Aging Population Driving Innovation in Japan’s Life Sciences

Japan’s greying demographics are a double-edged sword. The fact that it boasts the oldest population on the planet is a testament to its advanced, universal healthcare system. But caring for this expanding legion of seniors throws up challenges for that healthcare system, as well as for public finances. At the other end of the demographic curve is a shortage of young workers, which is impacting medical care along with nearly every industry. But this combination of factors is a driving force behind innovation and regulatory reform in the health and life sciences sector in Japan.

Last year the Japanese market for prescription drugs alone topped 11 trillion yen ($69 billion), according to healthcare research firm IQVIA. That represents just one slice of a wider industry set to grow in the years ahead. However, there is a contradiction at play here, too. Despite the huge size of the market, prescription drug prices are tightly controlled in Japan, decided by the Central Social Insurance Medical Council (Chuikyo), which advises the health ministry. This keeps medicine costs down but many in the industry argue that prices are so low it makes it unfeasible to develop and manufacture them.

Double shortages

Added to this are soaring costs for ingredients and supply problems exacerbated by production that has been disrupted by a series of safety scandals. NHK’s flagship current affairs show Close-up Gendai in June found that around 3,800 pharma products are in short supply, including blood pressure medication and cough suppressants. One pharma firm told the programme it had considered ramping up capacity but that the worker shortage ruled out 24-hour production, while the thin margins on medicines made investment in new machinery impossible.

Addressing the price issue, the health ministry has established a new distribution and drug pricing committee with a view to making innovation and production more viable. Chuikyo in February also proposed raising the fees paid by patients at clinics and hospitals in order to increase salaries for healthcare workers.

Encouraging innovation

The ministry is also working to make it easier for treatments that have been approved overseas to enter the domestic market, as well as providing tax breaks and other incentives to promote healthcare R&D in Japan by international firms. Meanwhile, the Ministry of Economy, Trade and Industry in 2022 launched a 300-billion-yen initiative to promote biopharmaceutical manufacturing, particularly vaccines, and another 350 billion yen to support pharma startups.

Some of this is already bearing fruit. Danish biotech firm Genmab was given approval late last year for an innovative cancer treatment it developed with a US partner. The firm is expanding its Japan operations with the intention of using them as a base to grow from in the wider Asian market. Recognising the potential of such moves, giant trading house Itochu launched a support service to facilitate market entry for medical device makers bringing as yet unapproved solutions to Japan.

Digitisation battling forwards

Many fields in Japan remain an oddball mix of cutting-edge tech and defiant clinging on to old ways. Taro Kono, Japan’s digital minister, announced June 14 that he had finally made headway in ending rules that required certain admin procedures at government ministries to be submitted via floppy disk.

“One case remains, but we’ll be able to review it over this month. Digitisation has made considerable progress. We would like to proceed with necessary reviews, including the use of faxes,” said the minister, referring to another battle he has yet to win.

In terms of such contradictions, healthcare and life sciences are no exception. Innovative startups now operate in a sector where paper-only medical records can still be found even at major university hospitals.

But progress is underway and machine learning is being increasingly deployed in healthcare. One example of a promising tool is a collaboration between a Fujitsu subsidiary, a government research centre and a startup to detect the early stages of dementia through analysis of how people walk. This AI-based system could be employed by monitoring footage taken at public facilities, though this throws up questions around surveillance and privacy.

Digital tech is showing enormous potential in areas including personalised medicine, stem cell therapies, drug trials and health data analytics. This technological advancement not only enhances the accuracy and efficiency of medical services but also creates new job opportunities in a wide range of fields such as data science, machine learning, and AI development, along with cybersecurity, digital health marketing, and clinical informatics.

By: Gavin Blair

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