Medical Business License

A company that wishes to engage in a medical and pharmaceutical business in Japan must comply with the set regulations and quality standards. If these requirements are met, the company will get a medical business license or accreditation from the prefectural government. Operation without a license or accreditation is strictly forbidden.

There are many types of medical business licenses in Japan depending on the type of your business and the products it delivers. In this guide, we are giving a high-level overview of these licenses, focusing on two most popular types that foreign companies opt for: Marketing Authorization Holder (MAH) and a Designated Marketing Authorization Holder (DMAH).

If you wish to produce or market cosmetics or quasi-drugs in Japan, please see our cosmetics license guide.

CONTENTS

How to obtain a license for a medical and pharmaceutical business in Japan?

Definition of Drugs

According to Article 2, Paragraph 1 of the Pharmaceutical Affairs Law (hereinafter PAL) also referred to as the Pharmaceutical Affairs Act the term “drugs” means the following:

“Substances that are listed in the Japanese Pharmacopoeia.
Substances (other than quasi-drugs), including dental materials, medical supplies, and sanitary materials, which are intended for use in the diagnosis, treatment, or prevention of disease in humans or animals, and which are not equipment or instruments.
Substances (other than quasi-drugs or cosmetics) which are intended to affect the structure or functions of the body of humans or animals, and which are not equipment or instruments.”

Types of Drugs

By the use and supply drugs in Japan are divided into:

Prescription drugs (behind-the-counter drugs): Can be selected and prescribed only by a physician or a dentist. Such drugs:
1. Need regular medical checks to observe, prevent or eliminate possible side effects.
2. Pose a danger of being used improperly for purposes other than medical treatment under the surveillance of a professional mentioned in previous points.
Non-prescription drugs (over-the-counter drugs): can be purchased directly in a pharmacy under the guidance of a pharmacist; such drugs do not have very strong action in the human body. This group of drugs is divided into:
1. Type 1: highly risky and need special attention when used.
2. Type 2: moderately risky.
3. Type 3: relatively low risk. For example, vitamins or digestive aids.

Types of Licenses

If you wish to engage in sales of drugs, you will need one of the following licenses as set by Article 25 of the Pharmaceutical and Medical Device Law (hereinafter PMDL):

License for pharmacies.
License to retail drugs at stores. This license covers the sale of the non-prescription drugs at the stores. Such stores must have an appointed pharmacist or a person approved by the prefecture governor as the one with sufficient knowledge and experience in drug retail activities.
License to retail drugs by way of household distribution. This license covers the sale of non-prescription drugs door-to-door.
License for the wholesale of drugs.

If you wish to engage in the production and distribution of drugs in Japan as a pharmaceutical company, you will need one of the following licenses:

Manufacturing Business License that covers registration of a manufacturing business focusing on medical devices, drugs, quasi-drugs, and cosmetics. If you wish to import drugs produced in a foreign country to Japan, your company must be recognized as an accredited foreign manufacturer by the Ministry of Health, Labour and Welfare of Japan (hereinafter MHLW).
Marketing Business License. The term “marketing” is applied to a vast variety of activities, namely, retail, rental, handover of manufactured or imported drugs (beside those with active pharmaceutical ingredients). This is also applicable to drugs produced or imported through subcontractors. Only local Japan-based entities that have obtained the qualification of the Marketing Authorization Holder (hereinafter MAH) or the Designated Marketing Authorization Holder (hereinafter DMAH) has the right to import, distribute and sell medical products to the Japanese market. MAH/DMAH is necessary to ensure that the imported products are compliant with the Japanese regulations by assigning a local company to the foreign producer or importer that bears responsibility for those imported and distributed products.Marketing business license, in turn, has 7 options:
1. Type 1 drug marketing business license for prescription drugs.
2. Type 2 drug marketing business license for drugs other than prescription drugs.
3. Quasi-drug marketing business license.
4. Cosmetic drug marketing business license.
5. Type 1 medical device marketing business license for specially controlled medical devices.
6. Type 2 medical device marketing business license for controlled medical devices
7. Type 3 medical device marketing business license for general medical devices.

The Differences Between MAH and DMAH

Marketing Authorization Holder (MAH) with the marketing authorization license located in Japan. MAH has a Japan-based office and:

Controls products’ registration and as an applicant becomes the owner of the certification when it is granted.
Independently submits a supplementary application or an application for certification without the signature of a foreign manufacturer because MAH is the owner of the approval as stated above.

Designated Marketing Authorization Holder (DMAH) acts as MAH for companies that do not have a Japan-based office. A foreign company can assign DMAH that will handle all the quality-related duties in Japan and:

Act as a representative of a foreign company in matters regarding product registration. However, DMAHs are not the owners of the certification since the application is done by the foreign company who is the owner of the certification.
Help with the submission of an application, a supplement or a transfer application, which requires a signature from a foreign company.

Remember also that changing MAH is much more difficult than changing DMAH because DMAH holds rights for your license as well as possess some of the company’s inner information (see below). Moreover, transfer of the license is a costly operation. Many DMAHs are not willing to let go of the distribution rights when the product in question is profitable.

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Duties of MAH/DMAH

Managing and supervising manufacturers.
Managing registration and maintenance of the certifications.
Ensuring that manufacturing sites are in line with Quality Management System (hereinafter QSM) of Japan. More information on QSM can also be found here.
Handling Storage of products in the premises with the MAH license.
Handling product release to sales groups, distributors, etc.
Carrying out post-marketing surveillance.

Qualifications for MAH/DMAH

Entities that can act as MAH/DMAH are:

Distributors. This option suits companies without a Japan-based office. This is a cost-efficient method of market entry because DMAHs usually do not charge fees for registration but expect the sales profits to be shared. On the other hand, DMAH gains access to the company’s inner information that is subject to intellectual property protection, which is necessary for registration. For example, materials used in production and developments procedures.
Japan-based independent third party. By using a third-party DMAHs you avoid disclosing your company’s inner information as they do not handle production. Changing a third-party distributor is a little bit easier than DMAH. However, they are more pricey since your company will have to pay for the registration and all the associated upfront fees.
Subsidiary of a foreign medical company in Japan. This is a MAH option discussed above: the original producer and distributor has a Japan-based office to handle its business within the country. This is specifically easy and reasonable for middle or large companies that have already set a subsidiary in Japan, but for smaller companies, it may become time and money consuming.

Structure of MAH/DMAH

Any MAH or DMAH consists of three controllers that supervise manufacturing, release, and marketing of the products. They are:

General Manager who ensures compliance with the quality, safety, and marketing standards as well as handles all MAH/DMAH responsibilities. The requirements for a person in this position include:
1. A Bachelor’s Degree in science or engineering.
2. The minimum experience of 3 years in post-marketing safety and quality assurance in the pharmaceutical or medical device company.
Post-Marketing Safety Controller who ensures good vigilance practices (hereinafter GVP). This person is in charge of post-marketing and documentation control, information and training of personnel about safety as well as the development and implementation of safety improvements. Safety Controller should inform the Pharmaceutical and Medical Device Agency (hereinafter PDMA) about any dangerous, suspicious and other events and have documents ready for PDMA’s requests at all times. The person in this position must have at least 3 years of experience in the field.
Quality Assurance Controller who is in charge of good quality practices (hereinafter GQP). This person is responsible for compliance with the GQP and the good manufacturing practice (hereinafter GMP). The person employed in this position should have at least 3 years of experience in quality assurance control. Some of the duties of the quality assurance controller include:
1. Control of local offices, storages, releases, recalls and audits.
2. Handling of relevant reports and documents.
3. Drafting and application of the design and development plan (verification and validation, testing products efficacy, etc.).
4. Making sure that manufacturing facilities meet new GMP regulations.
5. Implementation and maintenance of the quality system.

Requirements and Accreditation

Anyone who aims to produce drugs, quasi-drugs, cosmetics or medical devices and export them to Japan has to receive Minister Accreditation. The basis of accreditation for foreign companies is the same as for the local Japanese companies. The accreditation takes into account:

Applicant. Application on behalf of foreign corporations can be made by assigning a director with representative authority or by marketing agent (MAH/DMAH).
Timing. The application should be submitted and approved before the start of operations.
Outline of structure and facilities of the manufacturing sites. The outline should follow the requirements set for the manufacturing business license in Japan. A list of structures and facilities must be provided with the application.
On-site surveys of the overseas manufacturer. Structures and facilities must pass the GMP compliance survey and be confirmed as such.

Other requirements for products set by the MHLW Minister include meeting the following criteria:

Efficacy.
Quality.
Safety.
Availability of valid marketing business license.
Availability of manufacturing business license or accreditation as a foreign manufacturer.

MHLW will review the products which a foreign company wished to market in Japan, including:

Name.
Ingredients.
Composition.
Dosage.
Indications.
Side effects (adverse reactions).

Application Procedure

Where to Apply?

At the Ministry of Health, Labour, and Welfare through the Pharmaceuticals and Medical Devices Agency (hereinafter PMDA).

Fees

Fees differ depending on the type of operations and produced drugs or devices. An application fee for a new medical product ranges from JPY 2 million to JPY 50 million.

How Long Does It Take To Obtain a License?

The standard time from filing an application to receiving approval for a new drug is approximately one year. However, waiting time can be shorter if the product in question is a generic one.

Validity Time

The license is valid for a period of 5 years and can be renewed every 5 years after the first approval.

Summary

In Japan production, distribution and sales of medical substances and devices are strictly regulated by the government and it is illegal to engage in any of those activities without the appropriate license of the approval from the prefectural government. There are many types of medical business licenses depending on the nature of a business and the type of products in question, but two most common options are to be approved as a Marketing Authorization Holder (MAH) or a Designated Marketing Authorization Holder (DMAH).

In order to pass the qualification for MAH or DMAH the company needs to meet production, quality and safety standards outlined by the law. Pharmaceutical and Medical Devices Agency of the Ministry of Health, Labor and Welfare will examine the production procedures and the products to confirm their conformity with the requirements.

Once the license is granted it is valid for 5 years and can be renewed every 5 years after that. Application fees may vary greatly depending on the type of drugs and devices.