Opportunities for Foreign Companies in Japan's Medical Sector

Back to Contents of Issue: June 2005

A Seminar Hosted by Ibaraki Prefecture, LINC Media & J@pan Inc.
by Eri Minagawa
According to the UN'S World Population Prospects White Paper 2000, 35.7 percent of the total population of Japan will be senior citizens by the year 2050, meaning that only 50% of Japanese will be of working age. As a result, many private research institutions such as McKinsey & Company Inc., Japan, are estimating that while the aging of Japan threatens the country's economy, it also opens the way for a projected ?4-trillion growth of the Japanese Healthcare Market over a five-year period between 2002 and 2007. In view of the above estimated projections, it goes without saying that there will be an ever-increasing demand for healthcare services. As observed by JETRO, the following three sectors in particular show signs of strong growth in Japan: Welfare Services; Medical, Health Management and Security Services; and Nursing Care Services. The first two sectors alone are expected to be worth ?6.7 trillion by 2010, which certainly means that businesses and entrepreneurs around the globe cannot afford to ignore the wealth of opportunities presented by the growth of healthcare services in Japan. In this regard, the Ibaraki Prefecture Government, LINC Media and J@pan Inc. held at the Imperial Hotel in Tokyo on March 25 a seminar for foreign managers and professionals from the medical and related industries. John Wocher, executive vice president of Kameda Medical Center, one of Japan's largest and most respected private hospitals, gave the keynote speech on Japan's healthcare industry. This was followed by a demonstration of the most cutting-edge cybernic technology used to make a hybrid assistive limb (HAL) by Professor Yoshiyuki Sankai, of Tsukuba University in Ibaraki. The large turnout was indicative of the extensive foreign interest in the health sector with professionals from various industries eagerly looking forward to the emerging opportunities that the second largest medical market in the world offers. In the 90s, many foreign medical companies worried that Japan's struggling economy would shrink demand for their products in the country. However, two trends have reversed and tipped the scales in their favor. The first of these trends is a growth in demand. As Japan's population grays, the need for high-quality, cost-effective medical equipment from abroad will continue to grow. Given that Japan's domestically manufactured medical equipment is among the most expensive in the world, the country has traditionally looked to foreign suppliers for innovative alternatives. The other trend resulted from the Japanese Government's deregulation of the medical sector in 2000. The Nation's Health Insurance System, which is overly burdened by the rapidly aging population, and its notoriously regulated medical market will no longer be sustainable, given the system's annual deficit of over US$7.7 billion since 1998. Deregulation reflects the government's realization that Japan needs a more efficient, more cost-effective and, hopefully, a more transparent healthcare system. Major reforms in the medical industry began in May 1998, when Japan decided to relax some of its product testing and approval regulations for imported medical devices. Under this initiative, it encouraged the acceptance of foreign clinical trial data and introduction of new, innovative, foreign medical products to raise cost efficiency and to improve the overall quality of health care. The time it takes to get reimbursed for medical products, in particular, high-tech devices, was shortened and insurance coverage under the National Health Insurance System was extended to some leading-edge equipment. In recent years, the Ministry of Health and Welfare (MHW) has also been reorganized, merging the departments for drug safety measures and general medical practices to establish a new Pharmaceutical and Medical Safety Bureau. This move separates the regulatory and industry promotion functions, thereby making the provision of medical products and services more efficient. The Japanese Government appears committed to continuous deregulatory and liberalization reforms of the healthcare industry (as stated in "The 3-year Program in Promoting Regulatory Reform in December 2002"), with the hope of creating a trickle-down effect, both direct and indirect, that will have a favorable impact on the overall economy and improve the quality of life. With the above trends reinforcing policy initiatives by the Government, the opportunities for foreign companies who can deliver cost-effective, innovative and state-of-the-art products and services are indeed abundant. This was further reiterated by John Wocher, in his presentation, "Implementing Global Trends in Healthcare - Where are the Business Opportunities?" One of Wocher's examples was in the area of risk management, where there are plenty of opportunities for malpractice reinsurance, ISO consulting, etc. Apart from deregulatory initiatives adopted at the central level, prefectural governments are also riding on the wave of opportunity and actively courting foreign investments in areas such as advanced bio-medical research facilities and sophisticated medical technologies by offering attractive incentives and tax structures. One such body is the Ibaraki Prefecture Government. Ibaraki Prefecture offers superior infrastructure and logistical advantages such as proximity to port facilities, easy access to Tokyo International Airport in Narita (80 percent of its products are exports) and Tokyo and other major markets in the Kanto region. Furthermore, it has a highly educated and trained workforce with an excellent academic research institution conducive to foreign medical companies who are looking to relocate or site their facilities in Japan. (For more information, go to http://www.pref.ibaraki.jp/bukyoku/seikan/kokuko/en/). With strong support from prefectural governments, foreign medical companies can expect a smooth transition and relocation process. JI Holding Your Own Events In a fast-paced city like Tokyo, it's hard to meet each and every potential client on a one-to-one basis. If your goal is meeting 20 new people a week, that averages out to at least 3 hours of your time per day, not to mention travel time. So how does one fast-forward towards achieving that goal? Very simply, attending or holding events is an effective way to do so. With the right speakers and targeted at a specific audience, events can significantly increase business opportunities for both host speakers and attendees. Events allow you to meet about 20 people, which percolates down to quality time talking with about 8 of them. Out of these, an average sales yield would be 2 or 3 good business leads. For companies, it is the most effective way to reach an audience and establish one's "presence" and competence. It also provides a forum for speakers to personally interact with the target audience, helping them to create a bond of trust and familiarity. All of the aforementioned benefits enhance one's corporate image, facilitate client development and retention, and ultimately create more revenue for businesses. The magazine spoke to Elizabeth Chee, Japan Inc. Communication's Events Planning Manager, about the merits of running events. JI: You just recently produced a seminar for the Ibaraki Prefecture Government? Chee: That's right. We had speakers from the academic, corporate and governmental sectors come together to present a joint medical forum to foreign managers who are interested in the business opportunities that Japan's medical industry, in particular Ibaraki Prefecture, has to offer. JI: How was the overall response and feedback from the audience? Chee: The overall feedback was very positive and just by looking at the number of attendees alone, we had an overwhelming response. We were able to attract a substantial qualified audience. The presentations were informative and the networking generated a lot of potential business tie-ups for participants. JI: How long has Japan Inc. been organizing such events and seminars? Chee: We have been doing it since 1996. We now have a strong image in the foreign community and are recognized for our ability to attract a qualified audience through our media. We also pride ourselves on consistent quality, timely topics and sterling presentations. JI: Do you just do logistics for events? Chee: No, we also help to find speakers that will be appropriate for the event. For this seminar, which is medical specific, we engaged speakers from the medical industry, preferably from non-competing sub-sectors, to give the audience a rounded and informative session. JI: So, everything is taken care of by your team once the client gives the green light? Chee: That's right. Once the client has given the go-ahead for the event or seminar, we will take care of all the logistics that include sourcing and confirmation of the venue and speakers, publicity to ensure attendance, staffing, rehearsal, setting-up of tables, gifts, etc., and an overall follow-up after the event to gather feedback from both the client and attendees. This is to allow for future service improvements and to address any immediate concerns. JI: How long does it take to organize an event such as the medical seminar? Chee: Depending on how soon the client gives us the green light, it ranges from two to eight weeks. JI: There are many events management companies here in Tokyo. What sets you apart? Chee: I would say the effectiveness of our media, our commitment to quality service, our knowledge of the Japanese market and the thought processes behind Japanese and foreign companies -- not to mention our qualified network, including prefectural governments. It initially took us a good three years to establish the first point of contact, after which the business just took off and we have been able to secure repeat business from various prefectures and corporations. JI: It is interesting to note that JIC, which has traditionally targeted the foreign community, is holding an event for a Japanese government body. Have you switched your focus? Chee: No. I would say that we have extended our services to the Japanese market as well. After all, our mission is to help the world understand and do business with Japan. In the past, most Japanese companies were interested in only doing business with their own counterparts, giving little or no attention to foreign companies. However, with the bursting of the bubble economy and various market changes, Japanese companies are looking beyond new domestic opportunities and seeking new markets, in particular, the gaishikei [foreign-affiliated companies] market. These companies, however, have no idea of how to approach foreign companies, due to a lack of contact with the key persons, the appropriate sales and marketing approach, language communications, etc. That's what Japan Inc is here for -- to bridge the gap between the two markets and in the process create a win-win situation for them. JI

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