Posts Tagged lack of funding
Posted by Darshana V. Nadkarni, Ph.D. in Biotech - Medical Device - Life Science - Healthcare on June 19, 2014
alRecently US medical device industry has faced some serious challenges due to lack of funding, strong regulatory hurdles, and lackluster job outlook. On the other hand, for the first time in many years, the major Japanese companies are focusing on revitalizing their Medtech industry. There is an interest and Government backing, from Japan, to invest in, and collaborate with US Medtech companies, incubators, and venture funds, many of them located in Silicon Valley. For Silicon Valley startups, this may represent a great opportunity. At the recent Wilson Sonsini Goodrich & Rosati Medical Device Conference in San Francisco, a panel of experts discussed the possibilities for collaboration and the challenges and opportunities US-Japan Medtech collaboration may represent.
Jack Moorman, Principal, Le Vaunt LLC, moderated the panel. Moorman opened the discussion by sharing some eye popping facts about Japanese medical device market. It was hit hard during tsunami but still it remains a force to be reckoned with on the world stage. This is a market that ranks 2nd highest in the world after US, pays for devices, nearly 100% of the population has coverage, and represents an aging population with greater medical needs. Japan accounts for 10% of the total global market and will likely continue to expand, as the percentage of people over the age of 65 rises to 36% by 2050, even as it experiences dire shortage of caregivers. Less than a 3rd of its GDP goes into healthcare, Japan imports more than it exports, and though it has held down costs to a large extent, a complex review and approval process makes it very hard to introduce new technologies. But all that is poised to change. Backed by Government, chief objective of NIH Japan now is to accelerate process for product approval.
Panelist Masazumi Ishii (“Masa”), Managing Director at AZCA Inc. has written about “dymystifying Japan” and he talked about cultural aspects that US companies need to understand when doing business in Japan. Although now rapidly changing, Japan is a highly homogeneous society, where 95% of the population consider themselves to be middle class. There is homogeneity in education and employment. Belonging to and identifying with a group is extremely important to the Japanese. “For instance, I would introduce myself as Masa Ishii of AZCA”, said Ishii. In Japan, political preferences are connected to ties to a school but are not divided along liberal or conservative lines. Also, women face many barriers in advancement in the work place. Japanese market traditionally has been impenetrable and very difficult to crack for the outsiders, often because outsiders lack the experience and skills in dealing with companies in Japan. However, Japan is undergoing a rapid cultural shift. For instance, the homogeneity is decreasing as the country is importing labor for South East Asia, as its own population is aging. Japanese Ministry of Education is trying to bring in 300,000 students from abroad. However, some things are harder to change than others. For instance, indirect style of Japanese communication is very hard to change. (I also offer global inclusion & diversity trainings to companies and focus on helping employees navigate cultural communication challenges between direct and indirect communication styles and this part of the presentation was very interesting).
Ishii also talked about the fact that Japan is emerging out from a long dark tunnel and now has a stable Government (after going through 7 Prime Ministers during last 10 years). The new Government is focused on fostering economic growth, supporting greater collaboration outside Japan, and Japanese businesses have a strong appetite to invest outside Japan. Japan is still the 3rd largest economy in the world. “Japan is not as open as many Japanese think, but it is not as closed as those outside Japan think”, said Ishii and its greater interest in opening up will be creating huge opportunities for US businesses.
Hajime Oshita, President and CEO, MedVentures Partners, Inc. manages investment fund in Japan with investment target of seed to early stage projects and start-ups in medical device arena. In 2009, Oshita stated new venture fund, INCJ or Innovation Network Corporation of Japan, mainly funded by the Government, with an aim to promote innovation and enhance the value of businesses in Japan. Medical device require precise manufacturing where Japanese companies excel, said Oshita. Oshita also presented a strong case that Japan is greatly interested in collaboration outside US and for new ideas, new technologies, and new business partners.
Kenneth McDonnell, General Manager, Business Development at Terumo Medical Corporation, began by sharing the history of Terumo, which was started in 1921, by a physician scientist, with an immediate aim to design and make superior thermometers and a larger goal to promote healthier living with superior medial technology . Terumo achieved almost $500M in growth, in 2013 and it focuses on three primary businesses, Cardiac & Vascular business, Blood Management business, and General Hospital Supply business. The company has undertaken a large global initiative for pre-filled syringes. Pre-filled syringes reduce drug mix-up errors and enhance safety and efficiency in healthcare. Japan has a robust economy, longest life expectancy, longest “health” life expectancy, and less chronic diseases. In fact, real issue for elderly in Japan is not healthcare, but care, said McDonnell. Over 5M people over the age of 65, live alone. The issue that is discussed is not so much about disease as a burden, but as a social responsibility. But even the picture in chronic diseases is changing, with rates of diabetes rising, among the Japanese. Cancers, particularly stomach, lung, GI and pancreatic cancers remain the largest causes of death. All Japanese are covered by health insurance and patient only has to pay 30% of the cost, with a cap based on salary. Japan has an excellent healthcare system but one that is going to be increasingly hard to sustain, with the aging population. At Terumo, “we don’t take the first step, but we are fast followers and interested in partnership opportunities”, said McDonnell.
It seems clearly that the rapidly changing environment in Japan, with greater interest in investing in new ideas and collaborations outside Japan, represents a great opportunity for US medical device businesses, brimming with new ideas and looking for capital. If they can effectively work through the cultural challenges, this synergy may open new doors and may create win-win synergy for US-Japan medical device industry.
“dymystifying Japan”, Blood Management business, Cardiac & Vascular business, diversity, General Hospital Supply business, global inclusion, global initiative for pre-filled syringes, Hajime Oshita, homogenous society, Inc., INCJ, indirect style of Japanese communication, Innovation Network Corporation of Japan, Jack Moorman, Japanese market traditionally has been impenetrable, Japanese Ministry of Education, Kenneth McDonnell, lack of funding, lackluster job outlook, Le Vaunt LLC, Managing Director at AZCA Inc., Masazumi Ishii (“Masa”), Medtech industry, MedVentures Partners, NIH Japan, population is aging, rapid cultural shift, regulatory hurdles, Silicon Valley, Terumo Medical Corporation, training, Wilson Sonsini Goodrich & Rosati Medical Device Conference in San Francisco
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