Japan Medical Technology Market Overview - · PDF fileJapanese will grow to 30% in 2025 and 40% in 2055, ... Japan Medical Technology Market Overview ... categories for Japanese domestic

Information to Insight®

Confidential 2010

Junicon K.K.

Japan Medical Technology Market Overview


Japan Healthcare Market Introduction

Healthcare Expenditures

Patient Segments

Healthcare Infrastructure

Regulatory Environment

About Junicon

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Table of Contents



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Japan Healthcare Market Characteristics--Huge Capacity and High Utilization

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Strengths

• World’s 2nd largest market

• High standards of living

• Highest adult life expectancy (82, M=79, F=86)

• Highly developed, technologically advanced infrastructure

• Universal insurance coverage

• Excellent patient access to healthcare services

Weaknesses

• Rapidly aging population

• Low standardization of treatments

• Fragmented accreditation system with low continuing education requirement

• Shortages of doctors in certain specialties

• Slow device and reimbursement approval processes

• Biennial price revisions

• Convoluted multi-tier distribution

Opportunities

• World’s 2nd largest market

• High share of imported medical technology

• Rapidly aging population with growing needs for healthcare solutions

• High utilization of healthcare infrastructure

• Medical facilities eager to increase throughput, services and revenue

Threats

• National healthcare system financially burdened by growing elderly population

• Many hospitals struggle financially

Confidential2010

Information to Insight®Confidential2010


5

• Market Overview

- Japan’s healthcare system is designed for universal access and affordability

• Anyone can go to any facility without a referral

• Patient usually pays 30% of overall cost, with some differences by age group

- Japan’s historical fee-for-service system had the NHI (National Health Insurance) reimburse any medical intervention to the facility without strict oversight on need

• This has led to some excesses, including much longer average hospital lengths of stay (ALOS) than in the US or Western Europe

- Since 2003, a new reimbursement system called DPC (Diagnosis Procedure Combinations) is being implemented in the more advanced facilities

• More of a fixed reimbursement for a specific patient condition

• Intended to drive efficiency in treatments

• Started in 82 University and National hospitals

• 2010 hospitals that have adopted or are in the process of adopting DPC total 1,730 and account for 500,000 beds, over half of general hospital acute care beds


Japan Healthcare Market Introduction (continued)

• Economic Pressure

- Japan’s drawn-out financial doldrums have resulted in huge public debt levels

- There is strong pressure to reduce the burden of the National Health Insurance system (NHI)

• Biennial Price Revisions

- Foreign Reference Price (FRP) Adjustment: This policy enables MHLW to cap prices for existing products at 1.5 times the average price in foreign markets including the US, UK, France, Germany and others

• New products may be capped at <2 times the FAP

- Reasonable Zone (R-Zone) Adjustment: Based on a hospital market price survey conducted by MHLW, prices can be reduced if the margin between the list/reimbursement price and the actual hospital purchase price exceeds a ‘reasonable’ level, defined on an ongoing basis

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• Aging Society

- The population of Japan peaked in 2008 and the percent of elderly (65+) Japanese will grow to 30% in 2025 and 40% in 2055, up from 23% today

- The aging of society puts tremendous strain on the economics of the healthcare system, since healthcare for the elderly costs more per capita than for the young

• Healthcare expenditures for the 20% of the population aged 65 and older already account for 40% of total expenditures

- Caring for the chronic healthcare needs of the elderly is going to be critically important for Japan’s healthcare system and the society in general

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• Changing Role of the Patient

- Japanese patients are known for their high level of compliance and respect for medical professionals

- Now, increasing patient awareness and access to information makes them important contributors to the treatment decision

• There is no such thing as the US-style of direct-to-patient marketing; the Internet is the main source of information for patients and family members

• The days of passive patient acceptance are slowly ending

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Japan is the second largest market for medical technology after the US

9

Source: MHLW 2008, Eucomed 2007, Junicon Estimates

Europe: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom

Japan11%

US45%

Europe33%

ROW12%

$32B$35B

$134B

$99B

2007 Worldwide Medical Technology Company Sales = $300B


Japan Medical Technology Market Overview

• Market Overview

- Japan’s market for medical technology is $32B, second only to the US market

- We expect the market to grow at a rate of 5% despite intensifying downward price pressure

• Strong Imports

- Imports now account for over 45% of the Japanese medical technology market

• In 1997, the share of imports was 40% and rising (MHLW Annual Report)

• In 2003, the share of imports was roughly 45% (Junicon extrapolation referencing JETRO Marketing Guidebook 2004)

- Diagnostic Imaging Apparatus and Orthopaedic Implants are high growth segments for imports

• Domestic Manufacture

- Diagnostic Imaging Apparatus, Operating Instruments (endoscopes and surgical disposables), Artificial Implants and Home Medical Apparatus are the biggest categories for Japanese domestic medical technology companies

10


Healthcare Expenditures

11


Source: MHLW 2006, Junicon Estimates

Confidential2010

12

Japan’s National Health Insurance spends roughly $354B on healthcare

Technology9%

Ethical Drugs25%

Services66%

2006 Japan NHI Outlays (2009 $s) = $354B

$233B$32B

$89BNote: Figures are National Health Insurance (NHI) reimbursed items only. Elective procedures, health check-ups, disposable devices not separately reimbursed, OTC drugs and herbal medicines are not included


Source: MHLW, 2009

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Universal health insurance coverage is provided through a network of associations and government jurisdictions

Category System AdministrationNumber of People

Covered% of Population

(127.4M)

Employee Health Insurance

Association (Kempo) Managed Japan Health Insurance Association 36,312,000 28.5%Employee Health

InsuranceSociety Managed Health Insurance Societies (1,541) 30,860,000 24.2%

Seamen’s InsuranceSeamen’s Insurance National 157,000 0.1%

Mutual Aid Associations

National Public Employees Mutual Aid Associations (21)

9,374,000 7.4%Mutual Aid Associations Local Public Employees Mutual Aid Associations (55) 9,374,000 7.4%Mutual Aid Associations

Private School Staff Corporation (1)

9,374,000 7.4%

National Health Insurance (NHI)

Farmers, Self-Employed, Etc. NHI Associations (165) 3,843,000 3.0%National Health Insurance (NHI)

Farmers, Self-Employed & Retirees Formerly Under Employee Health Insurance Municipalities (1,804) 46,881,000 36.8%

Long Life Medical Care (supplement for those aged 75+)Long Life Medical Care (supplement for those aged 75+) Long Life Medical Care Affairs Association 13,075,000 10.3%

Overall InsuredOverall InsuredOverall Insured 140,502,000 110.3%


Source: OECD 2006

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Japan’s per capita healthcare expenditure is just less than the average for Europe

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Per Capita Healthcare Expenditure (2006)

$1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000

$6,714

$3,449

$3,371

$2,760

$2,614

$2,474

$2,458

United States

France

Germany

UK

Italy

Japan

Spain


Japan’s per capita healthcare expenditure is roughly 8% of GDP, slightly lower than the average for Europe

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National Healthcare Expenditure - % of GDP (2006)

$272.6B

$1,286.7B

$1,791.9B

Source: OECD 2006

3% 5% 8% 11% 13% 16%

15.3%

11.1%

10.6%

9.0%

8.4%

8.4%

8.2%

United States

France

Germany

Italy

UK

Spain

Japan


Source: MHLW 2005

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Healthcare costs increase dramatically with advancing age

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All Ages0-45-9

10-1415-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-7475-7980-84

85+

$1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000

$8,061

$6,721

$6,017

$5,005

$3,646

$2,912

$2,193

$1,743

$1,322

$1,122

$995

$892

$808

$648

$548

$630

$899

$1,712

$2,134

Japan Per Capita National Healthcare Expenditure (2005)


Patient Segments

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Source: MHLW 2008, CIA

Confidential2010

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The 65+ population in Japan is now at 23% and will reach 30% by 2025 and 40% by 2055

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

2055

25% 50% 75% 100%

40.5%

39.6%

38.2%

36.5%

33.7%

31.8%

30.5%

29.2%

26.9%

23.1%

20.0%

17.4%

14.6%

12.1%

51.1%

51.8%

52.8%

54.2%

56.8%

58.5%

59.5%

60.0%

61.2%

63.9%

66.3%

68.1%

69.5%

69.7%

8.4%

8.6%

9.0%

9.3%

9.5%

9.7%

10.0%

10.8%

11.8%

13.0%

13.7%

14.6%

16.0%

18.2%

0-14 yrs. 15-64 yrs. 65+ yrs. Population(1,000s)

123,611

125,570

126,926

127,768

127,176

125,430

122,735

119,270

115,224

110,679

105,695

100,443

95,152

89,930


Source: MHLW 2005

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Expenditures for circulatory disease--including heart disease and cerebrovascular disease--increase dramatically for those aged 65 and over

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25% 50% 75% 100%

22%

12%

30%

12%

12%

13%

9%

12%

8%

9%

8%

8%

10%

8% 7%

42%

47%

35%

Overall

<65 yrs.

65+ yrs.

Circulatory Neoplasia Respiratory Genitourinary Mental & Behavioral Musculoskeletal Endocrine Others

Japan Per Capita Healthcare Expenditure by Disease Category (2005)


Source: MHLW 2008

Confidential2010

Annual Incidence of Malignant Neoplasia in Japan (2005)

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BreastColorectalStomach

Trachea, Bronchus & LungUterus

Liver & Intrahepatic Bile DuctsPancreas

Gallbladder & Other Billiary TractOvary

Malignant LymphomaThyroid

Lymphoid, Hematopoietic & Related TissueSkin

BladderLeukemia

Oral CavityOesophagus

Central Nervous SystemMultiple Myeloma

Other

0 60,000

24,9892,1712,5672,6783,4983,8323,8584,3424,8847,0937,3248,3049,39911,69113,465

25,42425,617

37,03544,83450,695

Female Total = 285,240 Male Total = 390,835

StomachColorectal

Trachea, Bronchus & LungProstate

Liver & Intrahepatic Bile DuctsOesophagus

PancreasBladder

Lymphoid, Hematopoietic & Related TissueMalignant Lymphoma

Gallbladder & Other Billiary TractOral CavityLeukemia

SkinPharynx

Central Nervous SystemMultiple Myeloma

ThyroidOther

0 90,000

23,4542,1262,2422,4963,9034,7985,2007,4179,2379,6679,75812,61913,10814,81828,72942,997

58,26459,900

80,102


Source: MHLW 2008

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Malignant Neoplasia and Circulatory Diseases are the leading causes of death in Japan

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Infectious & Parasitic Diseases2%

Malignant Neoplasia30%

Circulatory Diseases30% Respiratory Diseases

15%

Digestive Diseases4%

Genitourinary Diseases3%

External Causes7%

Others10%

Leading Causes of Death in Japan (2007)


Source: MHLW 2008

Confidential2010

Cause of Death in Japan by Type of Malignant Neoplasia (2007)

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ColorectalTrachea, Bronchus & Lung

StomachPancreas

BreastLiver & Intrahepatic Bile Ducts

Gallbladder & Other Billiary TractUterusOvary

Malignant LymphomaLeukemia

Lymphoid, Hematopoietic & Related TissueBladder

Lip, Oral Cavity & PharynxOesophagus

Central Nervous SystemSkin

LarynxOther

0 20,000

10,203806327011,7691,7891,9032,0363,0513,9244,4675,622

8,92211,29911,32311,605

17,45417,92319,013


Trachea, Bronchus & Lung

Stomach

Colorectal

Liver & Intrahepatic Bile Ducts

Pancreas

Oesophagus

Prostate

Gallbladder & Other Billiary Tract

Malignant Lymphoma

Lip, Oral Cavity & Pharynx

Leukemia

Bladder

Lymphoid, Hematopoietic & Related Tissue

Larynx

Central Nervous System

Skin

Breast

Other

0 50,000

12,882

91

609

909

949

2,032

4,271

4,556

4,601

5,235

7,919

9,786

9,900

13,029

22,300

22,846

33,143

47,685


Source: MHLW 2008

Confidential2010

Cause of Death in Japan by Type of Circulatory Disease (2007)

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Cerebral Infarction

Heart Failure

Acute Myocardial Infarction

Intracerebral Hemorrhage

Other Ischemic Heart Disease

Cardiac Arrhythmias & Conduction Disorders

Subarachnoid Hemorrhage

Aortic Aneurysm & Dissection

Chronic Nonrheumatic Endocardial Disease

Hypertensive Heart & Renal Disease

Other Heart Disease

Other Cerebrovascular

Chronic Rheumatic Heart Disease

Other Hypertensive Disease

Cardiomyopathy

Other

0 50,000

3,365

1,465

1,569

1,696

1,836

2,024

2,252

5,439

5,534

8,894

10,993

14,264

14,732

19,853

36,715

40,587


Cerebral Infarction

Acute Myocardial Infarction

Heart Failure

Intracerebral Hemorrhage

Other Ischemic Heart Disease

Cardiac Arrhythmias & Conduction Disorders

Aortic Aneurysm & Dissection

Subarachnoid Hemorrhage

Chronic Nonrheumatic Endocardial Disease

Other Heart Disease

Cardiomyopathy

Other Cerebrovascular

Hypertensive Heart & Renal Disease

Other Hypertensive Disease

Chronic Rheumatic Heart Disease

Other

0 40,000

3,001

735

967

1,356

1,580

2,082

2,329

2,635

5,349

6,862

10,728

17,096

18,403

23,558

23,927

35,660


Source: MHLW 2004, Junicon EstimatesConfidential2010

The most common procedures in Japan are Orthopaedic and GI Surgery

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Orthopaedic

GI & Esophageal

OB/GYN

Urology

Vascular

Neurosurgery

Pulmonary

Cardiovascular

Transplants

600,000 1,200,000 1,800,000 2,400,000 3,000,000

22,982

65,606

210,106

228,826

346,963

486,278

1,261,805

2,324,717

2,854,406

Surgical Procedure Reimbursement Cases in Japan (2004)

Note: MHLW numbers are procedure reimbursements through Social Insurance for the month of June, 2004. (There can be multiple reimbursement codes for one procedure.) To these, Junicon applied a multiplier of 1.6 for procedures outside of Social Insurance and multiplied by 12 months


Healthcare Infrastructure

25


Source: MHLW, AHA, Walnut HER

Confidential2010

Japan has more general hospitals than any Western country

26

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000

7,714

4,927

3,533

2,820

1,615

1,435

846

Japan

US

France

Germany

Italy

UK

Spain

Number of Hospitals in Key Countries


Source: MHLW 2008

Confidential2010

Most Japanese hospitals are designated as not-for-profit medical corporations

27

National3%

Other Public15%

Insurance1% University

1%Corporations

65%

Individuals5%

Others9%

Japanese Hospitals by Management Type

Internal MedicineOrthopaedic Surgery

General SurgeryRehabilitation

CardiologyGastroenterology

RadiologyPediatrics, Ped. Surgery

DermatologyUrology

AnaesthesiologyPulmonology

OphthalmologyNeurosurgery

OB/GYNNeurology

OtolaryngologyPsychology

Plastic SurgeryProctology

DentistryRheumatism

GI SurgeryCardiac Surgery

Oral SurgeryPulmonary Surgery

Psychosomatic MedicineAllergy

DiabetologyNephrology

Breast SurgeryEmergency Medicine

HematologyOrthodontics

Pediatric Dentistry

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000

124131153186211

302388450

590665

8028939741,0561,1061,1861,198

1,5392,0352,088

2,2352,4722,498

2,4362,518

2,7943,008

3,2353,350

3,4903,621

4,9544,978

5,0857,089


Source: MHLW 2008

Confidential2010

Registered Departments in Japan’s 7,714 General Hospitals

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Source: MHLW 2006

Confidential2010

29

Japan has a very high number of general hospitals and general hospital beds. Overall hospital bed utilization is 82%

Hospital Bedsize # Facilities % Segments Beds

20-29 159 2.0%

3,423

1,366,916

30-39 375 4.8%3,423

1,366,916

40-49 607 7.7%3,423

1,366,916

50-99 2,282 29.0%

3,423

1,366,916

100-149 1,265 16.1%2,312

1,366,916

150-199 1,047 13.3%2,312

1,366,916

200-299 818 10.4%

1,703

1,366,916

300-399 591 7.5% 1,703

1,366,916

400-499 294 3.7%

1,703

1,366,916

500-599 169 2.1%

432

1,366,916

600-699 113 1.4%

432

1,366,916

700-799 53 0.7% 432

1,366,916

800-899 31 0.4%

432

1,366,916

900+ 66 0.8%

432

1,366,916Total 7,870 100.0% 7,870 1,366,916


Source: MHLW 2006

Confidential2010

30

Types of Beds in General Hospitals in Japan

Type of ICU # of ICU Beds % of Total General Hospital Beds

ICU 5,453 0.40%

Neonatal ICU 2,341 0.17%

Perinatal ICU 473 0.03%

Severe Burn Unit 63 0.00%

Radiation Therapy Unit 271 0.02%

Total 8,601 0.63%

General Hospital Bed Designation # of Beds % of Total General Hospital Beds

Psychiatric 92,857 6.8%

Infectious Diseases 1,779 0.1%

Tuberculosis 11,036 0.8%

Long-Term Care 350,230 25.6%

General 911,014 66.6%

Total 1,366,916 100.0%


Source: MHLW 2006

Confidential2010

The average length of stay (ALOS) in Japanese hospitals is much longer than in the US and Western Europe

31

ALOS in General Hospital Beds

5 10 15 20

19.2 days

3.5 days

6.5 days

Japan

United States

Western Europe


Source: MHLW 2008

Confidential2010

In addition to the hospitals, Japan has 166,862 clinics, defined as medical institutions with fewer than 20 beds

32

Medical Clinics (99,083)59%

Dental Clinics (67,779)41%

Clinics in Japan: 166,862

No Beds (87,583)88%1-9 Beds (4,026)

4%

10-19 Beds (7,474)8%

Medical Clinics: 99,083

Internal MedicinePediatrics

GastroenterologyGeneral Surgery

CardiologyOrthopaedic Surgery

RehabilitationDermatology

OphthalmologyPulmonology

AllergyOB/GYN

OtolaryngologyPsychologyRadiology

RheumatismUrology

ProctologyPsychosomatic Medicine

NeurologyPlastic Surgery

AnaesthesiologyGI Surgery

DiabetologyDentistry

NeurosurgeryNephrology

Breast SurgeryPediatric SurgeryCardiac Surgery

HematologyPediatric Dentistry

Oral SurgeryPulmonary Surgery

OrthodonticsEmergency Medicine

10,000 20,000 30,000 40,000 50,000 60,000 70,000

301231451681713143233333648731,5621,5941,9082,2672,2712,8413,3853,7753,5413,8854,044

4,9705,6295,8836,0846,300

7,7798,403

12,43612,56612,92912,963

15,28919,108

22,50363,083


Source: MHLW 2008

Confidential2010

Listed Specialties in Japan’s 99,083 Medical Clinics

33


Source: MHLW 2008

Confidential2010

Installed Base of Diagnostic Equipment

34

MammographyRadioisotope Scintigram SPECT PET PET CT Multi-Slice CT Other CT MRI 1.5T+ MRI <1.5T

Installed Units

General Hospitals

2,548 1,552 1,326 162 194 4,450 2,671 2,401 1,484

Installed Units

Medical Clinics

1,244 25 11 37 73 1,510 3,369 410 1,157Installed Units

Total 3,792 1,577 1,337 199 267 5,960 6,040 2,811 2,641


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Common Medical Checkup Procedures (2008)

ProcedureFacilities PerformingFacilities PerformingFacilities Performing Annual Number of ProceduresAnnual Number of ProceduresAnnual Number of Procedures

ProcedureGeneral Hospitals Medical Clinics Total General Hospitals Medical Clinics Total

Bone Mineral Densitometry 4,728 19,244 23,972 2,460,902 5,775,974 8,236,876

Tracheobronchoscopy 1,542 213 1,755 305,894 33,792 339,686

Gastroscopy 5,439 16,533 21,972 10,110,797 7,261,344 17,372,141

Colonoscopy 4,421 6,559 10,980 3,901,152 1,901,683 5,802,835

Sequential Angiography 1,836 138 1,974 1,735,450 47,002 1,782,452

Mammography 2,527 1,115 3,642 3,666,202 3,619,738 7,285,940

Radioisotope Scintigram 1,183 23 1,206 1,883,021 15,648 1,898,669

PET 109 27 136 89,069 50,957 140,026

PET CT 160 47 207 404,851 163,699 568,550

Multi-Slice CT 3,866 1,507 5,373 32,627,539 2,384,294 35,011,833

Other CT 2,825 3,380 6,205 5,322,758 2,456,794 7,779,552

MRI 1.5T+ 1,983 379 2,362 12,833,818 1,631,942 14,465,760

MRI <1.5T 1,567 1,158 2,725 3,354,106 2,788,474 6,142,580

3D Image Processing 1,684 609 2,293 2,972,602 988,762 3,961,364

Source: MHLW September, 2008 data multiplied by 1.6 to account for procedures in the population not enrolled in NHI and multiplied by 12 months


Other Japanese Healthcare Infrastructure

36

• Elderly Care Facilities Accepting Public Insurance (2005)

- Facilities: 3,278

- Beds: 299,769

- These are in addition to general hospital Long-Term Care beds: 350,230

• Home Visit Nurse Stations (2009)

- Registered Home Visit Nurse Stations accepting insurance: 5,924

- Many hospitals and clinics also have home visit nursing services under insurance

- There are also for-profit companies offering self-pay home nursing services

• Doctors

- There were 179,366 doctors working in general hospitals and 117, 567 doctors working in medical clinics in 2008, with some doctors working in both

• 2.2 doctors per 1,000 population, compared to 2.5 in the US, where there are fewer hospitals and hospital beds

• This ratio varies widely by region

Source: MHLW 2008, 2005


Other Japanese Healthcare Infrastructure (continued)

37

• Nurses

- Registered Nurses: 811,972

- Assistant Nurses: 382,149

- Public Health Nurses: 40,191

- Midwives: 25,775

• Pharmacists

- 234,447

• Laboratorians

- Licensed Clinical Laboratory Technologists: 54,753 and Assistants: 831

• Dental Professionals

- Dentists: 97,198

- Hygienists: 86,939

- Technicians: 35,147

Source: MHLW 2006, 2008


Regulatory Environment

38


Source: MHLW

Confidential2010

39

The Ministry of Health, Labour and Welfare (MHLW) controls policy and regulatory oversight

Organization of the MHLWOrganization of the MHLWOrganization of the MHLW

Minister’s SecretariatMinister’s Secretariat Personnel, General Coordination, Finance, International Affairs, Health Sciences

Statistics & Information Dept. Policy Planning, Statistics

Health Policy BureauHealth Policy Bureau Medical Service, Med. Professions, Dental, Nursing, Economic Affairs, R&D, NHO

Health Service BureauHealth Service Bureau Specific Disease Control, TB/Infectious Disease, Environmental Health, Water

Pharmaceutical & Food Safety BureauPharmaceutical & Food Safety Bureau Safety, Compliance & Narcotics, Blood Products

Department of Food Safety Policy Planning & Communication, Standards & Evaluation, Inspection & Safety

Labour Standards BureauLabour Standards Bureau General Affairs, Inspection, Wages & Working Hours, Labour Insurance Levy

Industrial Safety & Health Dept. Policy Planning, Safety, Industrial Health, Chemical Hazards Control

Workers’ Compensation Dept. Workers’ Compensation Administration

Workers’ Life Dept. Policy Planning, Workers’ Life Division

Employment Security BureauEmployment Security Bureau General Affairs, Employment Policy, Development, Insurance

Employment Measures for Elderly & Persons with Disabilities Dept. Policy Planning, Elderly Workers’ Affairs, Disabled Workers’ Affairs

Human Resources Development BureauHuman Resources Development Bureau General Affairs, HR Development, Vocational Training, Overseas Cooperation

Equal Employment, Children & Families BureauEqual Employment, Children & Families Bureau General Affairs, Equal Employment Policy, Work & Family Harmonization

Social Welfare & War Victim’s Relief BureauSocial Welfare & War Victim’s Relief Bureau Assistance, Community Welfare, War Victims’ Relief

Dept. of Health & Welfare for Persons with Disabilities Policy Planning, Welfare Division, Mental Health & Welfare Division

Health and Welfare Bureau for the ElderlyHealth and Welfare Bureau for the Elderly Policy Planning, Long-Term Care Insurance, Health Planning

Health Insurance BureauHealth Insurance Bureau General Affairs, Employee Health Insurance, NHI, Medical Economics

Pension BureauPension Bureau General Affairs, Pension Division, Corporate & National Pension Fund Division

Director-General for Policy Planning & EvaluationDirector-General for Policy Planning & Evaluation Counsellor, Counsellor for Policy Evaluation


40

Pharmaceuticals and Medical Devices Agency (PMDA)

• PMDA was established in April, 2004 as an independent administrative institution working with the Ministry of Health, Labour and Welfare (MHLW). It has three areas of service:

- Relief Services for Adverse Health Effects

• Financial benefits and assistance for those who have suffered health damages resulting from adverse drug reactions and infections from biological products

- Reviews and Related Services

• Approval reviews of pharmaceuticals and medical devices based on the Pharmaceutical Affairs Law (PAL) for MHLW

• Guidance relating to clinical trials

• Inspection of manufacturing facilities, processes and quality management systems

- Post-Marketing Safety Oversight

• Collection and analysis of information related to the quality, efficacy and safety of pharmaceuticals and medical devices

• Consultations with consumers

• Guidance to Marketing Authorization Holders to enhance safety of pharmaceuticals and medical devices


Kyoka: Entity and Facility Requirements

• Since April, 2005, approval (Kyoka) is required to market, rather than import a product. The distributor or manufacturer in Japan becomes the Marketing Authorization Holder (MAH)

• Foreign firms can approach the market either by establishing a Japanese subsidiary or by appointing a local distributor as their MAH

• To obtain and maintain the Kyoka license, the entity must undergo a review of its personnel in Japan, and its facilities and manufacturing practices in Japan and overseas

- Overseas facility registration and ISO 9000 GMP compliance

• Manufacturing sites, sterilization facilities, distribution centers

- Japan facility registration and ISO 9000 GMP compliance

• Receiving warehousing and labeling operations are treated as manufacturing

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Shonin: Device Approval Requirements

• Japan has a tiered system of classification based on risk level. For product approval (Shonin), the stringency of the requirements is determined by the Class of the device

• New devices are treated separately, as all require product approval with supporting clinical data regardless of Class

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Class Summary Technical Document (STED) Submission

Approval

Class I

General Medical DevicesPre-Market Submission to PMDA Acknowledgement Only

Class II

Specified Controlled Medical Devices

Pre-Market Certification to a Registered Certification Body

Pre-Market Certificate Issued by Registered Certification Body

Class II

Controlled Medical Devices

Pre-Market Approval Application & Registration Dossier to PMDA

PMDA or Prefectural Audit of Quality Management System, Pre-Market Approval

Issued by MHLW

Class III

Highly Controlled Medical Devices

Some significant risk to the patient, such as imaging equipment and orthopaedic

implants


Issued by MHLW

Class IV

Highly Controlled Medical Devices

Directly life-sustaining implantable devices, such as pacemakers and heart valves


Issued by MHLW


Once approved, medical devices are submitted to the Health Insurance Bureau of the MHLW for reimbursement determination

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Class Categorization

Class A• Devices are not separately reimbursed; NHI pays nothing

• Facilities must pay for these devices out of overhead

Class B• Devices are reimbursed at a set level based on the functional category

• Reimbursement level is reviewed and subject to biennial price reductions

Class C• New reimbursement level due to new functionality or added value to Class B devices

• Reimbursement level can be based on costs of production and other factors, but is usually limited to the foreign reference price multiplier

Class F • Innovative and risky devices that are reimbursed in a unique fashion


How Reimbursement Pricing is Set

• In applying for reimbursement, a device company can accept the “me-too” reimbursement level for similar products, or try for a new category

- If a new category, the price will usually be evaluated on a cost-plus basis and limited to 1.5 the average price in the US, UK, Germany and France and others

- New category approvals are harder to get and take longer to receive

• In addition to the device Material Cost, there is a Technical Fee or Doctor’s Fee

• MHLW reviews and may reduce reimbursement prices on all existing functional categories every two years on the basis of:

- FRP: Foreign Reference Pricing

- R-Zone: Reasonable margin between reimbursement price and purchase price

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Device Pricing

• Pricing of devices in Japan is closely linked to the level at which the National Health Insurance (NHI) will reimburse

- Facilities are not keen to purchase devices as part of overhead expense

- Facilities pocket the difference between the reimbursement price and their own purchase price

- Sales price at the MAH level will be a certain percent of the reimbursement price, probably in the 70-80% range depending on the type of device and complexity of distribution

• Under NHI reimbursement, facilities earn revenue through the Technical Fee and the difference between the reimbursement price and actual purchase price of the device

• After the Shonin, business can be conducted without NHI reimbursement in the private pay market

• In most cases, Kongo Shinryo, or combined therapy--when part of the therapy is approved for reimbursement and part is not--disqualifies the entire therapy from any reimbursement

- Therefore, an unreimbursed device is not viable in the NHI market

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46

Distribution

• The MAH (subsidiary or appointed distributor) will typically sell through a network of distributors

- National Distributors

- Sub-Distributors

- Local Dealers

• Device Distributors and Dealers

- There are roughly 2,500 device distributors and dealers in Japan, down from roughly 7,000 in the 1980s

- The MAH may use a national distributor and 1 or 2 dealers per prefecture

- Dealer reps are often the most frequent point of contact to the doctors

• The MAH will also have in-house sales reps for detailing


About Junicon

47


Junicon has nearly 2 decades of experience with an exclusive focus on healthcare

• Junicon was founded in Japan in 1992

- Japan remains a cornerstone of our worldwide operations

• Junicon has focused on healthcare since our founding

- Healthcare is not one of our departments or a separate service we offer. It is all we do

• In 2002, Junicon established a holding company in the US

- Umbrella for operating companies in the US, Europe and Japan

48


Junicon is a healthcare market research and strategy consulting boutique with global reach

• Internal capabilities in 7 languages

• Healthcare expertise

• Extensive network beyond our physical locations

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Junicon International Holdings, Inc.San Francisco, USA

Junicon K.K.Tokyo, Japan

Juniper Consulting Group, Inc.San Francisco, USA

Junicon Europe S.L.Barcelona, Spain


Since 1992, Junicon has developed expertise in a wide range of medical technology markets

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Cath Lab

ICU OR Specialty Clinic / Surgery Center

Central Processing

Hospital Wards /

Recovery

Long Term Care / Home Health

Medical Imaging

Diagnostic Laboratory

Disposable Equipment

Capital Equipment

Implantable Devices

Electronic Drug Delivery

Wound Closure, Drainage, Care

Vascular Access (CVCs, PICCS, PACs, Ports)

Surgical Tools

Patient Monitoring Systems Ventilators

Stents

(Coronary and

Peripheral)

Vena Cava Filters

MRI

Angiography

Kits

Balloons

Guidewires

Tension-free meshes and slings

Mitral /

Aortic valves

Sterilization Systems

Wound Care Infusion Equipment

Dialysis Equipment

Syringes

Tubes, Catheters

Pacemakers and ICDs Orthopedic Implants

Intra-Ocular Lenses

Endoscopes Microbiology

Analyzers

Point-of-Care Diagnostics

Clinical Chemistry

Analyzers

Ultrasound

X-Ray

Automatic Endoscope Reprocessors

Trays

Labware

Reagents

Disinfectants

Test Strips

Glucose Monitors

Glucose Testing Strips

Defibriillators

Defibriillators

Ophthalmic Surgery Equip.

Dental Implants

Radiotherapy Equipment

Vascular

Radiology/CT

CT/PET

Medication Management and Patient IT Systems

Lenses Invasive and Non-Invasive Monitor Probes

Anesthesia Delivery Telemetry &

Low-end patient

monitors

Medical Furniture


Junicon enables clients to identify and maximize opportunities

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• Market Research

• Strategy Development

• Ongoing Support

Ongoing

Support

Pre-Launch

& Re-Launch Strategy

New Business

Feasibility & Development

Portfolio and

Franchise Strategy


Our programs are customized to meet client needs at every stage

52

Customized

Program Design


Junicon delivers value by transforming client and market information into actionable insight

53

• Vision

- To be the premier global market research, strategy & regulatory consulting services partner to our valued healthcare clients

• Mission

- Deliver client value by enhancing our clients’ ability to excel in worldwide markets

- Support our clients’ efforts to improve healthcare delivery

- Create an environment for employees to grow professionally in line with their interests and goals

- Continuously improve internal processes through effective collaboration and training

- Create shareholder value

- Dedicate a portion of our resources and expertise to improve opportunities for children around the world


Junicon Worldwide Principals

• Rob Claar

- Rob graduated from Yale University in 1987, after which he joined a Japanese consulting firm in Tokyo. While there, Rob conducted projects for various ministries of the government of Japan, as well as private sector research and consulting assignments in healthcare and high tech industries. In 1992 Rob founded Junicon K.K. in Tokyo, and in 1997, Junicon US in California. Rob currently lives in Japan and is fluent in English and Japanese.

• Jeff Cocagne

- Jeff earned an MBA from the University of Arizona and a Bachelor of Science degree in Finance from the University of Illinois. Since 1994, Jeff has accumulated a broad range of healthcare marketing research and consulting experience in diverse markets including medical equipment and devices, pharmaceuticals and biotechnology. Jeff is a founder of Junicon and the practice head of Junicon US.

• Stephan Eichholz

- Stephan has been active in European healthcare marketing research and consulting since 1996. Prior to joining Junicon, Stephan studied Economics, Political Science and Languages at Mainz University in Germany. He is fluent in German, English, Spanish and French and has extensive on-site project experience throughout Europe and the Americas. Stephan is a founder of Junicon and the practice head of Junicon Europe.

• Dave Taggart

- Dave is the Head of Junicon's Strategy Practice. Dave has worked in strategy consulting for more than 10 years and has delivered successful projects to a wide range of healthcare companies. His expertise also includes specialized economic litigation support and health-economics practices. Dave has a BA in Modern History from the University of Oxford and an MSc in International Relations from the London School of Economics.

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Junicon K.K. Project Management Team

• Approach

- Junicon’s goal is to provide maximum value by developing long-term partnerships with our clients.

• Rob Claar

- Rob graduated from Yale University in 1987, after which he joined a Japanese consulting firm in Tokyo. While there, Rob completed research projects for various ministries of the Government of Japan as well as private sector research and consulting assignments in healthcare and high tech industries. In 1992, Rob founded the predecessor of Junicon K.K. in Tokyo, and in 1997, Junicon US in California. Rob lives in Japan and is fluent in English and Japanese.

• Kayoko Mikumo

- Since 1999, Kayoko has managed healthcare marketing research and consulting projects with Junicon. She has moderated focus groups and conducted one-to-one interviews with a full range of medical professionals and patient groups. Kayoko is a specialist in assisting North American and European firms with their understanding of the Japanese market and working with local partners. Kayoko has spent over 7 years in the US, where she earned a BA in International Business from Wichita State University in 1993 and an MA in International Business and Trade from Grambling State University in 1996. Kayoko is fluent in Japanese and English.

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We look forward to putting our experience and enthusiasm to work for you

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PrincipalsWork collaboratively to deliver maximum client

value

EmployeesEnjoy a flexible

environment to grow professionally in line with their capabilities

and interests

JuniconConsistently delivers

Premium & PrincipledHealthcare

Market Research & Consulting Services

PREMIUM

SERVICES

PRINCIPLED

MI NDSET

Client ValueClients enjoy direct relationships

with one or more Junicon principals. Junicon values ongoing

client relationships based on mutual respect and high strategic

value

Knowledge NetworkJunicon’s focus on healthcare

enables clients to benefit from our deep industry knowledge. We

value the medical professionals in our worldwide research network as

stakeholders rather than data points. Our experience and

network enable us to consistently deliver premium project outcomes

Positive ImpactJunicon employees are

passionate about improving the human condition. We work

directly with industry leaders to help them develop the healthcare

technologies of tomorrow

Corporate GivingWe work hard and believe in making a reasonable profit as

long as the benefits to the client significantly outweigh our costs to deliver. To give back, we donate

5% of worldwide profit to improve opportunities for children around

the world


Junicon K.K., 2-22-5 Higashi Azabu, Minato-ku, Tokyo 106-0044

Tel: +81 (3) 5570-1800 Fax: +81 (3) 5570-0600

www.junicon.net

Thank you very much!

Documents

Japan Medical Technology Market Overview - · PDF fileJapanese will grow to 30% in 2025 and 40% in 2055, ... Japan Medical Technology Market Overview ... categories for Japanese domestic