Often, overseas medical products companies are not yet ready to establish a footprint in Japan, but nevertheless entertain a possibility of such a scenario as an ultimate business goal.
Maintaining unequivocal ownership of the product registration and relying on an independent DMAH better position such firms to make the transition from reliance upon Japanese distributors to having their own direct presence in the country. Moreover, for those overseas firms contemplating going directly into Japan for marketing, during the establishment of the subsidiary, using an independent DMAH pending product approval avoids costly personnel overhead for professionals (registered pharmacists etc.) to staff DMAH functions who sit idle until approval of the marketing authorization gives them something to do.
A vignette might help illustrate the complications that might arise for the overseas medical products firm’s decision, whether unwary or forced by circumstance, to have its Japanese partner handle product registration.
Avoiding the “Pay now and pay later” Trap
This not-so-hypothetical illustration involves a start-up, innovative medical device developer located in a high-technology corridor in its home country. In order to ease up-front entry costs, the firm’s distribution agreement called for its Japanese partner (distributor) to obtain all needed regulatory clearances from the health authorities for the product to be imported and marketed in Japan. In the intervening years, the start-up has grown and now entertains the notion of a direct presence in Japan. Unfortunately, under the distribution agreement, the Japanese partner owns the product registration, and would require the overseas firm to purchase the Japanese registration of its own medical device. That is, the innovator will need to pay to obtain the approval from their Japanese partner on the latter’s terms. (And it is pay again: the firm has undoubtedly been defraying the cost of registration of its own medical device all along, in the guise of the affected transfer prices.)
Use of an MAH that is independent of the distributor, an MAH selected by the innovator, helps establish a more equitable relation with the Japanese partner during discussions of the distribution arrangements, and forms the basis of more flexible options for the innovator in the future, either in entering a more favorable stance in adding additional importer-distributors or in terminating the distribution agreement on more cost-benefit lines in order to make way for the innovator’s subsidiary to assume the duties under the auspices of direct representation in Japan.