[Toward Establishing a Japanese Drug Discovery Ecosystem: The Role of Startups and a Model Tailored to Japan]

Establishing a robust drug discovery ecosystem is seen as a key priority for enhancing Japan's drug discovery capabilities. Globally, startups play a significant role in advancing drug discovery. The author's research demonstrated that startups have recently expanded their role to late-entry drug discovery, the area where large pharmaceutical companies traditionally had strength, while maintaining their contribution to first-in-target drug discovery. Despite the growing importance of startups, Japan has faced challenges in fostering successful drug discovery startups, falling particularly behind in leveraging modality technologies. The development of promising startups requires the establishment of a robust startup ecosystem, as seen in the U.S. and certain European countries. Japan's ecosystem for supporting drug discovery startups remains fragile due to factors such as low entrepreneurial activity, limited labor mobility, and insufficient investment capital. The author's research has revealed that in Japan's unlisted drug discovery startups, "being a corporate spin-off" and "having a leader in research and development with prior experience in corporate R&D" positively impact the startup's valuation and total funding amounts. In Japan, large pharmaceutical companies still account for the majority of new drug discoveries, with a wealth of promising drug discovery seeds and experienced R&D talent accumulated within these corporations. Facilitating the creation of corporate spin-offs that utilize unexploited seeds within large companies and promoting the transfer of corporate talent to startups could strengthen Japan's drug discovery ecosystem. This paper will also explore potential policy measures to encourage these developments.