From Our Briefings Newsletter

Published on10 DEC 2018

The article below is from our BRIEFINGS newsletter of 10 December 2018:

Briefly . . . on Japan's Boom in Regenerative Medicine  

People are living longer thanks to advances in modern medicine, but that longevity is resulting in a growing, unmet need for treatments targeting age-related diseases and conditions. We sat down with Goldman Sachs Research's Akinori Ueda to learn about the potential for "regenerative medicine" to fill this role, and why it's a booming business in Japan.

What is regenerative medicine?

Akinori Ueda: Regenerative medicine is an emerging therapeutic field -- including stem cell therapy, bioengineering, organ and tissue transplants, among other technologies -- that aims to replace, engineer or regenerate human cells, tissues or organs in order to restore or establish normal function. In other words, regenerative medicine helps a body heal itself. Of these approaches, we believe stem cell therapy could become the cornerstone of regenerative treatment in the future. Stem cells have the ability to differentiate into a wide-range of specialized forms like nerve, muscle, or blood cells, meaning they can help treat almost any area of the body. And recent research advances pioneered by Japanese Nobel laureate Dr. Shinya Yamanaka have expanded these therapeutic possibilities, offering evidence that mature adult cells can actually be transformed into embryonic-like stem cells with these blank-slate properties.

Why, in particular, is regenerative medicine booming in Japan?

AU: As one of the world's biggest pharma markets, Japan already possesses world-class medical R&D facilities and manufacturing infrastructure. The Japanese government has also embarked on regulatory and legal reforms aimed at making the country one of the most attractive places in the world for developing regenerative therapies from a time-to-market standpoint.

For example, Japan is the only country globally with a drug approval process that treats regenerative medicine as a distinct, standalone category and takes into account the unique challenges of data collection and clinical study evaluation in this field. Regeneratives are eligible for fast-track, conditional authorization after early stage clinical trials, allowing manufacturers to market them for up to seven years before receiving a final decision on full approval . And as conditionally approved products are automatically covered under the national health insurance -- meaning that social insurance reimburses the majority of the drug's cost -- they are attractive to both doctors and patients alike. For manufacturers, this can mean swifter penetration in Japan's substantial market.

The impact of these reforms is already evident in the increasing number of partnerships between foreign and Japanese pharmaceutical firms, and the emergence of homegrown startups with some of the most promising regenerative pipelines globally.

How do you see the regeneratives market developing both in Japan and globally?

AU: Just last month the Japanese Ministry of Health, Labor and Welfare agreed to give conditional approval to a bone marrow stem cell treatment for spinal cord injuries. This adds to a small but growing track record of conditional approvals based on relatively small-scale clinical testing. In our view, these cases show the Japanese government's commitment to approving regenerative drugs for diseases lacking effective treatment, provided minimum acceptable levels of safety are demonstrated. As the number of conditional approvals grows, we believe this is likely to add momentum to pipeline development at other companies.

The promise of regenerative medicine has also attracted growing venture capital investment globally. VC investment in stem cell therapy companies accounted for almost half of the top venture capital deals during 2015 and 2016. And with $807 million venture dollars invested in 2016, up from just $296 million in 2011, we believe a supportive funding environment will drive further breakthroughs and growth in the sector going forward.