Japan a Major Player, But Be Prepared

By Maria Fontanazza
March 19, 2018


• Categories: 03-Manufacturing Execution, 04-Product Design & Development, 05-Quality/Regulatory, Market Access

It’s long been known that although Japan has one of the largest markets for medical devices globally, it’s still one of the most challenging to penetrate. However, there are still plenty of opportunities for device manufacturers—they just need to be prepared, says Ames Gross, president and founder of Pacific Bridge Medical. “Although most of the attention on the Asian markets is focused on China nowadays, Japan is still a major player in the medical device industry. Foreign medtech companies continue to go to the Japanese market because it is still the second largest single country medical device market in the world,” says Gross. “Also, Japan has a very developed medical community, so Western companies with new technologies will normally find demand there.”

In a Q&A with MedTech Intelligence, Gross shares his insights about the general landscape of the device market in Japan.

MedTech Intelligence: What are the barriers to entry for Western medtech companies that want to market their products in Japan?

Ames Gross: Registering medical devices in Japan can be challenging and expensive. If the Western device company has approvals overseas, that will normally help. However, the most important thing is to make sure your documents are in order and all your i’s are dotted and t’s crossed. Japan’s regulatory agencies are a stickler for details, and even a simple typo can cause confusion and significantly delay the process. Western companies are asked to submit a large number of documents to obtain approval, so a great deal of diligence and attention to detail is required. The good news is that Japan is more transparent than some other Asian markets like China, for example. While the Japanese standards are demanding, they are normally clear on what is needed.

Western medtech companies are often unsure about how their device will be classified or whether clinical trials will be required for product approval. To address these questions, the PMDA offers 30-minute free consultations for general questions. While most of the time your questions will not be answered during this free session, the PMDA will recommend you have a formal consultation session with them. There are a variety of formal consultation sessions that cover topics like clinical trials. There are also specific consultation sessions for diverse products like regenerative medicine. Normally, a formal PMDA consultation session will require you to put together about 50% of your dossier in Japanese and submit it to the PMDA with your questions. The PMDA will study this information and then meet with you to discuss further and let you know their recommendations. The fee for formal consultation sessions is about $10,000 to $20,000.

Read more about Strategies for Success in Japan’s Device MarketJapan has its own reimbursement code system that is critical for Western companies to understand in order to successfully market their products in the country. Generic devices normally fit into codes A and B, while new products with new features are normally categorized into the C1 or C2 codes. The main issue for Japan device reimbursement is that oftentimes, the Japanese government will place new technologies into existing categories where the lower reimbursement amount may mean the Japan business will not be profitable for the Western device company. Obtaining a higher reimbursement rate can be a long and expensive process. While health economics in Japan is becoming more prevalent, it is still behind the West in this area.

MTI: Are there specific technology sectors that are accelerating faster than others in Japan?

Gross: The main causes of death in Japan are cancer, cardiovascular disease and stroke. Thus, Western medical device companies with diagnostic and therapeutic devices in these areas have had, and will continue to have, the best opportunities in Japan. Lower back pain is also prevalent, so orthopedic device companies that address lower back issues should do well, too.

MTI: What are the biggest threats to medtech development in Japan?

Gross: The answer will vary depending on a number of factors, but one of the main issues is how large the market will be for your device in Japan and how much money/resources you can devote to the Japanese marketplace. Primary on-the-ground research is crucial to help determine market size.

Most small- to mid-sized Western device companies utilize Japanese distributors to sell their products in Japan. Taking the time to get to know your potential Japanese distributor before you sign the distribution agreement is very important. Also, once the agreement is signed, many Western device companies do not spend enough time training their distributor or give them the management needed to ensure they are doing their job properly. Bigger companies that have done extensive market research and know there is a good opportunity in Japan may decide to set up their own office locally, but this must be carefully thought out since it will take significant time and money to do so. Your company’s reputation in the Japanese medical device market is crucial, so it is very important to build a strong foundation regardless of which strategy you employ.

Smaller companies that want to reduce upfront cost may decide to let their Japanese distributors register their products on their behalf. Of course, in doing so, the Western medtech company will relinquish control of the product registration. If you decide to let your distributor register in their own name, make sure that there is a stipulated buy back provision in the contract, in case you no longer want to sell through that distributor in the future. Setting a simple formula and money amount to buy back the registrations is always the best way to go. If you perceive the opportunity in Japan as rather large and you want to control your own registrations from the start, hiring an independent DMAH/MAH is the way to go. Of course, in return for more control of your product registration, you will need to pay more money to the DMAH/MAH, including product registration fees and monthly local agent fees.