Key Points of Pharmaceutical Affairs Law Amendment and Its Impact on Pharmaceutical Companies

~ Impact of Reiwa 7 Act No. 37 on Pharmaceutical Companies and Response Strategies ~

The “Act to Partially Amend the Act on Securing Quality, Efficacy and Safety of Pharmaceuticals, Medical Devices, Regenerative and Cellular Therapy Products, Gene Therapy Products, and Cosmetics” enacted in Reiwa 7 (2025) represents a major turning point for the pharmaceutical industry. In response to recent quality issues and supply shortages, regulatory strengthening and the establishment of new responsibility frameworks are being demanded.

1. Clarification of Responsibilities Through Governance Strengthening

Impact of the Newly Established Responsible Person System

The most notable aspect of this amendment is the mandatory establishment of Quality Assurance Managers and Safety Management Managers for marketing authorization holders. The previously voluntary responsible person system has been made mandatory and will be subject to change orders by the Minister of Health, Labour and Welfare.

Impact on Pharmaceutical Companies

The amendment requires pharmaceutical companies to implement several critical changes in their organizational structure. In addition to the existing General Manager of Marketing Authorization, companies must now appoint two dedicated responsible persons, creating a more specialized governance framework. This necessitates the construction of coordination systems between responsible persons with clear reporting lines to ensure effective communication and accountability throughout the organization.

Companies must also establish comprehensive education and training systems with mechanisms for continuous capability improvement. These training programs should be designed not only for initial qualification but also for ongoing professional development to keep pace with evolving regulatory requirements and industry best practices.

Strengthening Supervisory Authority for Responsible Officers

Change order authority by the Minister of Health, Labour and Welfare has been newly established for responsible officers (representative directors, directors in charge of pharmaceutical affairs, etc.). This clarifies pharmaceutical compliance responsibility at the top management level of companies.

Key Considerations

Organizations must construct pharmaceutical law compliance systems at the executive level, integrating regulatory requirements into corporate governance structures. This includes reviewing and strengthening internal control systems to ensure effective oversight of pharmaceutical operations. Regular compliance audits should be conducted to identify potential risks and ensure adherence to regulatory requirements. These audits should be comprehensive, covering all aspects of pharmaceutical operations from manufacturing to distribution and post-market surveillance.

2. Establishing Stable Supply Systems for Prescription Pharmaceuticals

Establishment of Supply System Management Managers

Currently, approximately 20% of prescription pharmaceuticals face limited shipment or supply suspension situations. To address this critical issue, the establishment of Supply System Management Managers has been made mandatory. These managers are responsible for a wide range of duties, from establishing internal coordination systems to securing active pharmaceutical ingredients (APIs) and inventory management.

Actions Pharmaceutical Companies Should Take

Companies must construct early detection systems for supply instability, enabling proactive responses before shortages become critical. This includes implementing sophisticated monitoring systems that can identify potential disruptions in the supply chain at the earliest possible stage.

Diversification of API procurement sources and risk distribution are essential strategies. Companies should avoid over-reliance on single suppliers or geographic regions, instead developing robust multi-source strategies that can withstand various disruption scenarios. This approach not only enhances supply security but also provides greater negotiating leverage and potential cost benefits.

Improving the accuracy of production planning and demand forecasting is crucial for maintaining stable supply. This requires implementing advanced analytics and forecasting tools that can account for seasonal variations, market trends, and potential disruptions. Companies should also establish mechanisms for rapid response when forecasts deviate from actual demand.

Building coordination and cooperation systems with other companies can provide additional resilience. This may include sharing manufacturing capacity, mutual supply agreements, or collaborative approaches to API procurement. Such partnerships can help the industry as a whole maintain more stable supply chains while also benefiting individual companies.

Utilization of Generic Drug Manufacturing Infrastructure Fund

To address the challenge of production efficiency decline due to “small-volume, multi-product production” by generic drug companies, a fund will be established as a five-year temporary measure. This fund supports corporate coordination, cooperation, and reorganization, providing financial assistance for product consolidation and business restructuring expenses.

Strategic Utilization Methods

Strategy	Expected Outcome
Product consolidation with peer companies	Improved efficiency through economies of scale
Capital investment for productivity improvement	Enhanced manufacturing capabilities and reduced costs
Business restructuring for competitive advantage	Stronger market position and operational excellence

3. Improving the Drug Development Environment and New Opportunities

Expansion of Conditional Approval System

The conditional approval system for rare and serious diseases has been expanded. When certain efficacy and safety are confirmed in exploratory clinical trials, approval is possible on the condition of post-marketing confirmatory clinical trials.

Benefits for Pharmaceutical Companies

This expanded conditional approval system offers pharmaceutical companies several significant advantages. Development period shortening and early market entry enable companies to begin serving patients with unmet medical needs much sooner than traditional approval pathways would allow. This accelerated timeline can provide substantial competitive advantages and earlier revenue generation.

Promotion of rare disease therapeutic drug development addresses a critical need in the pharmaceutical industry. The conditional approval pathway makes it more economically viable to develop treatments for small patient populations, where traditional development costs might otherwise be prohibitive. This creates opportunities for companies to make meaningful contributions to patient care while building expertise in specialized therapeutic areas.

The realization of social significance through improved patient access cannot be overstated. By enabling faster approval of promising therapies, the system allows patients with serious conditions to access potentially life-saving treatments years earlier than would otherwise be possible. This fulfills the pharmaceutical industry’s fundamental mission of improving public health outcomes.

Establishment of Innovative Drug Commercialization Support Fund

As a 10-year temporary measure, a fund combining government and private contributions has been established. This fund supports the initiatives of Drug Discovery Cluster Campus development operators, establishing a more active drug development environment.

Key Utilization Points

The fund provides crucial support for developing and utilizing incubation facilities, creating physical and virtual spaces where innovative research can flourish. These facilities often include state-of-the-art laboratory equipment, shared resources, and collaborative workspaces that would be prohibitively expensive for individual startups or small companies to establish independently.

Strengthening industry-academia-government collaboration through the fund creates powerful synergies. Academic institutions bring cutting-edge research and scientific expertise, while industry partners contribute practical development experience and commercialization capabilities. Government support provides regulatory guidance and funding stability, creating an ecosystem where innovation can thrive.

Expanding opportunities for collaboration with startup companies opens new avenues for innovation. Established pharmaceutical companies can access novel technologies and fresh approaches, while startups gain access to resources, expertise, and pathways to market. This mutually beneficial relationship accelerates the pace of innovation across the industry.

4. New Business Models Through Pharmacy Function Enhancement

Sale of OTC Drugs Under Remote Management

Sale of general OTC drugs at stores without resident pharmacists becomes possible under the remote management of pharmacists. This represents an opportunity for OTC drug manufacturers to expand new sales channels, reaching customers in underserved areas and providing greater convenience.

The remote management system must ensure that appropriate pharmaceutical supervision is maintained even when pharmacists are not physically present. This requires robust communication systems, clear protocols for handling customer questions, and mechanisms for pharmacist intervention when necessary.

Liberalization of Online Sales of Drugs Requiring Guidance

Sales of drugs requiring guidance through online medication guidance become possible based on pharmacist judgment. A system is also established to exclude products requiring face-to-face confirmation for proper use, ensuring that patient safety remains the priority even as distribution channels expand.

This balanced approach recognizes both the convenience benefits of online sales and the importance of maintaining appropriate professional oversight. Pharmacists retain the authority to determine when face-to-face interaction is necessary, ensuring that the expansion of sales channels does not compromise patient safety.

5. Actions Pharmaceutical Companies Should Immediately Undertake

Short-term Actions

Establishing the Responsible Person System

Companies must carefully select and develop candidates for Quality Assurance Managers and Safety Management Managers. This selection process should consider not only technical qualifications but also leadership abilities, communication skills, and understanding of regulatory requirements.

Clear role divisions and authority definitions are essential. Each responsible person’s duties, decision-making authority, and areas of responsibility must be explicitly documented and communicated throughout the organization. This clarity prevents overlap, gaps in coverage, and confusion about accountability.

Construction of reporting and coordination systems ensures that information flows effectively between responsible persons and throughout the organization. These systems should enable rapid communication of critical issues while also supporting routine information sharing and coordination.

Review of Supply Systems

Appointment of Supply System Management Managers should be based on thorough assessment of candidates’ qualifications and experience. These managers need a broad understanding of the entire supply chain, from API procurement through manufacturing, distribution, and inventory management.

Creation of procedural documents and establishment of internal systems provide the framework for effective supply management. These documents should clearly define processes for monitoring supply status, responding to potential disruptions, and coordinating with other departments and external partners.

Assessment and countermeasures for API procurement risks require systematic analysis of the supply chain. Companies should identify single points of failure, evaluate supplier reliability, and develop contingency plans for various disruption scenarios.

Conclusion

While this legal amendment represents regulatory strengthening for the pharmaceutical industry, it also constitutes an important reform that promotes the creation of new business opportunities and the soundness of the entire industry. Companies are required to adopt a strategic perspective that utilizes these changes to establish competitive advantage, rather than merely complying with regulations.

The mandatory establishment of the responsible person system and strengthening of supply systems directly contribute to improving corporate credibility and establishing sustainable management foundations. These changes, while requiring significant investment and organizational adaptation, ultimately strengthen the industry’s ability to serve patients reliably and maintain public trust.

The drug development support fund and flexibility in the approval system represent valuable opportunities for accelerating innovation creation. Companies that effectively leverage these resources can advance their research pipelines more rapidly, bring treatments to patients sooner, and strengthen their competitive positions in the global pharmaceutical market.

The amendment also reflects a broader shift toward more sophisticated, risk-based regulatory approaches that recognize the complexity of modern pharmaceutical operations. Companies that embrace this perspective and build robust quality and supply management systems will be better positioned not only to meet regulatory requirements but also to achieve operational excellence.

Pharmaceutical companies are expected to view these institutional changes positively and work toward constructing stronger and more responsible corporate structures while providing products and services that meet the needs of patients and healthcare settings. The successful implementation of these changes requires commitment from all levels of the organization, from senior management to front-line employees.

Companies should also recognize that these changes create opportunities for differentiation in the market. Organizations that implement best practices in governance, supply chain management, and innovation support will be recognized by regulators, healthcare providers, and patients as industry leaders. This reputation can translate into competitive advantages in licensing discussions, partnerships, and market access.

Furthermore, the emphasis on supply chain resilience and risk management aligns with global trends in pharmaceutical regulation and industry practice. Companies that develop strong capabilities in these areas will be better positioned not only for compliance with Japanese requirements but also for success in international markets.

The next few years will be critical for implementing these changes effectively. Companies should develop detailed implementation plans, allocate adequate resources, and establish mechanisms for monitoring progress and adjusting strategies as needed. Regular review of implementation status and proactive engagement with regulatory authorities will help ensure successful navigation of this regulatory transition.

Ultimately, these amendments reflect the pharmaceutical industry’s evolution toward more sophisticated, risk-based approaches that balance innovation with safety and reliability. Companies that embrace this evolution and invest in building robust capabilities will be well-positioned for long-term success in serving patients and contributing to public health.