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Bristol-Myers Files in Japan for New Hepatitis C Drug

http://www.fool.com/investing/general/2013/11/13/bristol-myers-files-in-japan-for-new-hepatitis-c-d.aspx

Todd Campbell
November 13, 2013

In the multibillion-dollar race to bring oral hepatitis C treatments to market, Bristol-Myers Squibb (NYSE: BMY) is leapfrogging Gilead Sciences (NASDAQ: GILD) and Johnson & Johnson (NYSE: JNJ) by filing for approval for daclatasvir with Japan's Pharmaceutical and Medical Devices Agency.

The daclatasvir and asunaprevir combo therapy is the first all-oral treatment to be filed for approval,  eliminating side-effect-riddled interferon and ribavirin. Bristol's strategic move to go for a Japan launch rather than battle Gilead's sofosbuvir and J&J's simeprevir in the United States is a dramatic shift for the industry and may mark a shift in global drug development toward Japan -- a country in the midst of redefining itself as R&D friendly.

Why Japan?
Japan has long been known for launch delay. Stringent approval processes, understaffed agencies, and a pricing scheme that punishes new therapies have all kept drug makers and biotech companies focused on developing drugs in the U.S. and European Union instead.

But, that launch-delay stigma may disappear as Japan embraces a much more R&D friendly stance that includes exemptions for some drugs to its biennial price cuts and the ability to prescribe drugs approved in other countries -- but not yet in Japan -- for the toughest to treat cases.  

The pressure to bring innovative drug treatments to Japan more quickly is driven by Japan's rapidly aging population. The country's birthrate has been declining steadily since the 1970s, and 24% of its population is over the age of 65.

That older population, coupled with Japan's wealthy nation status, makes the country very attractive demographically for drug companies. Last year, only the U.S. spent more on drugs than Japan, and Japan represents 10% of the global market.

Japan's hep-C challenge
The market for hepatitis C treatment may not be as big in Japan as it is in the United States, but the number of patients infected still totals some 1.2 million. And 350,000 new hepatitis C cases are diagnosed in Japan each year, far more than the 150,000 in America.

Bristol's focus on Japan is an intriguing shift away from the U.S. and Europe-centric way that most drugs are brought through clinic. The opportunity for daclatasvir to capture share and generate revenue is big, given that as many as 70% of the country's hepatitis C patients are infected with the genotype 1b version of the disease, which has a reputation of being tough to treat.

In Japanese patients, the daclatasvir and asunaprevir combo therapy produced an 84.7% cure rate at 24 weeks -- during phase 3 trials. Those impressive results and the significant unmet need are likely to help speed a decision from Japan's regulatory agency, which is expected to issue a final "yes" or "no" next year.

However, even with the head start in Japan, competitors Gilead, J&J, and AbbVie (NYSE: ABBV) won't be far behind.  

Gilead is currently studying sofosbuvir in a phase 3 trials for Japanese patients. And J&J gained Japanese approval for its simeprevir in September. However, both Gilead's and J&J's first forays are likely to