Japan is the world’s third-largest medical device market after the US and China. With a very large aging population and an increase in chronic diseases, the opportunities for advanced Western medical devices that can help expedite patient care and reduce hospital patient time are in high demand. Other expanding trends include growth in AI and digital health, robotic healthcare, home-based care (remote monitoring), regenerative products, and wearables.
While many good opportunities exist in Japan, medical device reimbursement can be a constraining factor. In Japan, healthcare is almost exclusively provided through the Japanese government and the MHLW. In fact, unlike almost all global healthcare markets, for the most part, it is illegal for Japanese patients to pay out of pocket. Since the Japanese government sets nationwide reimbursement prices, it is trying to reduce expenditures. With a debt-to-GDP ratio over 200% — versus roughly 100% in the US — reducing cost is a paramount concern. Reduced reimbursement in Japan for unique innovative products is more common today than ever before. The main way to increase device reimbursement is by showing meaningful clinical improvement over competing products.