Antibiotics Become a New Test Case for Economic Security

Major pharmaceutical firms, such as Meiji Seika and Shionogi & Company, are building up inventories of certain antibiotics and their active pharmaceutical ingredients, particularly those that have depended on supplies sourced from China.

Beijing's coercive response to Prime Minister Sanae Takaichi's parliamentary remarks on a potential Taiwan contingency has highlighted the risks of overreliance on China.

Against this backdrop, major pharmaceuticals are taking steps to safeguard Japan's medical supply system by securing sufficient stocks of key ingredients in anticipation of potential supply disruptions.

Antibiotics Become Strategic Assets

The main drugs both companies are stockpiling are beta-lactam antibiotics, which are widely used in clinical settings. These antibiotics are indispensable for treating infections and preventing postoperative complications.

Any disruption to their supply, therefore, could pose a direct threat to public health.

For this reason, the government has designated them as "specified critical products" under the relevant law, placing them alongside items such as aircraft components and semiconductors.

Shionogi plans to invest roughly ¥2.3 billion JPY (about $15 million USD) in active pharmaceutical ingredients and precursor materials to secure a one-year supply as quickly as possible.

Meiji, meanwhile, has been gradually increasing its stockpiles of antibiotic drugs since fiscal 2024. It aims to secure a one-year supply of finished products starting fiscal 2025.

Building up these inventories is expected to take several years.

The Cost of China Dependence

Over the years, Japan's antibiotics have become increasingly reliant on Chinese-sourced raw materials and active pharmaceutical ingredients. This shift has been driven in part by declining profitability following repeated drug price cuts.

Particularly alarming is the near-total dependence on imports for beta-lactam antibiotics.

In 2019, for instance, production of antibiotics by Japanese domestic generic manufacturers stalled after problems emerged at a Chinese plant, forcing a series of surgeries to be postponed in Japan.

In response, the Japanese government has begun supporting pharmaceutical companies that have moved into the domestic production of beta-lactam antibiotics.