Japan is the third-largest consumer of ethical drugs and the world’s third-largest economy; therefore, it is an important development centre for new medicines. However, there are various cultural and economic challenges in Japan that make it difficult to manage a fixed workforce against a variable portfolio of clinical research.

The perception is that the Japanese labour laws and culture, including ‘salaryman’, restrict or limit the changes required to move to a variable workforce model in support of clinical development needs in Japan.

ICON believes that these barriers are implied assumptions that often do not actually exist. As a result, there is an opportunity for many pharmaceutical organisations to transition to a more efficient and productive operating model in Japan. This transition can be effected using an alternative structured transaction or joint venture (JV) model. The JV structure provides a stepwise framework to transition staff and functions from the pharma to supplier partner infrastructure while simultaneously preserving staff employment and continuity of business operations. In this type of transaction, the needs and concerns of all stakeholders are considered and addressed transparently, with a key emphasis on impacted employees.

Key functions of the development enterprise under consideration for the JV include clinical operations, medical writing, data management, clinical pharmacology, and pharmacovigilance. Regulatory is often a shared competence (discriminating the difference between regulatory operations and regulatory strategy). This strategy allows the pharmaceutical company to benefit by:

  • Reducing fixed employee headcount through its transition of staff to the JV
  • Reducing reliance on dispatch workers (contractors)
  • Avoiding both the financial costs and reputational damage of a significant staff redundancy and reorganisation
  • Maintaining continuity of ongoing research and development work as staff transitions to the JV
  • Allowing the pharma company to narrow its focus on core functions and the strategic elements of its portfolio and submissions

Importantly, in this model, the pharmaceutical company retains the legal responsibility for clinical trial performance under ICH/GCP but, through the structured transaction, transfers the employment responsibilities of the impacted staff to the new JV. In models like this, ICON was able to measure Year 1 operational savings to the pharma company of ~10% and incremental Year 2 savings of an additional 3-5% through the process and efficiency improvements as well as labour optimisation, which included:

  • Turnover-related backfill, benefits, and long-term obligation savings
  • Travel savings
  • Reduction in sponsor system and process ownership costs
  • Hiring time and improved utilisation
  • Reduction of duplicate oversight
  • Reduction of third-party management by the consolidation of services to ICON

Critical success factors to complete this transaction included understanding the important relationships that needed to be established with impacted employees and labour unions and understanding how co-employment risks would be managed.

Check out our recent whitepaper to learn more about Japan’s growing pharmaceutical industry.

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