Healthcare Sector

Situation in Japan

According to OECD statistics on health expenditure by country, the healthcare market in Japan ranks third in the world, following the United States and China. Market growth factors include the graying population and consequent increase of home-based care, and the rise of chronic diseases coming from changes in life style. With respect to the percentage of senior citizens aged 65 years or older, Japan ranks top in the world. A notable feature is that society is aging faster than that of the western nations, with it projected that seniors will make up about 40 percent of the population by 2050. Cancer, heart disease and other lifestyle diseases account for about 60 percent of deaths, and the number of deaths from cancer is increasing annually. Lifestyle related diseases account for about 30 percent of national healthcare expenditures. The number of such patients is forecasted to increase further with the surge in the elderly population. If this trend continues, it is expected that there will also be a rapid increase in the number of patients with lifestyle diseases in 2022 when the baby boomers start turning 75. The Japanese government positions the healthcare sector as a key industry, and is implementing various measures. In order to develop innovative drugs and medical devices, the Japan Agency for Medical Research and Development (AMED) was established in April 2015 for integrated management of R&D budgets. The development of drugs and medical devices is also promoted from the institutional side, including the introduction of a preferential treatment system for approval of products for regenerative medicine, drugs for rare diseases, and diagnostic reagents. On the other hand, soaring medical expenditure resulting from the growing elderly population is of issue. In order to curb healthcare expenses, the national government is working to further the use of generic drugs and is also advancing initiatives for preventive medicine, including vaccinations, regular health checkups and screening tests. Japan is also engaged in promoting the introduction of ICT in the health, medical, and long-term care sector with the aim of enhancing both quality and efficiency of health care, and is advancing measures such as establishing a medical information and collaboration network.

Regenerative medicine

Market size

Regenerative medicine market size: JPY 9 billion (2012)
Regenerative medicine surrounding industries market size: JPY 17 billion (2012)

Market growth potential

Regenerative medicine market size: JPY 95 billion (2020 forecast)
Regenerative medicine surrounding industries market size: JPY 95 billion (2020 forecast)
Pharmaceutical Affairs Act was amended and came into effect in November 2014 as the Act to Ensure the Quality, Efficacy and Safety of Drugs and Medical Devices (aka Pharmaceutical and Medical Device Act), which newly defines products for regenerative medicine, separate from drugs and medical devices. A system for conditional and time-limited approval of such products for regenerative medicine has also been introduced to facilitate early commercialization while ensuring safety. Through this system, products can be approved within the quickest period of time in the world.
Key points

The range of "products for regenerative medicine" has been defined as:
- Products derived from cultured or processed human cells
  1. to reconstruct, restore, or create human body structure and/or functions, or
  2. for use with the aim of treating or preventing disease
- Products for use in human cells for the purpose of genetic treatment.

Because products for regenerative medicine use human cells, a feature of these products is, in reflection of individual differences, a lack of uniformity in quality. A special system was thus introduced for quick, conditional and time-limited approval of these products if efficacy can be assumed and safety confirmed. The efficacy and safety of such products approved under this system must again be verified, with a reapplication for approval filed in principle within seven years.
To use such products, physicians and other relevant professionals must strive to provide appropriate explanation to the patients and receive their consent. As a post-marketing safety measure, with regard to products for regenerative medicine designated by the Minister of Health, Labour and Welfare, the business manufacturing and marketing the products must retain records for a long period of time, and medical institutions must record and keep information on the patients using the products.
Products for regenerative medicine come under health insurance from the stage of conditional and time-limited approval.

Advantages of setting up business in Tokyo

Tokyo is home to many research institutions that are studying regenerative medicine, including universities such as Keio University, Tokyo Women's Medical University, and Tokyo University, and the National Institute of Advanced Industrial Science and Technology. In order to partner up with or cooperate with such organizations, it will be very effective to establish a base in Tokyo.
Many relevant companies such as the headquarters of pharmaceutical companies are also gathered in Tokyo. The Forum for Innovative Regenerative Medicine (FIRM), an industry group, has an office in Nihombashi, close to Tokyo station. FIRM has a consultation desk that serves mainly to provide overseas companies with information on how to use the Japanese legal system and to facilitate business matchups between overseas firms and FIRM member companies in Japan. Tokyo has a very good environment for companies searching for the perfect business partner.

Sources:
　METI"Regenerative Medicine System Building and Business Development" (2014)
Jiho Inc. "Pharmaceutical Affairs Pamphlet 2015")
Ministry of Health, Labour and Welfare website

Clinical reagents

Market size

Clinical reagents market size JPY 533.5 billion (2013)

Market growth potential

Growth is projected in all areas due to the increasing elderly population and promotion of preventive medicine.
- Immunoassays: JPY 185.6 billion (2012) → JPY 211.7 billion (2018 forecast), 2.2% increase from 2012
- Biochemical tests: JPY 77.8 billion (2013) → JPY 79.5 billion (2019 forecast), 2.2% increase from 2013
- Blood tests: JPY 40.5 billion (2013) → JPY 43.1 billion (2019 forecast), 6.4% increase from 2013
- POC testing: JPY　102.7 billion (2013) → JPY 106.2 billion (2018 forecast), 3.4% increase from 2013
- Genetic testing: JPY 9 billion (2013) → JPY 9.8 billion (2018 forecast), 8.9% increase from 2013
- Pathology tests: JPY　6.5 billion (2013) → JPY 11.4 billion (2018 forecast), 75.4% increase from 2013
- Bacteria tests: JPY 21.4 billion (2013) → JPY 23.2 billion (2018 forecast), 8.4% increase from 2013
In March 2014, the Ministry of Health, Labour and Welfare announced their plan for collaboration between the national government and industry groups (FY 2014-2018), which sets down initiatives to speed up the process for approving in-vitro diagnostic reagents.
Projected growth areas
- By area of disease, for diabetes and heart failure, steady growth is projected for blood sample analysis to identify diagnostic markers that will enable understanding of disease progression.
- The Ministry of Health, Labour and Welfare has taken the policy of making some testing reagents^*1available for purchase at drugstores, and it is forecasted that the market will continue to expand.
- Personalized medicine is expected to spread, and with this, it is predicted that the development of "companion diagnostics," which examine in advance the efficacy of a drug in patient subpopulations, will progress.

Advantages of setting up business in Tokyo

For the in-vitro diagnostics market, in size by region, the market is concentrated around Tokyo, with Tokyo accounting for 16.3% of the market in Japan, and Tokyo and six surrounding prefectures accounting for 35.9%. Establishing a base in Tokyo can make it easy to access this market that makes up one-third of Japan's market.
As partnership and cooperation with pharmaceutical companies is indispensable for activities such as developing companion diagnostics, companies can gain an advantage by having an office in Tokyo, where many pharmaceutical companies have their headquarters.

Sources:
Japan Association of Clinical Reagents Industries website
Fuji Keizai "2014 Clinical Testing Market No. 1- No.3"
Nikkei NEEDS Industry Report "Medical Reagents" (2015)
Jiho Inc. "Pharmaceutical Affairs Pamphlet 2015"
Jiho Inc. "Training Text I for Staff Charged with Information on Clinical Reagents "

Healthcare IT

Market size: Healthcare information systems: JPY 374.3 billion (2013)

Market growth potential

Healthcare information systems:　JPY 420.4 billion (2020 forecast), 12.3% increase over 2013
Projected growth areas
- Electronic medical record systems are projected to grow 23.2% over 2013 to JPY 149 billion (2020 forecast) ... Potential demand in hospitals and clinics with 300 beds or less is anticipated. It is expected that systems using the cloud, which incur low initial costs, will be popular among small hospitals and clinics.
- Community healthcare coordination systems are projected to grow 66.7％ over 2013 to JPY 5 billion（2020 forecast）... Community comprehensive care is expected to advance, and it is forecasted that diffusion will start from rural areas.
- Remote healthcare systems are anticipated to be employed in healthcare requiring high precision, such as instructing surgical procedures in remote areas.
- Remote diagnostic imaging systems are projected to grow by a factor of 4.9 over 2013 to JPY 38.5 billion (2020 forecast)
  ... It is predicted that demand will increase due to reasons such as lack of specialists.

Advantages of setting up business in Tokyo

Japan's medical institutes are concentrated in Tokyo and the three surrounding prefectures (Kanagawa, Chiba, Saitama). From the perspective of marketing systems, and upgrading and maintaining software, etc., after sales, it can be said that it will be highly convenient to have a base in Tokyo to be close to customers.
- Number of medical facilities in Tokyo
  - Hospitals 646 (7.6%)^*2
  - General clinics 12,758 (12.7%)^*2
- Number of medical facilities in Tokyo and the 3 surrounding prefectures
  - Hospitals　1,609 (18.8%)^*2
  - General clinics　27,172 (27.0%)^*2
^*2Hospitals with 20 or more beds / clinics with 0-19 beds Number (percent of total number in Japan)
The national government is promoting projects to build patient data bases and cancer registration data bases, and from the perspective of collaboration with agencies such as the Pharmaceuticals and Medical Devices Agency (PMDA), which supervises this, and the collection of information, it will be effective to have a base in Tokyo where relevant agencies are located.

Sources:
Fuji Chimera Research Institute "Medical Solutions Market Survey Overview 2014", "Medical Solutions Market Survey Overview 2015"
Ministry of Health, Labour and Welfare "Health and Welfare Statistics Catalogue (FY 2014)
"Promotion of ICT in the Areas of Health, Medical, and Long-Term Care" (2014)