With Japan’s rising public awareness about advanced medical diagnostics and treatment, and the Government of Japan’s (GOJ’s) policies to build a medical tourism market, the market for medical capital equipment in Japan is expected to show steady positive growth in the next few years. Compared to other Organization for Economic Co-operation and Development (OECD) countries, Japan already has by far the highest number of certain types of medical capital equipment, such as magnetic resonance imaging (MRI) units and computed tomography (CT) scanners. Market demand for medical capital equipment, especially high-end medical capital equipment, is also supported by favorable changes in Japan’s reimbursement pricing system for these products. Japanese medical device companies have traditionally been strong in medical capital equipment; however, U.S. and foreign companies maintain a high share in some product segments. Advanced diagnostic imaging equipment and other globally available sophisticated medical capital equipment that have not yet been introduced into the Japanese market should have good sales potential.
This market report on medical capital equipment will cover medical devices such as CT scanners, MRI units, nuclear medicine, and therapeutic systems.
The market for medical capital equipment in Japan is expected to show steady positive growth in the next few years due to rising public awareness about advanced medical diagnostics and treatment; the Government of Japan’s (GOJ’s) policies to build a medical tourism market; and recent positive developments in Japan’s reimbursement pricing system for those products. There has been an increased perceived need for medical institutions to have advanced medical capital equipment, especially diagnostic equipment, to meet public demand in Japan. Organization for Economic Co-operation and Development (OECD) Health Data on medical technology illustrates the level of Japanese public interest in medical capital equipment such as MRIs and CTs (Table 1). Compared to other OECD countries, in 2008, Japan had by far the highest number of MRI units (43.1 per million population) and CT scanners (97.3 per million population). (In 2007, the number of MRI units and CT scanners in the U.S. were 25.9 and 34.3 per million population, respectively). In addition to large hospitals, medium and small sized Japanese hospitals and clinics have installed MRI units and CT scanners in order to attract Japanese patients. Japan already has a sufficient number of certain types of medical capital equipment; however, the demand for high-end MRIs and CTs, as well as other advanced medical capital equipment, is expected to increase with rising public awareness about advanced medical diagnostics and treatment. In 2010, the American Medical Devices and Diagnostics Association (AMDD), a trade association for Japan-based U.S. medical device manufacturers, conducted a survey to on how the Japanese public viewed advanced medical devices and diagnostics. Eighty seven (87) percent of survey respondents said that advanced medical technology is “important” or “very important” when they or their family members require diagnosis or treatment. Further information about this survey is available at http://www.amdd.jp/pdf/t_voice/article/article008.pdf.
The demand for advanced medical capital equipment is also expected to increase due to GOJ policies and efforts to build a medical tourism market in Japan. The June 2010 GOJ New Growth Strategy recognized the drug and device lags as urgent issues and stressed the need to accelerate review times. Development of a medical tourism industry in Japan was also included in the strategy. Further, the GOJ has identified the pharmaceutical and medical device industries as key drivers of Japan’s future industrial growth. However, a 2011 AMDD study indicated that there is still a significant device lag and gap with only about half of all European and American medical devices available in Japan. Additionally, the massive March 11 earthquake, tsunami and subsequent nuclear power issues have recently caused a sharp drop in the number of tourists visiting Japan. Therefore, the GOJ will need to exert even more effort to resolve the device lags and gaps, and introduce the latest medical diagnostics and treatments in order to attract foreign patients.
Recently there have been some positive developments in Japan’s reimbursement pricing system for medical capital equipment. In the 2006 biennial reimbursement price revision, the Ministry of Health, Labour and Welfare (MHLW) recognized the difference in quality between innovative and conventional diagnostic imaging equipment by granting premiums to innovative products for the first time. In the past, there was no difference in reimbursement prices between innovative products and conventional products. For example, in the 2006 reimbursement price revision, MHLW provided a higher reimbursement rate for advanced MRIs with 1.5 tesla or higher, compared to conventional MRIs with 1.0 tesla or lower. MHLW also provided a higher reimbursement rate for advanced multi-slice CTs compared to conventional single-slice CTs. At the reimbursement price revisions in 2008 and 2010, MHLW increased reimbursement prices for certain advanced medical capital equipment, such as CTs for coronary scans, MRIs for cardiology related scans, image-guided radiotherapy, etc. MHLW is expected to continue this reimbursement trend which in turn will help spur demand for more new and replacement advanced medical capital equipment.
According to the Japan Industries Association of Radiological Systems (JIRA), the market for diagnostic imaging and therapeutic systems medical capital equipment in 2009 was $3.4 billion, which was approximately 15 percent of the total market for Japanese medical devices ($23.2 billion). Total Japanese exports of this product segment exceeded $1.9 billion and total imports were $1.1 billion. Japanese medical device companies have traditionally been strong in diagnostic imaging, unlike sophisticated segments of the medical device market (pacemakers, advanced interventional cardiology products, etc.) where U.S. and foreign companies have maintained a dominant position. However, U.S. and other foreign companies have maintained a higher market share than Japanese companies for certain products in the diagnostic imaging categories such as MRIs (67.7 percent), nuclear medicine (65.5 percent), mammography (61.1 percent) and cardiovascular/angiography X-ray systems (60.4 percent). Also, U.S. and foreign companies have maintained a high market share in therapeutic systems (90.4 percent). According to the MHLW Annual Pharmaceutical Production Statistics in 2009, U.S. products represented an approximately 54 percent import share and accounted for 26 percent of Japan's total medical device market. U.S. products had the largest import share in 10 out of 14 major product categories and represented approximately 71 percent and 53 percent in the therapeutic and surgical equipment, and diagnostic imaging categories, respectively. Medical capital equipment is included in these major product categories (which also contain other products not included as capital medical equipment in this report, such as physical therapy equipment). It is estimated that the U.S. has an approximately 50 to 60 percent import share of Japan’s medical capital equipment market based on this information.