Do Your Homework Before Entering the Japanese Device Market!

japan medical device market

By Ames Gross, President and Founder of Pacific Bridge Medical

Every few days a medical device company calls Pacific Bridge Medical and asks questions such as, ‘How can we enter Japan?’ Or, they might say that some renowned Japanese doctors have seen their product and like it, and want us to help them find a distributor quickly. We help companies enter or expand in Japan, but basic due diligence is necessary before a company can jump into the market. We discuss some key points, below.

A company’s primary step should be to determine the size and expected growth rate of the market for their device. We have seen many foreign device companies spend anywhere from US$75,000 to US$300,00 to register their product in Japan only to find out there is limited or no demand in Japan.

Second, the opinions of Japanese key opinion leaders (KOLs) in your field should be included in your initial market research. But just because a number of Japanese doctors say that it is a “great product,” there is no guarantee of future sales in Japan. Japanese KOLs are almost always very polite to foreigners and their new devices. Some Japanese KOLs may be willing to sign a year-long contract with your company to help “talk up” the benefits of your product early on, prior to registration, for $50,000/year. But the same doctor may also be selling your IP or key features of your product to a large Japanese device manufacturer for $300,000 per year. We have found that some Japanese KOLs are double agents and are laughing all the way to the bank without the foreign device company knowing about it.

Third, even if you have conducted market research, obtained approval from some trustworthy Japanese KOLs, and are able to register a product at a reasonable fee, Japan’s reimbursement policies may impede your product’s profits. Japan offers universal healthcare, and nearly all healthcare providers buy devices only when the product or procedure is reimbursed. To be sure, the reimbursement system is good despite recent cuts by the Japanese government. But if your product is associated with an older technology, the reimbursement amount may be too low to make your Japan business profitable. Meanwhile, obtaining reimbursement for products using more advanced technology can be time consuming.

If you want to be successful in Japan, please do your homework.