Current Market Trends
Population: 126,591,889 (2018)
GDP: $4.88 trillion (2017 est.)
Currency: Yen (JPY/¥)
Japan's market for medical devices and materials continues to be among the world's largest. According to the latest official figures from the Ministry of Health, Labour and Welfare (MHLW) Annual Pharmaceutical Production Statistics, the Japanese market for medical devices and materials in 2017 was approximately $26.4 billion (USD 1 / Yen 112.10), up approximately 3% from 2016 in yen terms. The market remains heavily dependent on imports, especially sophisticated medical devices. The demand for advanced medical technologies is expected to increase as Japan has a fast-aging demographic profile, with relatively prosperous seniors holding increasing expectations for improved quality of life in their later years. BMI Research estimated that Japan's medical device market will exhibit a CAGR of 4.1% in yen terms from 2016 to 2021.
Over the last decade, reduction in regulatory approval timelines, increased predictability in pricing mechanisms, as well as incentives for innovation have allowed foreign pharmaceutical companies to bring their products to Japan more quickly. Companies, however, have expressed serious concerns that pharmaceutical pricing faces downward pressure for innovative products for several reasons: (1) a proposed shift to annual re-pricing; (2) a proposal to conduct Health Technology Assessments that would be imposed to further lower prices, and (3) a reduction in the scope of innovative pharmaceuticals covered by Price Maintenance Premium (PMP). These proposed changes are due to strong budgetary pressure to constrain healthcare spending, in part due to the rapid aging of Japan's population.
A Japanese company that intends to market a U.S. medical device needs to receive a “license for manufacturing/marketing business” (seizo hanbai gyo kyoka). The company holding this license is called a “Marketing Authorization Holder (MAH)”. A MAH must be physically located in Japan. The MAH must obtain marketing approval (hanbai shonin) for each product. A U.S. manufacturer intending to manufacture medical devices in the United States and export them to Japan is required to be registered by the Pharmaceutical and Medical Device Agency
(PMDA) as a “Registered Foreign Manufacturer” in the same way that a Japanese manufacturer is registered. Typically, a MAH can make a registration application on behalf of a U.S. manufacturer. A U.S. manufacturer that lacks a Japanese subsidiary can receive and maintain the marketing approval under its own name. However, the U.S. firm will need to designate a MAH when applying for product approval. This Designated MAH (D-MAH) will have to assume the same responsibilities as a MAH. A D-MAH can be a regulatory consulting company or an importer/distributor that holds an MAH license. When a regulatory consultant is designated as a MAH, a U.S. company will need to have a Japanese distribution partner since a regulatory consulting company will not act as a distributor. If a U.S. firm has a subsidiary in Japan, that subsidiary can become a MAH and then obtain the marketing approval for each product. If a U.S. firm does not have a subsidiary in Japan, the company has three options to consider in order to conduct business in Japan:
1. The U.S. firm can ask their importer/distributor to obtain the marketing approval under the name of the importer/distributor. In this case, the importer/distributor will have complete control of the U.S. firm’s products when the products are marketed in Japan.
2. The U.S. firm can obtain the marketing approval under their own name by designating their importer/distributor as a D-MAH.
3. The U.S. firm can obtain the marketing approval under their own name via a neutral third party such as regulatory consulting firms that have a “license for manufacturing/marketing business” by designating them as a D-MAH.
The Japanese market for medical devices is large and established at $26.4 billion in 2017. The market remains heavily dependent on imports, especially sophisticated medical devices such as pacemakers, PTCA catheters and orthopedic implants. A number of U.S. companies have substantial production capacity in Japan. As such, the total market share of U.S.-origin medical devices in Japan would be significantly higher than suggested by official statistics. According to the American Medical Devices and Diagnostics Manufacturers’ Association (AMDD), a trade association of Japanese operations of U.S. medical devices and diagnostics companies, the total sales of its member companies reached Yen 1.8 trillion ($ 14.9 billion) in 2015, which represented 67% of the Japanese medical device market (including IVDs) in terms of sales.
The major product categories comprising Japan’s domestic medical device production include: diagnostic imaging equipment; therapeutic and surgical equipment; bio phenomena measuring and monitoring systems, home therapeutic equipment, dialyzers, and endoscopes. Japanese medical device companies maintain high market share in those product segments. Top Japanese medical device companies, in terms of sales, include Terumo, NIPRO, Olympus Medical Systems, Hitachi Medico, Nihon Koden, and Fukuda Denshi. U.S. medical device companies produce a wide variety of medical devices, but they are especially strong in sophisticated segments of the medical market such as pacemakers, advanced interventional cardiology products, orthopedic implants, laser surgical equipment, and advanced diagnostic imaging equipment. Most major U.S. and foreign medical device firms have either a Japan office or a Japanese partner. As such, new-to-market U.S. companies will face strong competition not only from Japanese companies but also from American and multinational firms already in the market.
Given Japan's aging population and the increasing number of patients with chronic and life-style diseases, medical devices that alleviate pain, complement lost functions, and improve the quality of life should show steady growth in demand. Also, the markets for in-home care devices, technologies, and health IT related products are expected to grow as the number of people in out-patient care increases. Due to stronger consumer health concerns, other promising growth areas include self-care and preventive care medical devices and products.
Japan’s medical device classification system is based on the Japanese Medical Device Nomenclature (JMDN) codes which are different from U.S. and European classifications. Review processes for medical devices differ depending on the classification. Medical devices are classified by risk level into four classes (Class 1, Class 2, Class 3 and Class 4). Class 1 (lowest risk) is defined as general medical devices; Class 2 (relatively low risk) is defined as controlled medical devices; Class 3 (relatively high risk) and Class 4 (highest risk) are defined as specifically controlled devices. General medical devices can be marketed by submitting a notification to the Pharmaceutical and Medical Device Agency (PMDA). Controlled medical devices, with established certification standards, can be reviewed by third-party certification bodies. Controlled medical devices without certification standards and specifically controlled devices must be reviewed by PMDA and approved by MHLW.
In order to effectively market most medical devices in Japan, those products must be listed in Japan's reimbursement system. The reimbursement rate, or price, granted to a given medical device by the MHLW is effective under all insurance schemes, whether public, private or employer based. There are five product reimbursement classifications:
Category A1 products become eligible for reimbursement 20 days following a company's request for listing. Category A2 and B products become eligible for reimbursement on the first day of the month if the request for reimbursement is made in the first 10 days of the previous month. Category C1 and C2 products become eligible for reimbursement four times a year (March, June, September and December). Please see http://www.mhlw.go.jp/file/04-Houdouhappyou-11123000-Iyakushokuhinkyoku-Shinsakanrika/0000135598.pdf for further details regarding the medical device reimbursement system in Japan.
While the market for U.S. medical equipment in Japan remains strong, U.S. firms face challenges with pricing and reimbursement due to the Government of Japan’s (GOJ) efforts to contain overall healthcare costs as a result of Japan’s aging population. In June 2016, Japan decided to postpone, for the second time, the scheduled consumption tax hike in April 2017 (from 8% to 10%) to October 2019. When the tax hike was planned in April 2017, the Ministry of Finance was demanding that reimbursement prices be trimmed based on market prices by carrying out an irregular price revision, which would have led to de facto annual revisions (the scheduled biennial price revisions occur in even-numbered fiscal years). The decision helped the industry avert three consecutive years of price revisions in 2016-2018; however, it has created a more challenging financial environment as it generated additional revenues to fund healthcare expenditure. In June 2018, GOJ approved the 2018 Basic Policy on Economic and Fiscal Management and Reform, known as “honebuto”. This year’s honebuto again underscored the need to contain social welfare spending. Although no numerical targets were included, the honebuto specifically called for additional modifications to the reimbursement pricing mechanism.
Procurement & Tenders
In order to participate in the Government procurements, the seller must usually be qualified based on their history of operations, financial status, etc. For further information about the GOJ’s procurement, please see the Ministry of Foreign Affair’s website at http://www.mofa.go.jp/policy/economy/procurement/index.html. Also, the Japan External Trade Organization (JETRO) provides the Japanese Government Procurement Database System on their website at https://www.jetro.go.jp/en/database/procurement/.
International Modern Hospital Show (IMHS)
July 11-13, 2018
October 10-12, 2018
October 16-19, 2018
HOSPEX Japan (International Hospital Engineering Exhibition)
November 20-22, 2018
February 20-22, 2019
March 5-6, 2019
March 18-20, 2019
April 12-14, 2019
July 3-5, 2019
1. Can we file a product approval application to PMDA in a language other than Japanese?
No, PMDA requires all forms related to the product approval application to be submitted in Japanese.
2. Can we submit foreign clinical data for a product approval in Japan?
Yes, PMDA often accepts foreign clinical data of medical devices for a product approval. For further information, please see the following notifications:
3. Can we own a product approval status under our own name?
Yes, a U.S. manufacturer that lacks a Japanese subsidiary can receive and maintain the marketing approval under its own name. However, the U.S. firm will need to designate an in-country licensed Marketing Authorization Holder (MAH) when applying for product approval.
U.S. Commercial Service Contact Information
Name: Hiroyuki Hanawa
Position: Senior Commercial Specialist
Yen 42,364 billion (2015)
... as percent of GDP
... of which spent on inpatient services (including long-term care)
... of which spent on pharmaceuticals/consumables
... of which spent on outpatient services
Hospitals, Procedures, Healthcare Professionals
Number of hospitals
…Private and others
Number of hospital beds
... available beds per capita
1,229.8 beds/100,000 people
...of which in general hospitals
...of which in general clinics
...of which surgeons
...of which internists
...of which pediatricians
Life expectancy men/women
Male: 80.98 years Female: 87.14 years (2016)
2 deaths/1,000 live births (2016)
Percent of population older than 65
28.0% (Jan. 2018)
10.8 deaths/1,000 population (2017)
...caused by [highest disease burden]
...caused by [second highest]
Prevalence of [fastest growing disease burden]
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