OPPORTUNITIES IN JAPAN’S DIGITAL HEALTHCARE MARKETFOR NORDIC STARTUPS AND GROWTH COMPANIESThis report was jointly financed by:May 26th, 2021

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Japanese companies are looking to foreign companies for digital healthcare
solutions● Japan is one of the largest healthcare markets globally, presenting a large
opportunity for Nordic health startups across all focus areas− Japan is the 3rd largest healthcare market in the world – over 120 million people – and is
projected to grow 4% annually from 2018 to 2024

● Compared to other large healthcare markets, digitalisation of the sector islagging in Japan− Use of electronic medical records hovers between 30% to 40% in Japan compared to nearly
100% across the Nordics● Growing appetite, both from private and public sectors for new digital solutions− Life science was a top-10 most funded sector by Japanese VC firms in 2020

− Many new government initiatives – e.g. Society 5.0 – are focused on digitalising Japanesehealthcare#%$#%$#2

Japan’s healthcare sector – the 3rd largest globally – presents a large opportunity
for Nordic health startups across focus areas
Global healthcare spending, by country
Germany5,3%750

125

Sweden
0,7%

120
700

Health spending (BUSD)

Other
37,3%

USA
40,9%
India
1,2%

Health spending – 4% CAGR

115
110

650

105
600

100
Pharmaceutical spending – 3% CAGR

95
550

Phamaceutical market (BUSD)

Japan
6,3%

Life science market - Japan

90
500

China
8,2%85
2018

2019

2020

2021

2022

2023

2024

● Japan is the 3rd largest healthcare market in the world – over 120 million people – and is projected to grow 4% annually from 2018 to 2024

● Medical expenditures have increased over 30% since 2000 and now constitute 11% of GDP
Source: MHLW statistics (2015); World Bank Group (2018) – healthcare market calculated using healthcare spending per capita and population data#%$#%$#

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Japan’s hyper-ageing population drives growth of healthcare sector – novel
population structure will require innovative solutions
Population development (million people and % ofpopulation)
130
31%

4%
12%

30%

28%

23%
20%

115

17%
15%
12%

110

% of population

25%

120

44%

10%

9%
105

2%

35%

125

Million people% of total healthcare spending, by age cohort

7%
5%
38%

1000%
1970

1980

1990

2000

Total Population

2010

2020E

Age: 65+

2030E
0-1920-39

40-59

60-7980+● Japan's population has been ageing for quite some time and started to decrease in 2010 due to low fertility rate
− By 2030 approximately 1/3rd 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#%$#%$#4Digitalisation level of the healthcare sector in Japan is much lower than in peer
countries
Percentage of primary care physician offices and acute care
hospitals using electronic medical records, 2016Reimbursement structure – face-to-face versus
telemedicine

100

2500

90
2000

80701500

JPY

6050

Reimbursement
gap pre-2018

1000

4030Current
reimbursement
gap50020010F2F0Sweden

Norway DenmarkFinland

Inpatient care

OECDaverageUSAJapan

Primary care

Telemedicine pre-2018

Telemedicine post-2018

Prescription fees (general, issuing)

Off-hour treatment addition

Outpatient management addition

Specific disease addition

Telemedicine fee● Digitalisation of Japan’s healthcare sector is lagging the Nordics− For example, use of electronic medical records hovers between 30% to 40% in Japan compared to 100% in Sweden● Introducing digital solutions to Japanese market requires creative business models due to lower reimbursement rates for e-health products/services− Digital healthcare reimbursements* accounted for less than 0.1% of total healthcare expenditures – approximately 120 BJPY
Source: OECD, Japan Cabinet Office, INITIAL*Digital imaging/online consultations#%$#%$#5

Growing interest, both from private and public sector for new digital solutions –particularly from Nordic innovations due to reputation as leaders in digital health“We are considering several
Swedish digital healthinvestments. As digitalisation
is more advanced overseas, wethink it would be good to bringoverseas solutions to Japan”“We want to provide more
medical information forclinicians to make better
informed decisions to provide
better care”

Principal, Japanese VC Firm

Public Health Bureau Official, MHLW

“We recognise the high qualityof Nordic startups andunderstand their good
relationships with the public
sector. Therefore, we would
like to partner with them”
Head of Digital Accelerator, JapanesePharmaceutical Corporation● 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− Digital Agency: PM Suga committed to establishing a government agency focused on facilitating the country’s transition to a digital society− My Number: system similar to Nordic personal identification numbers to be used to share health data and improve patient care
● Life science was a top-10 most funded sector by Japanese VC firms− Over 200 MUSD of investments in 2020
Source: MHLW My number portal Nikkei on generic drugs, INITIAL#%$#%$#6Japanese firms are interested in complementary diagnostics that add value totheir core offering – other digital sectors gaining traction as well
Industry prioritisation matrix
Level of interest
WeakMedium

StrongMedicaldevice

Patient monitoring/
wearables

Medical imaging

Real world data/others

Telemedicine
Medical imaging

Real world data/others

Patient monitoring/Telemedicine

wearables

IT
Financialinvestors

Category of Japanese companies

PharmaTelemedicine

Medical imaging

Telemedicine

Real world data/others

Patient monitoring/

StrongComplementary
Diagnostics &Therapeutics

Real world data/others
Medical imaging

Complementary
Diagnostics &Therapeutics

Strength of Nordic offering:Complementary
Diagnostics &Therapeutics*

Complementary
Diagnostics &Therapeutics

wearables

MediumWeak*Digital solutions that complement core offerings of traditional pharma/med tech companies#%$#%$#7

Japan’s interest in the Nordic offering is demonstrated by recent partnerships
between Nordic startups and Japanese partners
Coala HealthCountry: Sweden
Description: Smart cardiac monitoring
Japan connection: Coala Health and Asahi Kasei Corp.
are partnering to evaluate the use of the Coala Heart
monitor for remote monitoring and management of patient
suffering from heart failureNightingale HealthCountry: Finland
Description: Blood analysis
Japan connection: Nightingale is partnering with Kirin
Holdings and Mitsui & Co. to launch the company’s bloodtesting service in Japan as well as develop novel wellness
productsSidekick HealthCountry: Iceland/Sweden
Description: Digital therapeutics/gamified digital
care
Japan connection: Sidekick Health and Japanese
insurance conglomerate, SOMPO Digital Lab, arepartnering on a pilot project focused on treating
diabetes

OncoImmunity AS
Country: Norway
Description: Norway-based bioinformatics company
that develops proprietary machine learning software tosupport the fight against cancer
Japan connection: Acquired by NEC in 2019#%$#%$#8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#%$#%$#9