to 2015 the five-year compound annual growth rate will be 0.7%. However, soon after BMI published these gloomy estimates, they revised them down further. The 11 March earthquake and tsunami that devastated a large part of northeastern Japan led the firm to downgrade its pharmaceutical market forecast to take into account the impending economic slowdown.

“The majority of the report's content is still applicable, but we have lowered our 2020 sales predictions by 1.5% (from $91.7 billion to $90.3 billion), which reflects a change in the country's overall macroeconomics now that the full extent of the recent disaster is known,” says Jamie Davies, BMI analyst and report author. “To improve their overall outlook for growth, the country's pharmaceutical companies need to look more to emerging markets, such as China.”

Mihoko Shinomiya, a spokesperson for Takeda Pharmaceutical Co., says that so far Takeda products have been unaffected by the recent quake and tsunami. "Our production facilities are far from the affected region," she said. Astellas Pharma, Japan's second largest drug company, are not so fortunate. They have two manufacturing facilities in the devastated regions both of which were damaged. “Our Nishine formulating and packaging plant has now resumed normal operations, but our biggest challenge is to repair and reopen the Takahagi plant,” says Daisuke Okajima, a spokesperson for Astellas. The economic impact of the recent events on Astellas's business is still being assessed, but the company reports having a three-month supply of their mainstay products stockpiled. The cost of repair and reconstruction efforts in Japan is likely to make the March earthquake and tsunami one of the costliest natural disasters in history. Shin-Ichi Nishikawa, deputy director of the Riken Center for Developmental Biology in Kobe, says it's hard to tell what impact this will have on future budgets for scientific research, but, at a meeting with the Ministry of Education in mid-April, the plan was to continue to fund all new projects.Riken's current focus is on helping colleagues replace damaged scientific equipment and replenish resources. Many resources were lost in the power cuts, Nishikawa notes. “We, and many other scientists around Japan, are organizing a collection of goods”—such as equipment that is not currently being used—“for our colleagues in the devastated regions,” he says.