japan medical device market overview

Japan Medical Device Market Overview

Ian ClementsOffice of Japan

U.S. Department of CommerceApril 10, 2008

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Main Points of this Presentation

• Japan remains the world’s No. 2 medical device market.

• Japan’s market is highly regulated: Product approvals are slow and expensive.

• The Commerce Department helps U.S. companies overcome Japan’s regulatory problems.

Presentation Outline

• Importance of Japan’s Market – Impact of Its Aging Society

• Introduction to Japan’s Regulatory System– The Regulatory Agencies and Pharmaceutical Affairs

Law– Regulatory Problems and Their Impact– Japan’s Plans to Resolve the Problems

• The Commerce Department’s Work on Medical Devices in Japan– Regulatory Reform Initiative

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Warm-up Question

Who is the Prime Minister of Japan?

• Junichiro Koizumi

• Shinzo Abe

• Kosuke Fukudome

• Yasuo Fukuda

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Japan Remains the World’s Number 2 Economy

Country Gross Domestic Product

Per Capita Income

United States $13.8 Trilli0n $46,000

Japan $4.4 Trillion $33,800

China $3.2 Trillion $5,300

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Source: CIA World Factbook

Japan Imports $5 Billion of U.S. Medical Devices

2005 2006 2007

Market Size 19,172 20,416 19,122

Local Production

14,277 15,261 15,379

Exports 4,296 4,595 4,630

Imports Overall

9,191 9,750 8,373

Imports from the U.S.

5,395 5,850 5,265

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Unit: Millions of U.S. Dollars

Figures for 2006 and 2007 are estimates.

Source: “Doing Business in Japan, 2008 Country Commercial Guide for U.S. Companies,” U.S. & Foreign Commercial Service and State Department.

Japan’s Population is Shrinking and Aging

• Japan’s population is projected to fall from 127 million in 2007 to 97 million in 2047.

• 1 in 5 Japanese is 65 or older today.

• 1 in 4 Japanese will be 65 or older by 2015.

• Population trends are straining Japan’s healthcare budget

Sources: U.S. Census Bureau, The Economist, OECD

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Two Agencies Regulate Medical Devices in Japan

• Pharmaceuticals and Medical Devices Agency (PMDA), or Kiko– Reviews product applications– Isn’t a government agency– Needs more device specialists as reviewers

• Ministry of Health, Labor and Welfare (MHLW)– Approves product applications– Is a government agency

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Pharmaceutical Affairs Law (PAL) Governs Regulation of Medical Devices

-- Risk-Based Regulatory System

• PMDA reviews devices in highest risk categories.• Third parties can review some lower-risk devices.

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Risk Class Approval type Review body

Highest 4 Approval PMDA

3 Approval PMDA

2 Third-party certification or Approval

Third-party review body or PMDA

Lowest 1 Self-certification

N/A

Things You Probably Need to Sell Medical Devices in Japan

• Marketing approval (hanbai shonin)

• Marketing Authorization Holder, or MAH (optional)

• Four licenses:– Marketing– Manufacturing– Retail – Repair

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Regulatory Approval Delays are a Problem

Average Medical Device Approval Times

• European Union: 6 Months.

• United States: 3 to 10 Months.

• Japan: 12 to 36 Months.

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Source: Medical Devices and Equipment: Competitive Conditions Affecting U.S. Trade in Japan and Other Principal Foreign Markets, March 2007, U.S. International Trade Commission

Japan’s ‘Strategy for Innovative Medical Devices’

Japan’s April 2007 “Five-Year Strategy for Creation of Innovative Drugs and Medical Devices” includes plans to:

• Increase R&D spending.

• Promote start-ups.

• Improve clinical trials.

• Expedite reviews.

• Review the reimbursement pricing system.

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Warm-up Question on the U.S. Commerce Department

Bureau of Engraving and Printing

Census Bureau

Federal Trade Commission(FTC)

Occupational Safety and Health Administration

(OSHA)

National Weather Service Patent and Trademark Office

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Which of the following 3 agencies are units of the Commerce Department?

Commerce Department Helps Companies do Business in Japan

International Trade Administration • U.S. Foreign and Commercial Service

– Offices in Boston and 106 other U.S. cities– Offices in more than 80 countries– In Japan, offices in Tokyo, Osaka, Nagoya, Sapporo

• Manufacturing and Services (MAS)– Industry specialists– Office of Health & Consumer Goods

• Market Access and Compliance– Regional and compliance specialists– Office of Japan (my office)

• Leads U.S. Government work on medical devices in Japan

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U.S. Government Encourages Japan to Streamline Regulations

• U.S.-Japan Regulatory Reform Initiative (since 2001)

• 1986 U.S.-Japan MOSS (Market-Oriented, Sector-Selective) Agreement

• U.S. Government’s October 2007 Recommendations:– Regulatory

• Speed approvals of minor changes.– Reimbursement Pricing

• Abolish the Foreign Average Price rule.

• U.S.-Japan Report to the Leaders– Annual summary of progress on regulatory and

reimbursement issues.

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Concluding Summary

• Japan, the world’s No. 2 medical device market, will be affected by demographic changes.

• Japan acknowledges its cumbersome regulatory process contributes to a “device lag.”

• The Commerce Department uses the Regulatory Reform Initiative and other means to help U.S. companies overcome Japan’s regulatory problems.

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Websites of the International Trade Administration

• International Trade Administration of the U.S. Department of Commerce: http://trade.gov/index.asp

– Market Access & Compliance: http://trade.gov/mac/index.asp

• Office of Japan: http://www.mac.doc.gov/japan/

– U.S. Commercial Service: http://trade.gov/cs/index.asp

• Japan 2008 Country Commercial Guide: http://www.buyusa.gov/japan/en/ccg.html

– Manufacturing & Services: http://trade.gov/mas/index.asp

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Other Useful Websites

• U.S. International Trade Commission Report: Medical Devices and Equipment: Competitive Conditions Affecting U.S. Trade in Japan and Other Principal Foreign Markets (March 2007): http://hotdocs.usitc.gov/docs/pubs/332/pub3909.pdf

• U.S.-Japan Report to the Leaders (June 2007): http://www.ustr.gov/assets/World_Regions/North_Asia/Japan/Regulatory_Reform_Initiative/asset_upload_file751_12837.pdf

• Annual Reform Recommendations from the U.S. Government to the Japanese Government under the Regulatory Reform Initiative (October 2007): http://www.ustr.gov/assets/Document_Library/Reports_Publications/2007/asset_upload_file751_13383.pdf

• Japan’s Pharmaceuticals and Medical Devices Agency: http://www.pmda.go.jp/english/index.html

• Japan’s Ministry of Health, Labor and Welfare: http://www.mhlw.go.jp/english/

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My contact information

Ian ClementsInternational Trade SpecialistOffice of JapanU.S. Department of Commerce1401 Constitution Avenue, NWWashington, DC 20230

202-482-1821Ian_clements@ita.doc.gov

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