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Sato Pharmaceutical: Marketing and monozukuri the differentiators in drug development overseas

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Interview - March 9, 2021

Since its founding in 1915, Sato Pharmaceutical has accurately captured market needs to provide the highly original over-the-counter (OTC) and ethical products that contribute to healthy lives. Owing to their R&D ability developed over the years, Sato’s OTC drugs such as Yunker, Acess and Nazal have held a top share in their respective markets in Japan. We sit down with president and CEO, Seiichi Sato, to gain more insight into the company’s products and drug development. Mr. Sato also explains the company is “aggressively looking for partners” as it looks to expand on the international market.

MR. SEIICHI SATO, PRESIDENT AND CEO OF SATO PHARMACEUTICAL CO., LTD
MR. SEIICHI SATO | PRESIDENT AND CEO OF SATO PHARMACEUTICAL CO., LTD

How has the Monozukuri essence contributed to the healthcare industry in Japan?

The Monozukuri essence in the pharmaceutical/healthcare industry is to accurately capture the market needs and that the R&D and manufacturing function together as one in order to meet those needs. As for the OTC drugs, we find the packaging made by the non-Japanese companies rather simple and cost-efficient. In Japan, we strive to elaborate on the entire usage experience of the customer through details such as the formulation, dosage form, package, etc. to enable each customer to choose their most convenient product.

Under the corporate philosophy of “Healthcare Innovation”, we at Sato Pharmaceutical make the best effort to provide the highly-effective, safe, and high-quality products to the health-conscious customers who want to live a more beautiful, more fun, and more fulfilling life. Sato Pharmaceutical is proud to provide our differentiated OTC drugs which were developed based on our marketing insights and our R&D capabilities developed over the past century.

 

As a global company, how are you able to maintain the same philosophy to develop products which meet each consumer’s needs at your overseas locations?

We have a local factory in Taiwan where the local employees are being taught by our Japanese employees. The aim is to replicate the exact quality of the product that is made in Japan while complying with the foreign laws and regulations.

 

What has been the impact of the aging Japanese society on the pharmaceutical industry in Japan?

While the Japanese society is aging, the rise of the Japanese medical cost is also increasing yearly. In fact, according to experts, it is expected to reach 70 trillion yen by 2040 compared to 43.6 trillion yen in 2019. If we analyze this current situation and look at the Japanese social security, we can undoubtedly see that as of today the Japanese healthcare system is extremely good and rich – capable of providing a great service to the people, especially to elders, who need it the most.

To cope with this aging situation which is leading to a decrease in the working population, which is expected to decrease 15% by 2040, the Japanese government set up a panel called “All generation social security panel”. The aim is set to pre-forming the system for the younger generation in particular and to analyze to what extent they can cover the healthcare cost vis-à-vis the elderlies.

The Japan Self-Medication Industry (JSMI), which I serve as chair, is the national association of over-the-counter (OTC) drug manufacturers and has been contributing to the country’s public health by enhancing the role and function of OTC medicines as well as promoting responsible self-care.

 

Could you give us an overview of the major trends that are affecting the OTC industry?

The global OTC drugs account for 20% of total drugs in the marketplaces. However, in Japan, it is a very big contrast because the OTC drugs account for less than 10% which represents a big gap compared to the 20% globally. This means, that there is a huge sea of opportunities for us. Due to the spread of COVID-19, we once again realized the importance of self-care/self-medication.  This will lead to better health literacy as well as change in the way people act and we think that the needs for OTC drugs will grow as well

 

How are you promoting the use of self-care and self-medication through JSMI?

To further promote self-care and self-medication, JSMI plans to tackle various issues the industry is faced with. In its Business Strategy for 2020, JSMI puts the priority on the following four items, intending to promote the safety and health of the people.

1-         Extension or perpetuation of Self-Medication Tax Deduction System, with expanded drugs eligible for deduction

2-         Expansion of the scope of OTC pharmaceuticals to increase therapeutic options for the public

3-         Legalization of the principles of self-medication based on health literacy, and

4-         Increased availability of Japanese OTC drugs in Asia

 

Could you give us an overview of your main business areas?

To meet the social needs in our main business area, healthcare, we are making use of the know-how and advanced technologies we have cultivated over many years and focus on the development of Switch OTC and direct OTC drugs. Along with this, we have developed a competitive market advantage by building strong relationships of trust with pharmacies and drug stores, and have developed a variety of marketing practices. Also, we will help to create an environment in which consumers can effectively use OTC drugs.

Our healthcare business, which is Sato’s main business area, covers a wide range of some 300 products including OTC drugs, quasi-drugs, foods with function claims, foods for specified health uses, and cosmetics.

Consumer needs are accurately captured during product development, with decades of experience and the newest technologies applied to designing new products reflecting many viewpoints. Sato’s major OTC pharmaceutical products include the herbal-based health drink YUNKER series; the market-leading ACESS series of medicated anti-gingivitis and anti-periodontitis products; the popular, cold-symptom-specific STONA series; the RINGL IB series, the antipyretic analgesics especially popular with women; and the rhinitis drugs NAZAL and STONARHINI series.

Sato’s ethical pharmaceutical business is developing highly original products, mainly in its core area of dermatology. Behind this philosophy is Sato’s passion for treatments and examinations that are more comfortable and easier for patients. Sato Pharmaceutical is actively engaged in new drug development through strengthened collaboration with companies, universities, and research institutions both in Japan and overseas.

Sato Pharmaceutical launched PASTARON in 1978; since then, the company has grown primarily in the dermatological area, expanding the number of brands. Our main products providing treatment for several skin ailments include the oral anti-fungal agent NAILIN Capsules 100mg; LUCONAC Solution 5% for external use, a topical treatment for onychomycosis; the topical anesthetics EMLA Cream and EMLA Patch; PATCH TEST PANEL (S) for allergic dermatitis testing; and the DALACIN T series of acne treatment agents.

In April 2016, we launched LUCONAC Solution 5%, a treatment for onychomycosis. This is caused by dermatophytes; luliconazole, which has strong antifungal action, is applied in a high concentration with improved penetration into the nail. In July 2018, Sato Pharmaceutical launched NAILIN Capsules 100mg, an oral agent that is the first new treatment for onychomycosis in approximately 20 years. NAILIN Capsules 100mg is a novel antifungal agent containing the active ingredient fosravuconazole L-lysine ethanolate. One out of ten Japanese is said to suffer from onychomycosis; the launch of NAILIN Capsules 100mg along with LUCONAC Solution 5% for external use provides them an alternative treatment. Sato is one of the Japanese pharmaceutical companies proudly offering both topical and oral onychomycosis treatments.

Lastly, Sato Pharmaceutical is also involved in the cosmetic field with our flagship brand EXCELLULA which is made based on our many years’ research on crude drug and is mostly used to keep moisture within the skin, make your skin look brighter, tighter, and elastic among others. Customers can find this product in the Japanese major drugstores.

 

What are your main products and brands sold in the overseas market?

The main brands YUNKER, HAKUBI, NAZAL, and POLIBABY have grown significantly in Asia. Sales of HAKUBI began in Singapore in 2007, with an increasing lineup today. Sales have expanded from pharmacies and drugstores to cosmetics stores and department stores. In the future, we plan to release the topical treatment for onychomycosis, the ethical drug LUCONAC, from our Singapore branch into Southeast Asian markets.

In Hong Kong, in addition to HAKUBI, sales of NAZAL continue to grow, reaching a number-one share in the market through TV commercials and successful local promotions. The HAKUBI brand is seeing strong sales in Thailand, Malaysia, and Indonesia; sales in Vietnam began in 2019, while sales in the Philippines and Cambodia began in 2020. The HAKUBI brand is expected to grow further in the rapidly-growing economies of the ASEAN market. Sato Pharmaceutical is developing a huge market in China. In addition to expanding our online store for the EXCELLULA cosmetics lineup and HAKUBI Drink, in April 2019 we concluded a sales alliance with the Baheal Pharmaceutical Group for the sales of EXCELLULA. Sales of CALCALCIN Plus and POLIBABY are also scheduled to begin in 2021

In the US, ZENTRIP, a motion-sickness treatment using a convenient, highly portable film, first went on sale in 2009. We are now expanding sales channels by supplying products in new formulations to major drugstore chains as store-branded items. Sato Pharmaceutical is expanding the YUNKER brand in the US, including Hawaii. In 2019, we released the topical analgesic with lidocaine SATOHAP, and are actively promoting the SATO brand. In Germany, YUNKER is our main brand, as we further expand our product lineup and firmly establish the brands. Sato Pharmaceutical is also active in introducing global brands such as BAYER ASPIRIN, an antipyretic analgesic.

 

How do you promote your product and what is your main distribution channel in the overseas market?

With our subsidies in the US, Hong Kong, Singapore, Taiwan, and offices in China and Germany, we carry out fine-tuned marketing and sales activities closely tied to each region. We will continue to make use of our know-how and networking to cultivate and further popularize SATO brands in a way that responds to the various lifestyles and needs of different countries and regions.

 

Is there any field that you are looking to enter in the future?

Besides our three main business areas, we are looking to expand the food supplement industry because this is an industry that is booming within Japan. We would also like to strengthen the e-commerce field which is expanding in the Japanese market.

 

Could you run us through your R&D activities?

Sato Pharmaceutical develops new drugs using the latest technologies to meet modern requirements. The Shinagawa R&D Center conducts the research and development activities needed to develop Sato’s ethical pharmaceuticals, OTC drugs, quasi-drugs, cosmetics, and foods for specified health uses. The R&D center pursues research into high value-addition products that are always based on the needs of consumers. Researchers of all departments participate in projects for each drug discovery theme, and actively engage in research activities such as synthesizing new compounds, biological screening, and pharmacodynamic and pharmacokinetic evaluation. Sato Pharmaceutical is researching new and original drugs in the field of ethical pharmaceuticals.

 

Are you actively looking for co-creation partners? How important is joint development for Sato Pharmaceutical?

Yes, we are aggressively looking for partners! Sato Pharmaceutical is actively promoting joint research with domestic and international specialist institutions. We are proactively engaging in joint research into drug discovery with companies, universities, and research institutes in Japan and overseas. We have achieved tangible results in several joint research projects with different universities. We are now working on drug discovery targeting lipid metabolism-related coenzymes, as well as on sarcopenia, the muscular atrophy that comes with aging, and are steadily achieving results.

We have also begun collaborative research in the field of ophthalmology, as well as into wound healing, aiming to elucidate the healing mechanisms for wounds and pressure sores, and towards the creation of wound-healing drugs. We will continue to focus on drug discovery research, with a special eye on Japan’s fast-aging society.

 

What is your international expansion?

As market shrinkage due to population decline have become a great concern in Japan, we believe that while focusing on the domestic market, Sato Pharmaceutical should aggressively expand our overseas business to continue being a global leader and export our Monozukuri overseas. Therefore, our international business is centered on six locations in the rapidly growing Asian market, as well as North America and Europe.

 

What would you like your brand (the yellow elephant) to be known for in the overseas market?

Our elephant “Sato-chan” represents health and longevity. Among the Japanese people, there is a good strong association between Sato Pharmaceutical and Sato-chan. Unfortunately, Sato-chan is not well known in the global market. Sato Pharmaceutical should be known for its good quality and reliable products and most importantly, I would like our customers to know that Sato Pharmaceutical is a company that cares about their health.

 

What dream would you like to accomplish 2 years from now? What are your goals as the president of Sato pharmaceutical?

We are currently living in an unfortunate situation, which is Covid-19. As a member of the healthcare industry, our goal is to contribute to the health of our society. People’s lifestyle has greatly changed during this pandemic. We would like to contribute to such people’s health enhancement by launching new healthcare products and Switch OTC products which will meet the consumers’ new-born needs. We would also like to aim for Sato’s products to be well used overseas, including our new markets such as China.

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