Digital Health Opportunities in Japan
Final report

This report was jointly financed by:

26 May 2021
Business Sweden Tokyo

1

Agenda● Executive summary● Background and objectives● Project approach and plan

● Healthcare sector in Japan● Digitalisation opportunities and prioritisation● Digital health stakeholder mapping● Business model analysis● Conclusions – Road map for NIH in Japan● Contact information● Appendix− Summary of sector and their priorities#%$#%$#

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Executive summary
As one of the largest healthcare markets globally, Japan presents a “can’t-miss” opportunity for Nordic digital health startups● Japan is the 3rd largest economy and healthcare market in the world● Medical expenditures have increased over 30% since 2000 and now constitute 11% of GDP● With a population of approximately 120 million people, of which over 30% are projected to be 60 years or older within a decade, Japan’s healthcare
market will continue to grow – projected CAGR 4% from 2018 to 2024
Lagging with regards to digitalisation, both the private and public sectors are looking to implement digital health solutions● Digitalisation of Japan’s healthcare sector lags other OECD countries – use of electronic medical records hovers between 30% to 40% in Japan
compared to 100% in most Nordic countries● Our interviews with Japanese companies, which included pharmaceutical, medical device, IT, and financial firms, revealed that Japanese companies
are mainly interested in complementary diagnostics and other digital services that add value to their core offerings● Private sector has an appetite for digital healthcare solutions – healthcare/pharmaceutical was a top-10 most funded sector by Japanese VC firms− Japan is interested in the Nordic offering as demonstrated by recent partnerships between Nordic startups and Japanese partners● The Government of Japan is implementing multiple digitalisation initiatives – Society 5.0, Digital Agency, My Number, etc.
Based on the findings presented in this study, we propose a four-step approach to introduce digital health startups to Japan● Engage with prioritised partners in Nordic, e.g. business regions and local ecosystems that have close contact with startups● Recruit Nordic startups through regional and local partners● Engage with Japanese stakeholders, including pharmaceutical, medical device, IT, and financial companies and innovation ecosystems● Jointly facilitate digital health activities; Nordic-Japan Digital Healthcare Summit and Nordic Japan Healthcare Investor Meeting#%$#%$#

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Agenda● Executive summary● Background and objectives● Project approach and project plan

● Healthcare sector in Japan● Digitalisation opportunities and prioritisation● Digital health stakeholder mapping● Business model analysis● Conclusions – Road map for NIH in Japan● Contact information● Appendix− Summary of sector and their priorities#%$#%$#

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Identification of key opportunities areas within digital health for Nordic startups in
Japan
SITUATION● Nordic Innovation House (NIH)
opened in Japan in 2020

● Healthcare has been identified as anarea of interest by the five Nordic
TPOs – with a particular focus on
digital healthtechnology● NIH wishes to further define its focus
within digital healthcare technology inJapan to better understand business
opportunities for Nordic startups andscale-ups in this field in Japan● Business Sweden, Tokyo has
substantial experience with supporting
Swedish healthcare businesses inJapan, including multiple activities
focusing on digital healthcare

COMPLICATION● Japan has a comprehensive compulsory
healthcare insurance system that pays forhealthcare in combination with patient copayments● Japan’s healthcare system is focused onproviding treatments in clinical settings andis making advancements in prevention withan annual health check-up system for all
residents 40 years or older● Japan is lagging in use of digital technology inhealthcare, partly due to lack ofreimbursement● The main complications facing emerging
digital healthcare businesses in Japan are
related to
1. Lack of clarity on business models due toambiguity concerning government
policies and reimbursement
2. Uncertainty regarding suitable partners
for Nordic startups in JapanOBJECTIVES● Understand digital healthcare priorities andfunding road map in Japan● Understand challenges and accelerators toincreased use of digital solutions byhealthcare providers● Identify key opportunities within digital
healthcare in Japan with focus on:− Pharmaceutical companies− Medical device companies− IT sector− Financial investors

KEY QUESTIONS● What are the highest potential opportunities
for Nordic digital healthcare technology
companies to focus on in Japan?
● How to pitch the opportunities to Nordic
startups and scale-ups?

#%$#%$#

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Agenda● Executive summary● Background and objectives● Project approach and plan

● Healthcare sector in Japan● Digitalisation opportunities and prioritisation● Digital health stakeholder mapping● Business model analysis● Conclusions – Road map for NIH in Japan● Contact information● Appendix− Summary of sector and their priorities#%$#%$#

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Key questions in multi-sector analysis of key opportunities areas within digital
health for Nordic companies in Japan
Key question

Areas of investigation

1
Public sector
What public funding is available today andwhat can be expected in the next 5 years?

Examples of sub-levers•

What digital health products are currently supported byreimbursement or other public funds?

•

What are the key public sector stakeholder for the digitalisation ofhealthcare in Japan?

•

What are the priorities and concerns of the different public sector
stakeholders?

•

How can we expect public funding for digital healthcare to evolve in
the next five years?

•

What digital health products are currently in use?

•

What are the digital healthcare priorities and concerns of healthcare
providers?

Expected output from analysis

Public sector roadmap

2
Healthcare providers

What is the ideal offer
and fit in Japan of Nordic
digital health solutions?

What do healthcare providers value andwhich are the unmet needs?

3
Private sector
What products and business models
are in demand?

4
Road map for NIH
What would it take to win in Japan?

•

Identify companies within pharmaceutical, medical devices, IT andfinancial sector that prioritise digital healthcare•

What are the focus areas of the these companies?

•

What type of products and collaboration projects are of interest?

•

What business models are attractive?

•

What digital health technology products will be most attractive to theJapanese market?

•

What business models and what partners will be key to success?

•How should these opportunities be pitched to Nordic digital healthcompanies?

Assessment of business models, timelines tolaunch and market potential

Road map, Nordic digital tech in Japan#%$#%$#

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PROJECT APPROACH

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Comprehensive framework for end-to-end delivery of assignment in four steps
ASSESSMENT OF MARKET POTENTIAL, APPROX. 8 WEEKS

Project startPre-selection of markets/segments

Final selection of markets/segments

1
Mobilisation

GO-TO-MARKET PLAN & NEXT STEPSAPPROX. 2 WEEKS

2
Public sector

Project completion & next steps

3
Healthcare providers

4
Private sector

Road map NIH

Scope

•

National government•

Clinics, hospitals and nursing
homes

•

Pharmaceutical, med. devices, IT, &financial companies•

Prioritisation by target market andbusiness modelKeydeliverables•

Assessment of current publicfunding and road map ofdigitalisation:•

Assessment of needs andchallenges of healthcare
providers:•

Assessment of products andbusiness models thatcompanies want to bring tomarket or invest in:•

Go-to-market plan:o Description of reimbursement andpublic funding mechanism

o Description of challenges by typeof providers

o Nordic/Japan deals to dateo Description of public sector
digitalisation road map

o Description of needs by type ofproviderso Description/prioritisation of
products

o Forecast of future public funding
Method••Desk researchInterviews* with two to three key
public sector stakeholder including
MHLW and METI

Within project scope
Outside of project scopeo Product/service offering
adaptationso Business models
o Timelineo Pitches about Japan to Nordic
startups based on go-to-market
plano Description and prioritisation ofbusiness models•

Interviews* with decision makers at
three to four clinics, hospitals andnursing homes••

Desk researchInterviews* with eight companies,
two within each of the four sectors

Executionof plan•Analysis of one to three above

Workshops
Checkpoints with project management*Interviews will a mix of face to face and online format. NIH will be invited to join if it is available#%$#%$#

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PROJECT APPROACH

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Agenda● Executive summary● Background and objectives● Project approach and plan

● Healthcare sector in Japan● Digitalisation opportunities and prioritisation● Digital health stakeholder mapping● Business model analysis● Conclusions – Road map for NIH in Japan● Contact information● Appendix− Summary of sector and their priorities#%$#%$#

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Japan is a top-three healthcare market in the world with continued growth
expected, driven by a large, ageing population and mandated universal healthcare● Japan is an extremely large market – with over 120 million people,
it is the 3rd largest healthcare market in the world− Projected CAGR of 4% between 2018 and 2024
● Japan has a comprehensive universal healthcare systemfinanced through compulsory health insurance in combination with copayments and government subsidies− Patients are free to choose their healthcare provider● Public subsidies account for over a third of the funding forJapan’s healthcare system

Medical expenditure as share of GDP (%)

12,00%
10,00%
8,00%
6,00%
4,00%
2,00%
0,00%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

− Government exploring cost-containment measures− Patient payments are relatively low in Japan – 12%
Funding of healthcare system, 2017

● Medical expenditures have increased over 30% since 2000 andnow constitute 11% of GDP

12%
21%

− 11% is similar to other industrialised countries● Ownership/organisational structure and sise of healthcare providers
vary, but reimbursement scheme – managed by Ministry of Health,Labour, and Welfare – is the same for all

28%● Primary care is provided by over 100,000 clinics nationwide
Patient payments

Public subsidies

39%

Insurance premium (individual)

Insurance premium (employer)

Source: MHLW statistics (2015); World Bank Group 2018 – healthcare market calculated using healthcare spending per capita and population data#%$#%$#

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A rapidly ageing population is forcing the Japanese government to consider costcontainment measures
Population development (million people and % of population)% of total healthcare spending, by age cohort
2%

130

35%

31%
125

4%
12%

30%

28%
25%

23%
20%

17%

115

15%

44%

12%

110

10%

9%
105

% of population

Million people

120

7%
5%

38%
100

0%
1970

1980

1990

2000

Total Population2010

Age: 65+

2020E

2030E
0-19

20-39

40-59

60-79

80+

● Japan's population has been ageing for quite some time and started to decrease in 2010 due to low fertility rate
− By 2030 approximately a third of the population will be 65+● Over 80% of healthcare spending is accounted for by adults 60 years or older
Source: MHLW statistics (2015); OECD statistics#%$#%$#

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Japan’s healthcare policy is focused on creating a more efficient market, cost
containment, and digitalising health records
The GoJ is deregulating themarket in order to promotecompetition and reducecosts• Mixed treatments – adding nonreimbursed treatment to a reimbursed
treatment – are allowed in limited
cases since April 2016 to facilitate
clinical trials−

Mixed treatments are still
generally not allowed as it isassociated with risk of unsuitable
treatment• Blood tests at pharmacies andonline sales of OTC drugs allowed
since 2014
• Market creation – encourage
development of new drugs, devices andtreatments aimed at global use

Japan is lowering
reimbursement prices andincreasing use of generics
to contain expenditures

The GoJ is digitalising thehealth records system toimprove information flow
and health outcomes• Decreasing reimbursement prices,
and annual review of drug prices replaced
biannual system in 2017

• GoJ is digitalising health records
incrementally (drug prescriptions –10/2021, surgery/transplantation –2022, health checks – 3/2021, otherrecords – scheduled 2022)• Target to increase share of genericdrugs to 80% by 2020 is nearlyreached with current use at 78.3%• Group purchasing of single-use
medical devices introduced atnational university hospitals in 2017

• “My Number” (similar to personal
identification numbers used in theNordics) is being introduced in
2021• GoJ is interested in using big data to
analyse healthcare data andfacilitate possibility of preventive
actions• Improved system for informed consent
to ensure patients and medical staff
better understand risks

Source: MHLW My number portal Nikkei on generic drugs#%$#%$#

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Compared to other OECD countries, Japan is lagging in digitalising its healthcare
system● Digital healthcare reimbursements from digital imaging and online
consultations account for less than one tenth of total healthcare
expenditures – approximately 120 BJPY
● However, many new initiatives are focused on digitalising Japanese
healthcare− Society 5.0: Japan’s long-term plan to integrate cyberspace and physical space
to create a human-centred society with a focus sector being healthcare− Digital Agency: Prime Minister Suga committed to establishing a government
agency focused on facilitating the country’s transition to a digital society− Government support for the venture capital ecosystem: VC in Japan is
growing rapidly with a CAGR of 28% between 2015-2019. In 2019, healthcare was
the third largest investment focus (both in VC deal value and number of deals)● Japan’s focus on digitalisation is evident in other sectors as well
− QR code-based payments increased by 56% from January to September
2021− Percentage of household shopping online up from 43% to 49.9% in
2020− Percentage of companies utilising cloud services grew from 44.5% to64.7% between 2015 and 2019

Percentage of primary care physician offices and acutecare hospitals using electronic medical records, 2016
100

90

80

70

60

50

40

30

20

10

0
SwedenNorwayDenmark

Finland

Inpatient careOECDaverage

USA

Japan

Primary care

Source: OECD, Japan Cabinet Office, INITIAL#%$#%$#

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Japan is interested in the Nordic offering as demonstrated by recent partnerships
between Nordic startups and Japanese partners
Sidekick Health

Coala HealthCountry: Iceland/Sweden

Country: Sweden

Description: Digital
therapeutics/gamified digital care

Description: Smart cardiac monitoring

Japan connection: Sidekick Health andJapan insurance conglomerate, SOMPO
Digital Lab, are partnering on a pilot
project focused on treating diabetes

Japan connection: Coala Health andAsahi Kasei Corp. are partnering toevaluate the use of the Coala Heart
monitor for remote monitoring andmanagement of patient suffering fromheart failureNightingale Health

OncoImmunity AS

Country: Finland

Country: Norway

Description: Blood testing

Description: Machine learning software
to support the fight against cancer

Japan connection: Nightingale Healthis partnering with Kirin Holdings and
Mitsui & Co. to launch the company’s
blood-testing service in Japan as well as
develop novel wellness products

Japan connection: Acquired by NEC in
2019“We are considering several Swedish
digital health investments. As
digitalisation is more advanced
overseas, we think it would be goodto bring overseas solutions to Japan”
Principal, Japanese VC Firm

“We recognise the high quality ofNordic startups and understand their
good relationships with the public
sector. Therefore, we would like topartner with them”
Head of Digital Accelerator, JapanesePharmaceutical Corporation#%$#%$#

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Agenda● Executive summary● Background and objectives● Project approach and plan

● Healthcare sector in Japan● Digitalisation opportunities and prioritisation● Digital health stakeholder mapping● Business model analysis● Conclusions – Road map for NIH in Japan● Contact information● Appendix− Summary of sector and their priorities#%$#%$#

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Japanese companies are mostly interested in complementary diagnostics anddigital services that add value to their core offerings
Industry prioritisation matrix

Description
Level of interest
MediumWeak

StrongPatient monitoring/
wearables

Medical imaging

Complementary
Diagnostics &Therapeutics

MedicaldeviceReal world data/others

Telemedicine

Complementary
Diagnostics &Therapeutics

Medical imaging

Real world data/others

Real world data/others

Patient monitoring/Telemedicine

IT

wearables

Medical imaging

Telemedicine

Real world data/others

Patient monitoring/

Strength of Nordic offering:

MediumDescription

Complementary
diagnostics andtherapeutics

Digital services that complement orenhance therapeutic offering (e.g.
CurApp)Real world data

Quantitative use of everyday medical
records rather than clinical trial data
(e.g. MedEngine )Medicalimaging

Novel technology and software usedin medical imaging to improvetreatment solutions and aid drug
development (e.g. RaySearch andSyntheticMR)

Telemedicine

The practice of providing patient careremotely via video calls or otherdigital communication platforms.
This technology is particularly usefulfor patients in rural locations (e.g.
Kry, Line Health)Patient
monitoring/
wearables

Wearable technologies are healthcare
devices which consumers can wear inorder to collect health data andmonitor performance (e.g. Navigil)

Complementary
Diagnostics &Therapeutics

wearables

StrongAreas

Medical imaging

Complementary
Diagnostics &Therapeutics

Financialinvestors

Category of Japanese companies

PharmaTelemedicine

Weak#%$#%$#

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Complementary diagnostics and therapeutics are the primary interest forJapanese firms due to their ability to enhance the profitability of core offerings
Current State

Tailor-made medicine market sise transition and forecast
1 000 000

974 860
943 540950 000● 7 of the top 10 Japanese pharmaceutical companies are marketingcomplementary smartphone apps in Japan

MJPY

919 170
900 000

888 670

Policy Trends

878 960

850 000

800 00020192020 (forecast)

2021 (forecast)

2022 (forecast)

2023 (forecast)● Smoking cession app CureApp was the first standalone therapeutic app toreceive Japanese government approval in June 2020 and reimbursementin November 2020

Note: Digital solutions enable tailor made medicine

Tech/Business Trends“As hurdles are high for standalone
reimbursement, our focus is on enhancing patient
experience digitally”
Head of Digital Accelerator, JapanesePharmaceutical Corporation

Source: Tailor made medicine in YANO Cure App in NIKKEI● Tailor-made medicine market expected to grow to 975 BJPY by 2023
● Dependent on roll out of companion diagnostics and companion
therapeutics● Priority for leading Japanese pharmaceutical companies because it creates
added value to profitable core products

Note: Among top Japanese pharma companies only Otsuka, Sumitomo Dainippon and Kyowa Hakko Kirin do not offer iPhone apps#%$#%$#

BUSINESSSWEDEN
Source:INITIAL, Crunchbase

17Japanese companies are interested in digital solutions such as AI-powered
diagnosis and data analysis in order to increase their local market share
Medical imaging (PACS) market sise transition and forecast

Current State

MJPY

30 00030 35030 30230 09129 85029 800● Picture Archiving and Communication System (PACS) is a good indicator
for the larger digital imaging sector as it enables a large majority of otherdigital imaging solutions

20 000● PACS market sise is estimated around 30 BJPY and the installation ratio
has increased from 28% to 67% over the past decade

10 0000
20182019 (forecast)2020 (forecast)

2021 (forecast)

2022 (forecast)

Policy Trends● Market drastically grew with the reform of reimbursement in 2008, whenan additional reimbursement introduced for “scan on electronic media”

PACS installation ratio
2009

28,6%

2010

71,4%

36,1%

2011

41,1%

2012

58,9%

45,7%

2013

● High-end CT market growing with the increase in reimbursement for CTwith over 64 multi-slice

63,9%

54,3%

50,9%

49,1%

2014

57,6%

42,4%

2015

60,2%

39,8%

2016

62,1%

37,9%

2017

64,5%

35,5%

2018

65,7%

34,3%

2019

67,4%

32,6%

0%

20%

40%
Installed

60%
Not installed

80%

Tech/Business Trends● Industry actively restructuring with mergers and business transfers− Panasonic Medical Solutions merged to Konica Minolta Japan,
Yokogawa Medical Solutions acquired by FujiFilm
100%● Priority for medical imaging companies is to create new businesses using
big data in combination with AI to provide value-add services suchautomated diagnostics

Source: YANO#%$#%$#

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Large investments from Japanese tech giants and new reimbursement policies
spurred the growth of telemedicine growing from 0% in 2020 to 15% in 2021
Healthcare providers accepting online consultation

Current state● Telemedicine receiving increased support from the public sector

15%− After temporarily allowing teleconsultations during the pandemic,
MHLW is aiming to make the policy change permanent85%

Policy Trends● Until April 2020, initial medical consultations need to be in person

Accepting online consultations

Not accepting

Reimbursement structure – face-to-face versus telemedicine
2500● Due to the spread of COVID-19, online/telephone consultations wereapproved even for initial medical examinations and drug prescriptions● The upper limit of the reimbursement for telemedicine was increased● In October MHLW announced allowing telemedicine for initial medical
examinations as a permanent measure

2000

JPY

1500
Reimbursement
gap pre-2018

1000

Current
reimbursement
gap

Tech Trends

500● Approximately 15% of healthcare providers offered online consultations by
March 2021

0
F2F
Prescription fees (general, issuing)
Outpatient management addition
Telemedicine fee

Telemedicine pre-2018

Telemedicine post-2018

Off-hour treatment addition
Specific disease addition● Private companies, including tech giants, are expanding online healthconsultation services without reimbursement

Source: Japan Times, MHLW, interview with Takeda, Nikkei Shimbun 29 April 2021#%$#%$#

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Agenda● Executive summary● Background and objectives● Project approach and plan

● Healthcare sector in Japan● Digitalisation opportunities and prioritisation● Digital health stakeholder mapping● Business model analysis● Conclusions – Road map for NIH in Japan● Contact information● Appendix− Summary of sector and their priorities#%$#%$#

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Japan’s healthcare system, although well regulated, is heavily influenced by the doctors’
association, Japan Medical Association
Roles and mandates

Overview of stakeholder landscape● The Cabinet issues policy and oversees ministries● The Ministry of Health, Labour and Welfare manages
the healthcare system by controlling the reimbursement
system, product approvals and notifications

CabinetJapan Medical
Association

Healthcare providers

Ministry of Health,Labour and Welfare

Insurance companies(national and private)

Patients

Ministry of Economy,
Trade & Industry● Ministry of Economy, Trade and Industry regulates
aspects of industry that are not subject to MHLW regulations,e.g. non-reimbursed healthcare business● Japan Medical Association is the umbrella organisation ofphysicians in Japan which is frequently consulted by MHLW
when medical expertise is needed. The doctors are also an
important intermediary between private and public sectors

Private companies(Pharma, etc.)● Healthcare providers provide patient care and impact
policy via the JMA● Insurance companies are regulated by the MHLW andcollect payments from patients as well as provide
reimbursements to healthcare providers● Private companies are regulated by MHLW and METI andsell mostly to healthcare providers and pharmacies

Source: MHLW, METI, JMA#%$#%$#

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Private companies are mainly interested in
identifying new, complementary technologies
Focus areas● Complementary digital services to add value to core pharma and medical devices offerings● Therapeutic focus areas differ by company● B–C–B is the primary business model being explored by IT companies/system integrators● Products that have already been launched successfully overseas

Challenges● High hurdles for standalone reimbursement in combination with weak demand fromconsumers to pay out of pocket● Localisation needs high (language, cultural and medical system)“I think that digital health ismore advanced in the Nordics.
In order to expand digital
health to Japan, it is quickest to
introducing technology that is
profitable overseas”
Principal, Global Brain● Weak in-house software experience at pharma and medical device companies

Opportunities for Nordic startups● Introduce service/product that does not require reimbursement● Prioritise service with track record outside Japan#%$#%$#

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The Government of Japan is focused on
improving efficiency and infrastructure
Focus areas● Establish digital infrastructure to improve efficiency and quality of healthcare− Shared medical data between healthcare provides, government, industry andindividuals− Analyse healthcare data for early diagnostics, promotion of health management andpreventative care
Challenges● Controlling healthcare expenditures despite rapidly ageing population● Public acceptance of information sharing in order provide useful healthcare data andservices to individuals through My Number portal“We want to provide more
medical information forclinicians to make better
informed decisions to provide
better care”
Public Health Bureau Official,
MHLW● Conservative medical profession and limited IT proficiency among elderly● No road map to expand reimbursement for digital healthOpportunities for Nordic startups● Provide digital solutions that have track record of increasing efficiency of healthcare● Provide easy-to-use services that have clear benefits to the individual and indirectly help
the government promote digitalisation – e.g. software that allows the government toanalyse data gathered through My Number program● Provide analytical tool use healthcare data for early diagnostics, prevention and healthmanagement#%$#%$#

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Healthcare providers want improved medical datain order to provide better care
Focus areas● Sharing of medical data so medical professionals can make more informed decisions● Increase the uptake of telemedicine to improve access to care
● Digital monitoring of patients to complement patrolling staff

Challenges● Initial cost of establishing digital infrastructure● Conservative medical profession“As the majority of diseases
treated changes from infectious
diseases to non-infectious
diseases, the location of carecan change away from
hospitals, and that is where
private companies have a roleto fill”
CEO, Kids Public● Reimbursement system prioritises treatments rather than prevention● Lower reimbursement for online consultations

Opportunities for Nordic startups● Provide solutions that do not require new digital infrastructure● Provide services that do not require reimbursement● Use track record among medical professionals in home markets to win over Japanese
doctors#%$#%$#

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Agenda● Executive summary● Background and objectives● Project approach and plan

● Healthcare sector in Japan● Digitalisation opportunities and prioritisation● Digital health stakeholder mapping● Business model analysis● Conclusions – Road map for NIH in Japan● Contact information● Appendix− Summary of sector and their priorities#%$#%$#

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New business models enable Nordic startups to sidestep hurdles associated withtraditional reimbursement modelBusiness models

Reimbursement

Complementary

B-C-B

Description

MHLW sets reimbursement prices for
medicine and medical devices.
Customer that buys products receives
reimbursement after purchase occurs

Product and services that are used tocomplement medicine or medical
devices – e.g. apps that collectinformation concerning medication andpromote behaviours to enhancetreatment

Customer uses services that are billed toa third-party company that indirectly
benefits from the customer’s use – e.g.
employers benefit from the improved
health of their employees

Technology
application

Traditionally restricted to physicalproducts. However, CureApp, an app
that helps patients quite smoking, wasgranted standalone reimbursement in
2020

Complementary diagnostics (e.g. apps),
patient monitoring, wearables

Online medical consultation, wearables,& health monitoring apps

Key stakeholders

•
•
•
•
•
•

MHLW
PDMA
Pharmaceutical companies
Medical device companies
Healthcare providers
New entrants

•
•
•
•

Pharmaceutical companies
Medical device companies
Healthcare providers
New entrants

•
•
•
•
•
•

Pharmaceutical companies
Medical device companies
Healthcare providers
New entrants
Employees
Insurance companies#%$#%$#

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Although highly desirable, qualifying for national reimbursement model is difficult
for many digital health companies
Payment model● Requires products registration followed by reimbursement approval from MHLW. It is the classic
business model for prescription drugs and medical device where the reimbursement systemshoulders most of the cost (typically 70% of the reimbursement price) and the patient makes asmaller co-payment

Reimbursement model
Government sets
reimbursement policy andprice for product/solution

Trends● Private companies generally pessimistic with regards to expansion of public reimbursement for
digital health solutions● Annual review of drug reimbursement prices started in 2017 to control medical cost
● Expansion of reimbursement for medical imaging over past 20 years

Nordic startup solutions
sold to healthcare provider
in Japan● Expansion of reimbursement for online consultation in 2020 expected to continue
Case study● In 2020 smoke session CureApp was the first standalone digital therapeutics services that received
reimbursement● Pharmaceutical companies that are launching non-reimbursed apps hope to be able to gain
reimbursement as evidence of benefits and savings accumulate over time

Healthcare provider receives
solution/product and isreimbursed by the government
in addition to receiving copayment from user#%$#%$#

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Complementary business model is gaining popularity as large Japanese healthcompanies look to increase their market shares and profits
Payment model● Services provided free of charge that add value to medicine or medical devices typically sold by thesame company● Seen as relatively easy way of gaining digital foothold as it does not require reimbursement

Complementary model
Nordic startup enters Japanand markets innovative
solution

Trends● Leading Japanese pharma companies including Takeda, Astellas and Eisai have launched freesmartphone apps
● Chronic diseases such as dementia, Alzheimer’s and diabetes are of particular interest

Case study● Easiit dementia management app provided by Eisai● The app enables to users to assess their cognitive abilities and track development of the disease● Launch in Japan is a result of Eisai’s partnership Cogstate, an Australian neurotechnology company,
but has also involved DeNA● Though currently providing as complementary free service, Eisai’s ambition is to gain regulatory
approval and standalone reimbursement for the digital solution

Large healthcare companies
buy innovative digitalsolution from Nordic
startups which complement
their core offering, provide
extra value to customers andincrease overall sales

Customer receives
complimentary solution,
appreciates the improved results
and continues to buy from thecompany● An example on how Japanese pharma companies can benefit from overseas partnerships to launch
digital services#%$#%$#

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B-C-B business model enables startups to bypass issues associated with thereimbursement system as well as consumer reluctancy to pay
Payment model● Services provided to consumers but paid for by a third-party company which indirectly benefits fromthe consumer’s use of the product. Third-party companies are typically employers or insurancecompanies● This provides innovative companies a way to bypass the hurdles of public health insurance
reimbursement and low willingness to pay by consumers

B-C-B model
Japanese businessrecognises the value ofservice for its
employees/customers andpays Nordic startup directly

Trends● As the business model is mainly used for online medical consultation, it has grown with increased
demand for telemedicine during the pandemic

Customer receives service
directly from Nordic startup

Case study● Paediatric and maternity online consultation company, Kids Public, provides services that are
charges to employers or insurance companies● Employers and insurance companies create contract with Kids Public in order to improve the healthoutcomes of their employees and customers

Nordic startup provides service
to consumer, receives payment
from Japanese business#%$#%$#

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Agenda● Executive summary● Background and objectives● Project approach and plan

● Healthcare sector in Japan● Digitalisation opportunities and prioritisation● Digital health stakeholder mapping● Business model analysis● Conclusions – Road map for NIH in Japan● Contact information● Appendix− Summary of sector and their priorities#%$#%$#

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Nordic Innovation House should utilise a four-step approach to maximise its
impact for Nordics startups in Japan1
Mobilisation

2
Engage with prioritised
partners in Nordics

3
Recruit Nordic
startups

4
Engage with partners inJapanPartnering activities

Scope

NordicNordics

Japan

First contact between Nordic
startups and Japanese partners

Key tasks

Engage with high-levelpromotional partners in Nordics

Reach out to Nordic startups
through partners in the Nordic

Engage with partners in Japan

Events and visiting program

o Sell Japan storyo Describe opportunities in Japano Set common agenda

o Explanation of current businessmodels in Japanese market

o Engage to recruit Nordic startups

Focus areas

Priority Nordic partners:
o Regions, innovation agencies, etc
o Investorso Ecosystems

Startups with solutions in highpotential areas:o Complementary diagnostics andtherapeutics
o Digital imagingo Real world datao Pharma and medical device firmso Description and prioritisation of
products
o Description and prioritisation ofbusiness models

Partners in Japan:• Pharma companies• Medical device companies• System integrator and other IT• Financial investors• Japanese innovation hubs

BusinessDev.

o Hybrid events where Nordic
companies join from homeo Delegations to Japano Delegations to Nordics

Type of partnerships:• Minority stake investment• Licencing• Co-development• Mergers• Acquisitions#%$#%$#

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31

Agenda● Executive summary● Background and objectives● Project approach and plan

● Healthcare sector in Japan● Digitalisation opportunities and prioritisation● Digital health stakeholder mapping● Business model analysis● Conclusions – Road map for NIH in Japan● Contact information● Appendix− Summary of sector and their priorities#%$#%$#

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For access to the full report, please contact your country’s Trade Promotion
Office or the Nordic Innovation House Tokyo
Organisation

Contact

Business Finland

Masahiro Kimura
Email – masahiro.kimura@businessfinland.fi
Phone – +81 3 6432 5270

Business Iceland

Halldór Elís Ólafsson
Email – halldor.olafsson@utn.is
Phone –

Business Sweden

Magnus Blondell
Email – magnus.blondell@business-Sweden.se
Phone – +81 80 5537 2447

Innovation Norway

Hiroko Tominaga
Email – hiroko.tominaga@innovationnorway.no
Phone – +81 3 6408 8100

Royal Danish Embassy

Peter Takizawa
Email – petaki@um.dk
Phone – +81 3 3780 8718

Nordic Innovation House

Niklas Karvonen
Email – niklas@nordicinnovationhouse.com
Phone – +81 80 8908 4814#%$#%$#

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Agenda● Executive summary● Background and objectives● Project approach and plan

● Healthcare sector in Japan● Digitalisation opportunities and prioritisation● Digital health stakeholder mapping● Business model analysis● Conclusions – Road map for NIH in Japan● Contact information● Appendix− Summary of sector and their priorities#%$#%$#

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Appendix: meeting summary – Pharmaceutical company 1⚫ Private pharmaceutical company
Description⚫ YM, Conversion Science office⚫ March 10th

Digital healthpriorities andopenness tocollaboration⚫ Top priority is to develop and launch complementary services that add value to core pharma business⚫ Facing hurdles to receive standalone reimbursement for digital products⚫ Building a digital platform in dementia field⚫ Launched a dementia app through collaboration with a US company⚫ Actively searching for new collaborations with international healthtech companies

Implications
for Nordic
startups⚫ Open for collaboration, such as licensing, co-development, investment and business partnership with Nordic
healthtech companies⚫ Focus on dementia and oncology#%$#%$#

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Appendix: meeting summary – Financial investor 1⚫ Private venture capital company
Description⚫ TM, Director, NS, Principal, YS, Principal investment group⚫ March 16th

Digital healthpriorities andopenness tocollaboration⚫ Focus on digital health technologies backed by scientific evidence⚫ Interested in digital health products for prevention, healthcare, early diagnosis, telemedicine, diagnostic imaging,mental health, medical data collection and analysis, and VR/AR solutions⚫ Makes minority stakes investment with 5-year investment horizon in early-stage foreign companies⚫ Very actively searching for new investment in international digital health companies

Implications
for Nordic
startups⚫ Japanese investors very open for capital investments in Nordic healthtech companies⚫ Can support Nordic companies to entry into the Japanese market. Establishment a local office, human resources,
strategic business plan, developing networking and public relations#%$#%$#

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Appendix: meeting summary – Financial investor 2⚫ Trading company
Description⚫ KA, TOKQE Section, Medical Business Team, Chemicals Division⚫ March 12th

⚫ Invested in a social networking platform for doctors in Asia, with focus on China
Digital healthpriorities andopenness tocollaboration⚫ Interested in solutions that can launched in several countries in East Asia including China⚫ Interest in digital health products which have already approval overseas and are relatively easy to launch in Japanand China⚫ Interested in digital services that do not require reimbursement, such as a platform of gene analyses and risk factor
test in cancer and diabetes field

Implications
for Nordic
startups⚫ Investors in Japan are very open for business partnerships and licensing with Nordic companies⚫ Supporting Nordic companies to establish a local office/joint venture and use their wide range of sales network inJapan and China⚫ Very interested in imaging analysis technologies of Nordic companies, especially MRI in dementia field#%$#%$#

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Appendix: meeting summary – Kids Public Inc⚫ Online medical consultation service (paediatrics)
Description⚫ Kids Public Inc⚫ Mr. Naoya Hashimoto, CEO⚫ March 18th

Digital healthpriorities andopenness tocollaboration⚫ KP is shifting its focus to preventative telemedicine in order to address non-infectious diseases/psycho-social
problems such as child abuse, developmental problems, absent from school, allergy, etc.
⚫ KP currently builds B-C-B business model where companies/municipalities pay for the users
─ Looking to expand to online medical care which is subject to reimbursement, but B-C model may bechallenging as medical care for children is free under national scheme⚫ KP is interested in using machine learning (to automate the Q&A in online consultations) & wearables (to improveaccuracy) – open for collaboration, mainly to expand their service overseas

Implications
for Nordic
startups⚫ Since Japan has a universal health insurance, it is challenging to sell medical services & products directly to
consumers/patients. Currently many companies build B-C-B business model⚫ In Japan there is a stigma for psycho-social problems and patient tends to be reluctant to visit a clinic. Online
medical consultation and medical care could reach out and accommodate those patients⚫ The COVID-19 pandemic accelerated the of spread of online services including medical solutions resulting in thegovernment taking temporary measures to improve reimbursement for digital health services#%$#%$#

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Appendix: meeting summary – Ministry of Health, Labour and Welfare⚫ Public sector
Description⚫ Ministry of Health, Labour and Welfare⚫ NU, Health Policy Bureau⚫ March 19th, 2021
⚫ Purpose of digitalisation: to provide proper medical care, to refer to the medical record of a patient in case of
emergency, and to decrease unnecessary drug prescription

Digital healthpriorities andopenness tocollaboration⚫ My Number portal and online qualification as a foundation of digitalisation⚫ Medical prescription record to be shared among healthcare providers, starting with drug prescription record from
October 2021 and other record including surgery/transplantation record by the summer 2021
⚫ Unification of electronic medical record⚫ Record utilisation on My Number portal by a third party via API to be discussed after the surgery records arelaunched in the summer 2022

Implications
for Nordic
startups⚫ Limited funding available for healthcare digitalisation such as online qualification device, unified electronic
medical record, etc⚫ Budget for funding telemedicine device to be increased from FY2021⚫ New technology and devices will be examined by a council in terms of quality, benefit of a patient, etc. to determine
whether they will be subject to reimbursement#%$#%$#

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Appendix: meeting summary – IT company 1⚫ Information technology and electronics company
Description⚫ Mr. I and Mr. Y Social/public business innovation unit (Medical device related)⚫ March 24th

⚫ Believes that prevention and aftercare will gradually shift to outside hospital/home with digitalisation
Digital healthpriorities andopenness tocollaboration⚫ Main business within digital health is electronic medical record. The current function is an operational support of
hospital through system integration, and hospital pays for the medical device⚫ Planning to apply their technologies and solutions to the following new field of business in the coming five years:
AI drug discovery in collaboration with other companies, medical device program, medical device
support/diagnosis support service, etc.

⚫ Is already collaborating with overseas company on AI drug discovery. They are also interested in applications andsolutions which could work together with electronic medical record

Implications
for Nordic
startups⚫ Seeking an opportunity to enter healthcare industry utilising their technologies and solutions, and they do so incooperation with companies that have knowledge of the domain⚫ Electronic medical records is one of the prioritised digital health by the Japanese government to utilise its data bystandardising the record format. Although there are localisation issues in the record itself, there might be some
opportunities for related applications and services#%$#%$#

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Appendix: meeting summary – IT company 2⚫ Private IT services provider
Description⚫ IT company 2⚫ DM, AG, Medical Solutions, Healthcare Division⚫ March 16th

⚫ Developing the platform of the medical system in Japan
Digital healthpriorities andopenness tocollaboration− Remote ICU support, AI engine of diagnostic imaging, electronic medical records with AI⚫ Collecting medical data of 4 million employees from 2000 customers for the health databank⚫ Licencing with the foreign digital health company⚫ Presenting open innovation contest in order to meet international digital health companies

Implications
for Nordic
startups⚫ Open for licensing of products from Nordic digital health companies⚫ Focus on digital health technologies which are not related to the medical insurance system in Japan#%$#%$#

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Appendix: meeting summary – Medical device company 1⚫ Medical device and electronics company
Description⚫ Mr. MY General Manager, Cardiovascular Business Department⚫ March 22th

⚫ Focus on personalised medicine utilising vital data outside the hospital and telemedicine
Digital healthpriorities andopenness tocollaboration⚫ In the U.S./Europe, copmany has started a scheme to acquire data from at-home sensors to inform doctors andimprove medical care treatment/intervention− Aims to expand the same business model to Japan, but is struggling due to reimbursement model⚫ As the company is strong in B-C, they continue to develop new sensing devices as well as digital add-on services forexisting products. Also interested behavioural focused health apps – focus on addressing blood pressure⚫ Company is open to collaboration - already works with a company specialising in ECG hardware/software formobile devices, a telemedicine service provider in Netherlands, and a Finnish smart cardiac analysis company

Implications
for Nordic
startups⚫ There is an opportunity for digital health at medical products and equipment company, where digital solutions add
value to their existing business/products, e.g. to utilise the data for medical care intervention. Sensing device andwearable device are of some interest⚫ Building a new business model could be challenging since doctors do not have economical benefit under thecurrent reimbursement system#%$#%$#

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Appendix: meeting summary – Primary Care Association⚫ Healthcare provider
Description⚫ Primary Care Association⚫ HO, Vice Chief Director and NY, Director in charge of ICT⚫ February 24th

Digital healthpriorities andopenness tocollaboration⚫ Data centralisation to understand the actual situation of how patients use primary care institutions as well as todecrease unnecessary use and to increase desirable use⚫ “D-P-D” model to connect specialised doctor remotely and the patient, with primary care doctor nearby⚫ Telemedicine (healthcare providers are looking for know-how to provide telemedicine in an appropriate way)
⚫ PHR (Personal Health Record) to integrate both data of preventive medicine and healthcare services provided byhealth insurance, which provide evidence what kind of preventive medicine has an effect

Implications
for Nordic
startups⚫ Data centralisation to expand the possibilities for private companies to utilise it for new service development⚫ Telemedicine-related services and know-how demanded by healthcare providers#%$#%$#

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Appendix: meeting summary – Healthcare providers⚫ Long-term care provider
Description⚫ KI, Chairman⚫ March 1st

Digital healthpriorities andopenness tocollaboration⚫ Telemedicine to enrich and compliment medical care services for situations where there is no full-time doctor⚫ Monitoring support robot to complement staff patrols and to increase around-the-clock safety of elderly patients⚫ Digitalised care plan to effectively share information and improve cooperation among staff− In the future for risk foresight via AI analysis

Implications
for Nordic
startups⚫ Various type of subsidiary aid provided by the government and municipality when installing device and equipment⚫ Additional nursing care compensation to be introduced from 2021 for those providing care data, as the government
aims to extend “healthy life expectancy”#%$#%$#

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Appendix: meeting summary – Pharmaceutical company 2⚫ Private pharmaceutical company
Description⚫ MO, Head of Digital Accelerator Japan, Digital Unit

⚫ March 9th⚫ Digital Health unit consists of approx. 40 people and is growing
Digital healthpriorities andopenness tocollaboration⚫ Focus on adding impact of medicine with complementary digital products⚫ Hurdles for reimbursement of standalone digital products to remain high as regulators demand evidence that
digitalisation lead to savings⚫ Investments in a number of overseas companies recently⚫ Very actively searching for new collaborations with international healthtech companies

Implications
for Nordic
startups⚫ Very open for collaborations with Nordic healthtech companies⚫ Focus on complementary diagnostics and therapeutics solutions⚫ Greatest opportunities in offerings that are related to the company’s therapeutic focus areas: oncology, rarediseases, neuroscience, gastroenterology, plasma-derived therapies and vaccines. AI for drug discovery and digitalsolutions for R&D also of interest#%$#%$#

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Appendix: meeting summary – Medical device company 2⚫ Medical products and equipment manufacturer
Description⚫ RS, Business development division⚫ March 18th

⚫ Company’s focus for digital health is to add value to their existing products/business domain
Digital healthpriorities andopenness tocollaboration

─ Healthcare trending towards data-driven personalised medicine, especially for chronic disease such as
diabetes. Institutions also looking to improve work efficiency via tech implementation⚫ The company has various blood glucose meters which can be used both at home/hospital─ Next step is to support medical care intervention utilising monitoring data from their devices – businessmodel uncertainty (subscriptions, volume of usage, etc.?)⚫ Open for collaboration mainly in aresa related to their existing business. Company recently acquired the U.S.
digital health company which develops a software to support clinical decisions

Implications
for Nordic
startups⚫ There is an opportunity for digital health at medical products and equipment company, where digital solution adds
value to their existing business/products⚫ Building a new business model could be challenging since doctors benefit economically under the current
reimbursement system which does not accommodate subscription model#%$#%$#

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Appendix: meeting summary – Ministry of Economy, Trade and Industry⚫ Public sector
Description⚫ Ministry of Economy, Trade and Industry⚫ YI, Planning officer and Izumi Kamata from Healthcare Industry division⚫ March 4th⚫ Special health check-ups record to be shared from March 2021

Digital healthpriorities andopenness tocollaboration⚫ Drug prescription record on medical prescription to be shared from October 2021
⚫ Accumulation of health check-ups and medical examination record from birth to be examined in relation to My
number and PHR and to be put on the schedule by the summer of 2022
⚫ Surgery/transplantation record to be shared from around summer of 2022
⚫ Electronic prescription to start in around summer of 2022
⚫ Sharing of other medical records to be determined by the summer of 2022

Implications
for Nordic
startups⚫ PHR access by private companies to expand the possibility of new service development, such as healthcare support,
health management, etc.
⚫ Digitalisation to make a way for new kind of services, especially for disease prevention⚫ Healthcare industry as a whole to expand beyond healthcare providers and long-term care providers, and toconnect more stakeholders such as restaurants, retailer, schools, like a smart city with the theme of health#%$#%$#

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Appendix: Growth Strategy 2018 sets out new measures to realise nextgeneration healthcare system, slide 1● Utilisation of the My Number Card as a health insurance card and centralise the data
Data centralisation
and utilisation among
various institutions● Cooperation and utilisation of health/medical information at medical institutions utilising prescription
records, and introduction of electronic prescriptions as a future possibility● Information sharing among various long-term care occupations (in-home/home-visit etc) to enable effective
and efficient cooperation, as well to improve the efficiency and productivity of long-term care
● Creation of PHR (Personal Health Record) accessible by individuals which also allows data utilisation by
private service providers to promote new kind of services● Establishment of an information analysis infrastructure for health, medical and long-term care as a Big Data

Health promotion
and disease/long-termcare prevention
at workplaces
and communities● Promotion clarifying disease state and aim for establishing early detection, prevention and diagnostic methods
for dementia through further cooperation between domestic database and registry● Advance health promotion, disease and severity prevention, and health management using insurers’ data#%$#%$#

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Appendix: Growth Strategy 2018 sets out new measures to realise nextgeneration healthcare system, slide 2

Efficient and effective,
high quality
medical/long-term care

Development ofadvanced medicine andmedical equipment; thestructuraltransformation of thehealthcare industry● Development and introduction of robot sensors and AI● Document reduction, work efficiency, and productivity improvement by using ICT, the robot and etc● Promotion of online medical care including medication guidance and monitoring, to improve convenience of
patients, to reform work methods of medical professionals and to promote efficiency and effectiveness of
medical care
● Utilisation of technologies including AI in 6 focused area (genomic medicine/image-based diagnosis/diagnosis
and treatment support/drug development/long-term care and dementia/surgical support)● Promotion of a comprehensive healthcare solution, which aims to improve the quality of lifestyle mainly forpatients and individuals, and includes prevention and posttreatment monitoring.

#%$#%$#

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Appendix: Medical expenditure by segment, 2018
Medical expenditure by segment, 2018

2%

1%

0%

7%

18%

38%
Total
43.3 TJPY

34%

In-patient treatment

Out-patient treatment

Pharmacy dispensing

Meals and living expenses

Rehabilitation treatment

Home nursing

Dental#%$#%$#

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