On June 27, 2024, a health ministry panel in Japan outlined a visionary plan aimed at propelling the country’s health care startups to the forefront of global innovation through strategic investments. The panel highlighted Japan’s potential to become a leader in health care innovation but emphasized the challenges in commercializing these innovations and nurturing them into sustainable businesses.
Shuji Honjo, the panel chair and a management consultant, emphasized the significance of health care as a vital component of Japan’s social infrastructure. “Health care, which is Japan’s social infrastructure and treasure, must now be led by startups to innovate and contribute both in Japan and globally,” Honjo stated.
The landscape of health care startups in Japan has seen a decline since 2019, with only about 50 new startups established each year. Notably, there are no unicorn companies—those with a valuation exceeding $1 billion—in Japan’s health care sector. Additionally, large-scale mergers and acquisitions and initial public offerings remain scarce. Japanese health care startups, encompassing medical, health, and nursing care sectors, constitute a mere 2% of their counterparts in the United States.
The panel’s proposal identifies the structure and characteristics of each health care segment, outlining strategic investment approaches essential for the success of health care startups. Key areas of focus include science, human resources, finance, the development and regulatory environment for medical products, and market conditions.
One advocated approach is the “global direct approach” to investment, targeting areas with well-established markets and regulations, such as biotech sectors heavily influenced by the U.S. Food and Drug Administration (FDA). For this approach to succeed, Japanese startups must incorporate overseas expansion into their strategies from an early stage.
Additionally, the panel recommends a “gradual international expansion” approach. This strategy would concentrate on areas where Japan can pioneer and develop new markets, such as medical devices, software, and some segments of regenerative medicine. Startups would initially conduct pilot projects or market launches domestically before expanding internationally.
A third approach focuses on addressing domestic health care needs, particularly in response to Japan’s aging population. This approach would support “care tech” solutions, which involve the use of robots and other technologies to enhance the quality and sustainability of Japan’s health care system.
The health ministry is expected to request related expenses for the next fiscal year’s budget to support these strategic initiatives. By implementing these strategies, Japan aims to foster a more robust and competitive health care startup ecosystem, ultimately driving innovation and contributing significantly to global health care advancements.
The vision presented by the panel underscores the importance of targeted investments and strategic planning in elevating Japan’s health care startups. By addressing the unique challenges faced by these startups and leveraging Japan’s strengths in technology and innovation, the country is poised to become a global leader in health care solutions.
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