Major drug makers AstraZeneca Plc and Pfizer Inc said on Friday they were upbeat about their prospects in the Japanese market, citing a sea change in the regulatory environment and mild generic competition.

International companies have been cheered by government moves to speed up the approval process in the world's second-biggest drug market, worth some $70 billion, where products on average reach market four years after they were first sold overseas.

Around a quarter of the top 100 selling drugs globally are still not sold here.

AstraZeneca development head John Patterson said the company would spend 10 billion yen ($90 million) in 2008 on trials and internal resources, roughly double 2006 levels.

It has also as put some 20 new medicines into clinical trials this year.

We would hope to put at least 20 into Japan first trials next year as well, he told a news conference.

Japan's Health Ministry has said it is determined to reduce the so-called drug lag. It is working to increase regulatory staff and has made changes in the types of data accepted. Pfizer's new head of research Martin Mackay also expressed optimism.

The regulatory world is changing in Japan and we are very well positioned to launch a host of compounds, he told an investors meeting in Hong Kong.

Generic competition is also limited in Japan, accounting for 17 percent of drugs prescribed compared with 63 percent in the United States and 59 percent in Britain.

Although the government has recently proposed measures to promote generics including changes to prescription forms, both branded and generic industry executives as well as analysts have said they expect growth to be slow.

Generic penetration is really mild here, so if a new drug debuts in Japan it has really strong sales prospects, said Masahiro Kato, head of AstraZeneca's Japan unit.

The unit accounts for around 6 percent of the company's overall revenues and expects double digit growth this business year on the back of strong sales of its cholesterol-lowering drug Crestor, originally developed by Shionogi & Co Ltd. (Reporting by Edwina Gibbs)

Pfizer Japan