Food for Thought: GHC HealthBytes


3 Tiers of Understanding – A Guide to Japan’s Healthcare Market (Part 1)

By Dionne Ng

Launching a new product in a foreign market is always a challenging process, no matter how experienced you or your team may be. Having the right team and technology for addressing the right audience at an opportune timing is almost irrevocably fundamental to success. This challenge tends to seem even more formidable when your target market happens to be a country like Japan, where unveiling the large market potential is, more often than not, laced with initial obstacles of uncovering myths and mysteries about the healthcare system and market.

We often wonder what the secrets to success are. How do we even begin to gain an understanding of the market at a level necessary to penetrate it? Limited access to or comprehension of information can sometimes be the root of a common problem – “I don’t know what I don’t know”. This is the greatest challenge many overseas players face with the Japanese market.

Now, what if I told you that there are, in fact, no secrets to success? Companies that thrive in the Japanese market have, very simply, attained something that can actually be accessible to all players – a firm, up-to-date understanding of the healthcare scene on 3 levels: the Client, the Ecosystem, the Nation.

The Client

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Many would have already heard about the dismal fiscal situation of a large majority of hospitals in Japan – 60% are in the red, with the percentage going a little higher for publicly-owned hospitals, thereby raising the barriers to spend on new technology, etc. Indeed, these are hard truths that affect decision-making, and by extension, the impact on the scalability of your company’s potential business in this market. But how many companies truly understand the reasons for the current financial distress that hospitals are experiencing? Are companies aware that the motivations that drive purchasing decisions in Japanese hospitals are very different from that of hospitals in other developed countries? We must also not forget to consider the differences in character of hospitals depending on their size, type of ownership, and their positioning in the care continuum (sub-acute, acute, post-acute etc.) – trends that may not be easily uncovered without the help of big data.

As the bearer of the second largest acute care patient data set in Japan (the first being the Ministry of Health, Labor and Welfare (MHLW)), covering approximately half of the acute care hospitals (also known as Diagnosis Procedure Combination (DPC) hospitals, as shall be detailed in a subsequent article), Global Health Consulting Japan is painfully aware of the restrictions that hospitals face in an environment of complex regulatory policing, the recent wave of “work style reform” driven by the Japanese government, as well as a market governed by non-price competition (this has, counter-intuitively and unpredictably, led to excessive expenditure on medical devices). Here at GHC, our mission of enhancing the value of healthcare (defined as the quality of healthcare divided by its cost) is our greatest motivation for helping companies like yours to bring value to the healthcare ecosystem here. In order to do so, having a holistic and profound understanding of your potential clients – what they need, how to provide that, who benefits from and influences these decisions – is the first of the 3 levels of understanding that we hope to help you attain.

The Ecosystem

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Next, the healthcare ecosystem. The legislators, the regulators, the payors, the providers, the patients, and the players. How does marketing authorization work? What is the process for a company to apply for marketing authorization (typically understood as FDA approval in the context of the US), and then for insurance reimbursement coverage? Did you know that insurance reimbursement coverage for medical devices and healthcare IT solutions can either be a device reimbursement or a technical fee code that is not unique to the device, and that the amount of reimbursement (depending on the type of device and the specific application pathway) can sometimes be affected by the perceived value that it brings to patients and/or medical personnel? How are these decisions made? Especially for companies new to the market, and even for companies with existing subsidiaries or partners in Japan, driving the whole go-to-market process is no mean feat.

Understanding the role and mission of the MHLW (and its various related agencies), and observing the trends in approvals will definitely help. Again, with the help of big data, GHC supports companies in defining the value of their product and providing the basis for lobbying for reimbursement that is an accurate reflection of the value thereof. GHC’s unrivalled access to both the providers and the regulators/legislators in Japan also enables us to understand cross-player issues such as the gaps in awareness and motivation for concrete action in the uptake of healthcare IT – this serves, for example, as a massive barrier to entry for healthcare IT companies. In this column, let us help to contextualize what this healthcare ecosystem means for you and your company, and how best to approach it.

The Nation

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Finally, the nation. What do we mean by the nation? This would be the needs of the general population (the concept of “population health” is still a slightly foreign one in Japan), such as the changing structure of disease prevalence / morbidity with the 2025 problem (when all members of the baby boomer generation will be 75 or older), leading the MHLW to introduce policy initiatives such as the 5 key disease areas (cancer, stroke, AMI, diabetes and mental health) and 5 care provision areas (emergency care, disaster relief, medical services in remote areas, perinatal care, pediatrics) to focus on, for the management of medical demand in the coming decades. The macro perspective is always crucial for companies to keep in mind, especially from the R&D perspective where technology should be used to develop products that meet the needs of the population, and not vice versa, where technology is first developed to produce goods that are later force-fit to the needs of the population – a common mistake especially in large firms lacking cross-functional collaboration. Here, combining different data sets to predict future healthcare demand, and recognizing the efforts of the public sector, will be valuable to companies like yours in identifying potential blue ocean areas for development of new solutions.

This column is designed to share insights and up-to-date information on the current state of Japan’s healthcare market, and enable us to bring shared value to healthcare in Japan. With a lineup of articles that will provide both the latest updates and historical context to enhance understanding, we hope that healthcare companies can stand to benefit from this shared knowledge. Stay tuned for more insights to grow your business! Feel free to contact us with any queries at inquiry[at]

Originally from Singapore, Dionne graduated from the College of Arts and Sciences at the University of Tokyo before starting her career as a growth strategy consultant in an American strategy consulting firm. Prior to joining GHC, Dionne was driving the healthcare business unit in Japan, covering market entry and growth strategies for global medical device, pharmaceutical, life science and digital health companies interested in the Japanese market and Japanese companies looking beyond the domestic market.
At GHC, Dionne is involved in various consulting projects for hospitals, and is also spearheading GHC’s ongoing efforts to support healthcare companies in their efforts to thrive in the Japanese market.