Innovation management of Japanese pharmaceutical companies: the case of an antibiotic developed by Takeda

It is often argued that the Japanese pharmaceutical industry lacks international competitiveness partly because of its weakness in innovation - most new drugs developed by Japanese companies are imitative and lack appeal in overseas markets. To address this problem, I suggest a well-defined typology of drug innovation. I found in my previous studies that the dominant type of innovation among Japanese companies has been the modification-based innovation, which indeed appears to be imitative. Although modification-based innovation is not necessarily easy it may bring in significant revenue. It is also found that institutional and organisational conditions of the Japanese market until recently were in favour of modification-based innovation. Therefore, it can be argued that innovation management of Japanese pharmaceutical companies in the past was not inappropriate. Recently, the situation is changing and some Japanese companies are seeking more radical types of innovation. But we should not underestimate the strategic value of modification-based innovation.