Overview
Japan Market Size for Medical Devices
Japan’s market for medical devices continues to be among the world’s largest. Given Japan’s aging population and the increasing number of patients with chronic and life-style diseases, the market is expected to continue to expand. The COVID-19 pandemic, which demonstrated the importance of innovative healthcare products, including the adoption of digital technologies, will help the market growth. Japan’s Ministry of Health, Labour and Welfare (“MHLW”) data show that the Japanese market for medical devices in 2021 totaled $40 billion. Fitch Solutions estimates that Japan’s medical device market will exhibit a compound annual growth rate (“CAGR”) of 5.5 percent from 2022 to 2027.
Many U.S. medical device companies – including larger companies such as GE Healthcare, Johnson & Johnson, Abbott, Edwards Lifesciences, Medtronic, Stryker, Zimmer, and 3M – have subsidiaries in Japan. The American Medical Devices and Diagnostics Manufacturers’ Association (“AMDD”), an industry association for Japanese subsidiaries of U.S.-based corporations engaged in the manufacture and sale medical devices and in-vitro diagnostics, currently has over 60 member companies in Japan. In addition, many U.S. medical devices are sold through Japanese importers and distributors. Based on CS Japan’s research, U.S. imports’ share of Japan’s medical device market is significantly higher than the percentage reflected in official statistics. CS Japan estimates that U.S. imports may account for as much as 60 percent of Japan’s medical device market, including production in Japan by U.S. companies.
While the market for U.S. medical devices in Japan remains strong, U.S. firms face challenges with reimbursement pricing due to GOJ efforts to contain overall healthcare costs that continue to increase given Japan’s aging population and low birthrate. Under these circumstances, the GOJ has taken various measures to cut healthcare spending. Concerning medical devices, one such measures is the Foreign Average Price (“FAP”) Rule. The FAP is the average list price of specific medical devices in the United States, the United Kingdom, France, Germany, and Australia. Since Japan implemented the FAP Rule in 2002, the GOJ has continued to revise application of the rule in order to most effectively reduce medical device reimbursement prices, including prices of innovative U.S. medical devices.
Leading Sub-Sectors
Digital Health
Under the Japanese government’s policy of extending healthy life expectancy and reducing medical costs, aggressive measures requiring health management and care are being deployed. The “Basic Policies for Economic and Fiscal Management and Reform 2022,” approved by the Cabinet in June 2022, clearly states the promotion of PHR, and technology-based measures (budgeting/subsidy payments/legal reform) are being promoted to tackle the ongoing agendas such as COVID-19 epidemic, declining birthrate, aging population, and ongoing labor shortage in medical/caregiver fields. In Japan, the 2022 revision of reimbursement for medical services has made online medical services permanent, while overseas, utilization of vital data, daily life data, and disease-specific digital technology during online medical services is being promoted. The need to link vital data to various services is also expected to grow continuously in Japan.
According to the Fuji Chimera Research Institute’s February 2022 report on Wearables/Healthcare Business Survey, increasing health awareness is progressing in the general public, and demand for health care devices/services is expanding. The acquisition of vital data through wearable devices and health management services using vital data are becoming more sophisticated, and an increasing number of companies are entering the platform business to promote “behavior change” by analyzing the collected information and elucidating the relationship between health and factors. The segment for “smart-ware” solutions that can help medical institutions evaluate a patient’s condition via smart-ware biometric information is expected to rise rapidly in the future. In the domestic market for wearable/healthcare-related devices, systems and services, demand for devices such as thermometers and pulse oximeters, which had grown due to special demand associated with the Covid-19 epidemic, has declined in reaction to that demand. On the other hand, smartwatches, smart glasses/HMDs for which BtoB AR/VR needs are increasing, and hearable devices that can acquire vital data in addition to listening to music are growing and driving market expansion.
Table: Major Japanese Domestic Wearable/Healthcare related Equipment, Service, Systems and Healthtech Market Size and Future Projections
Unit: USD $ Millions
Opportunities
In March 2021, Japan’s Office of Healthcare Policy of the Cabinet Secretariat concluded a survey identifying key diseases in Japan that may require high levels of medical devices and pharmaceuticals for remediation purposes. The survey identified the following diseases associated with high medical needs in Japan based on factors such as leading causes of death and those diseases that require support and long-term care: (1) malignant neoplasm; (2) diabetes; (3) cardiovascular disease; (4) Alzheimer’s and other dementia; (5) pneumonia; (6) kidney disease; and (7) frailty and sarcopenia, including weakness, fractures, and falls due to old age.
Japan’s medical device market remains heavily dependent on imports, especially sophisticated medical devices. The demand for advanced medical technologies is expected to increase as Japan has a fast-aging demographic profile. Japan’s relatively prosperous seniors have increasingly high expectations for improved quality of life in their later years. Opportunities in Japan exist for innovative new medical technologies and therapies that alleviate pain, complement lost functions, and improve quality of life, especially in the disease areas identified in the previously referenced survey. Specific medical devices that are likely to see increased sales potential are minimally invasive medical devices as well as medical technologies and diagnostics utilizing Internet of things (“IoT”) and Artificial Intelligence (“AI”) technologies. Other medical devices that will likely enjoy increased market opportunities are those associated with telemedicine, in-home care, self-care, and preventive care. This market is expected to expand in 2022 due to increased demand for new services such as online medical care and medication guidance, and firm demand for nursing care-related systems and services, supported by subsidies. The market for elderly care monitoring services and nursing care support systems is expected to grow steadily due to the need to ensure the safety and security of family members as the elderly population grows.
Demand for health tech will increase, utilizing devices and systems/services in a wide range of areas such as sleep, beauty, and sports. In addition, the collection/analysis of mental data is becoming possible with the development of AI, and the concept of “well-being”, a healthy lifestyle both physically and mentally, will permeate society.
U.S. medical device technology has been traditionally well-received in Japan because of its perceived high quality. However, Japan’s medical device market is sophisticated and mature with both well-established local and foreign medical device companies. As such, Japanese importers are conservative when selecting new medical devices and typically seek to import those devices that provide a significant improvement in clinical outcomes, reduce healthcare costs, have clearly differentiated capabilities, and are generally cost-effective.
Resources
Japanese Ministry of Health, Labor and Welfare (“MHLW”)
Medical Device Organizations: The Federation of Japan Pharmaceutical Wholesalers Association (“JPWA”)
Japan Bioindustry Association (“JBA”)
Prime Minister’s Office of Japan
Japan Generic Medicines Association (“JGA”)
The Japan Pharmaceutical Manufacturers Association (“JPMA”)
Medical Japan Pharmaceutical and Medical Device Agency (“PMDA”)
Pharmaceutical and Medical Device Regulatory Science Society of Japan (“PMRJ”; https://www.pmrj.jp/ )
Pharmaceutical Research and Manufacturers of America (“PhRMA”)
The Pharmaceutical Society of Japan (“PSJ”)
Annual Trade Events
CPhI Japan, April (Tokyo)
MEDTEC Japan, April (Tokyo)
International Technical Exhibition of Medical Imaging (ITEM), April (Yokohama)
INTERPHEX Week JAPAN, June (Tokyo)
International Modern Hospital Show (IMHS), July (Tokyo)
Bio Japan, October (Yokohama)
Commercial Service Japan
For additional information about Japan’s medical device business sector, please contact Commercial Service Japan (“CS Japan”) at Office.Tokyo@trade.gov, Mr. Hiroyuki Hanawa at Hiroyuki.Hanawa@trade.gov, or Ms. Akiko Sugiura at Akiko.Sugiura@trade.gov.