In November 2024 Merck agreed to pay Daiichi Sankyo up to $22 billion for three antibody-drug conjugates, $4 billion of it upfront, and let the Japanese firm keep the rights to its home market. Five months later GSK paid ABL Bio, a Korean biotech, $50 million upfront and pledged up to $2.66 billion to license a brain-delivery platform. In 2025 Pfizer paid 3SBio of China $1.25 billion upfront, the largest such payment of the year, to take a cancer asset everywhere except China. Three deals, three countries, three different shapes. The costliest mistake a US chief business officer can make is to read them as one story. The Japan pharmaceutical market, the Korean one and the Chinese one reward three distinct entry playbooks, and a plan built for one of them tends to fail in the other two.
Japan: inside the Japan pharmaceutical market's approval-for-price bargain
Japan offers the most predictable regulatory path of the three and the most punishing price math. The Pharmaceuticals and Medical Devices Agency (PMDA) runs a tiered review: a standard 12-month track, a 9-month priority track for orphan drugs, and a Sakigake designation, introduced in 2015 and modelled on the US Breakthrough Therapy program, that targets six-month review for drugs developed first in Japan. In the year to March 2025 the PMDA cleared 148 applications, including 66 new active ingredients. For a company with a differentiated asset, approval is rarely the binding constraint.
Price is. The Ministry of Health, Labour and Welfare (MHLW) sets one national price for every drug under National Health Insurance (NHI), on the advice of a standing council known as Chuikyo, then cuts it on a schedule. NHI prices are revised every two years, and annually for most drugs since 2021. The average cut for branded drugs rose from 7.48% in April 2014 to 11.11% in April 2022; patent-protected drugs lost 10.97% of price over the five years to 2022, a stretch in which most European markets allowed increases. A Market Expansion Repricing rule docks any drug that passes ¥15 billion, about $100 million, in annual sales. The effect is a documented "drug loss": about 70% of new chemical entities launched in America and Europe over the past five years never reached Japan at all. "Too many companies seek market entry in Japan without considering reimbursement challenges in the country," warns Ames Gross of Pacific Bridge Medical. Japan is the one APAC market where a US biotech can win approval and still lose money.
Korea: how the Korea pharmaceutical industry prices in Japan's shadow
Korea has moved fastest to make itself easy to enter, and is the most exposed to a pricing problem made in Washington. On January 1, 2025 the Ministry of Food and Drug Safety (MFDS) overhauled its review: dedicated teams by therapeutic area, rolling submission of the Common Technical Document module by module, and parallel manufacturing inspections, all aimed at cutting the approval clock from about 420 days to 295. Its GIFT program (Global Innovative products on Fast Track) offers rolling review for serious diseases. The historic friction point, a K-PIC (Korea Pharmaceutical Industry Cooperation) bridging study to confirm that foreign trial data hold in Korean patients, is exactly what the 2025 reforms aim to shrink.
Reimbursement is where the Korea pharmaceutical industry inherits Japan's discipline. The National Health Insurance Service (NHIS) covers about 97% of Koreans; the Health Insurance Review and Assessment Service (HIRA) runs a pharmacoeconomic evaluation, then negotiates price against a basket of reference countries that includes Japan. In April 2026 that basket widens from seven countries to eight with the addition of Canada. Because Korea prices partly by looking at Japan, it tends to land below it, and the United States' Most-Favored-Nation policy now references Korea in turn. That circularity produced "Korea passing," companies skipping Korea to protect their American price. A flexible-pricing mechanism phased in from 2026 is, in the health ministry's words, meant to "minimise the effect of international reference pricing while mitigating the problem of Korea passing." Korea's saving grace is mildness: patent-protected drugs there lost only 2.2% of price over five years, a fraction of Japan's erosion.
China: the NMPA in 2026 is fast, and that is not the point
China has the quickest regulator of the three and the structural conditions that make speed almost beside the point. The National Medical Products Administration (NMPA) and its Center for Drug Evaluation (CDE) now clear an investigational new drug application in 30 working days for Class 1 innovative drugs, down from 60, under a pathway piloted in July 2024 and formalised in September 2025. Parallel China-plus-West filings rose 30% in 2024. The Goldman Sachs analysts Ziyi Chen and Salveen Richter note that "46% of new drug molecules that entered into human trials in the first half of [2025] are from Chinese companies."
The friction sits downstream and sideways. Reimbursement runs through the National Reimbursement Drug List (NRDL), renegotiated every year by the National Healthcare Security Administration (NHSA); the 2024 round cut listed prices by an average of 63%. The 2025 round, effective January 2026, added 114 drugs and introduced a second "commercial insurance" catalogue for 19 high-cost therapies at gentler cuts of 15-50%. Imported drugs without a domestic edge are excluded outright: the NHSA's Huang Xinyu explained that no imported PD-1 inhibitor was added because its price sat far above the 10-plus Chinese ones already listed. Sideways sits Human Genetic Resources (HGR) regulation, moved in May 2024 to the National Health Commission, which bars foreign-controlled entities from collecting or exporting Chinese genetic data without approval; HGR licences fell 58.4% from 2023 to 2024. These are exactly the inputs US boards keep collapsing into a single "China discount," as the China-origin valuation piece in this series argues. The defining fact of China is not entry but exit: Chinese firms out-licensed $137.7 billion of assets in 2025, up nearly tenfold from 2021.
Partner or build: a different answer in each capital
The build-versus-partner decision resolves differently in each market, and the cost map explains why. In Japan, a wholly owned subsidiary, a kabushiki kaisha, needs a local marketing-authorization holder, Japanese-language dossiers and a hospital sales force; practitioners put the first-year cost of a lean rare-disease operation at $10 million to $30 million. Most specialty assets therefore partner with a domestic major, which is why Merck left Japan rights with Daiichi Sankyo rather than build. In Korea the calculus tilts toward partnership of a different kind: the draw is manufacturing scale at Samsung Biologics or Celltrion, often bundled with distribution, and an English-friendly regulator that makes Korea a credible regional hub. In China, partnership is close to compulsory; HGR rules stop a foreign-controlled entity from running domestic genetic studies on its own, so the dominant structure is to out-license ex-China rights to a local firm that runs the trials, the NRDL negotiation and commercialization. Which assets are worth taking into APAC in the first place follows the same logic, the subject of an earlier piece in this series. The single rule: match the structure to the constraint that binds, regulatory in China, commercial in Japan, manufacturing in Korea.
Three reimbursement systems, three sets of rules
The clearest way to see the divergence is to set the three reimbursement systems side by side. They share one goal, universal access at a controlled price, and almost nothing else.
| Japan (NHI) | Korea (NHIS) | China (NRDL) | |
|---|---|---|---|
| Authority | MHLW, advised by Chuikyo | HIRA, then NHIS | NHSA |
| Pricing mechanism | Comparator or cost-accounting; list price set within 60 days of approval | Pharmacoeconomic evaluation, then price negotiation | Annual NHSA negotiation against domestic clinical value |
| Foreign reference pricing | Yes: average of US, UK, Germany, France | Yes: 8-country basket including Japan from 2026 | No systematic foreign reference |
| Re-pricing cadence | Every 2 years (annual since 2021), plus blockbuster repricing | Every 2 years, on actual transaction price | Every year |
| 5-year price move, patented drugs | About −11% | About −2.2% | Average 63% cut on listing |
| Standard patient co-pay | 30% outpatient | 20% outpatient | 30-40% inpatient |
Where an asset goes to be acquired
Exit looks different in each market too, and in one of them it barely exists. Japan has the region's deepest bench of acquirers: Takeda, Daiichi Sankyo, Astellas, Eisai, Otsuka and Roche-owned Chugai all buy or in-license US assets, often leaving the seller its ex-Japan rights. Otsuka paid $800 million upfront, plus up to $325 million, for Boston's Jnana Therapeutics in October 2024. Korea offers partners rather than buyers: Samsung Biologics and Celltrion strike manufacturing and licensing tie-ups, and ABL Bio has become a serial out-licensor to Eli Lilly and GSK, but documented acquisitions of US biotechs by Korean pharma are scarce. China inverts the model. Hengrui, Innovent, CSPC, 3SBio and RemeGen are licensors, not acquirers; Hengrui alone closed four out-licensing deals in 2025 worth more than $15 billion combined. A US biotech does not sell itself into China so much as license its China rights to a domestic champion. Plan the exit before the entry, because the buyer pool differs by country.
The operator's playbook: seven moves
Seven moves separate a segmented APAC strategy from an expensive one-size guess.
One. Name the market before the region. "APAC entry" is not a plan; a Japan plan, a Korea plan and a China plan are.
Two. In Japan, model the price before the approval. Sakigake can deliver a six-month review and the NHI formula can still make the launch uneconomic; run the reimbursement math first.
Three. In Korea, fix your reference-price exposure. If a low NHIS price would drag your US price down under Most-Favored-Nation rules, weigh launch sequence and the 2026 flexible-pricing mechanism before you file.
Four. In China, treat HGR and the BIOSECURE Act as design inputs, not paperwork. They decide whether you can run a domestic trial at all, and increasingly whether US-funded partners can work with your contract research organization.
Five. Match the entry structure to the binding constraint: partner for commercial reach in Japan, for manufacturing in Korea, for regulatory access in China.
Six. Pick the partner with the exit in mind. The acquirer or licensee pool is a different set of names in Tokyo, Seoul and Shanghai.
Seven. Sequence the three. The reference-pricing links between them, Japan into Korea, both into the US, make launch order a pricing decision, not a logistics one.
The case for one strategy, and its limits
The unified-APAC case is not a straw man. Firms that run the region from a single Singapore or Shanghai hub capture real economies in regulatory affairs, distribution and tax, and the largest APAC operators, Takeda and Daiichi Sankyo among them, list in New York and run global income statements in which scale plainly beats segmentation. For a company with a broad portfolio and the headcount to staff a regional office, one operating platform across the three markets can be the right answer.
But a platform is not a strategy. The same Singapore hub still files with three regulators on three timelines, negotiates price against three incompatible formulas and exits into three separate buyer pools. A shared back office does not make the Japan pharmaceutical market behave like the Chinese one. The discipline is to run one organization and three playbooks, and to know, asset by asset, which of the three you are playing. The CBOs who lose money in APAC are rarely the ones who under-invest. They are the ones who paid for one strategy where the market demanded three.