Healthcare: A Deeper Look into the Industry

Over the past few decades, the lifespan of humans has increased quite remarkably due to better healthcare technologies, improved living conditions as well as nutrition. In Japan, currently, the average life span of a Japanese man is 80 and 86 for woman, and with the steady increase in statistics over the years, it is expected to have the highest ageing rate among all developed countries by 2025. From there, you would think it is an improvement so why is it considered a problem? While lifespan is increasing, healthspan of a person, the period of time in which the person is considered generally healthy and less susceptible to diseases due to old age, is not increasing as rapidly resulting in a larger gap between these two periods. A good example would be in Japan, although the lifespan of a typical man is 80 years, the healthspan is only 71. This leaves a 9 years period in between where the man has a higher risk of contracting diseases and illnesses resulting in an increase in medical expenses.

Figure 1: Average Lifespan and Healthspan of the Japanese Population

  1. 1. Current Healthcare Industry
  2. 2. Overview of the Current Market and the Key Players
  3. 3. Japanese HealthTech Landscape
  4. 4. Contact us

Current Healthcare Industry

With the increasing need to maintain and promote the health of the consumers, there is a constant growth of the healthcare industry and is an area that is expected to see continuous growth over the next few decades. Furthermore, Abe administration has also included “prolonging of the peoples’ healthspan” as one of the themes of the “strategic market creation plan” in the Japan Rebirth Strategy. In this plan, it is clearly stated that areas such as health promotion, prevention, life support services, medicines and medical devices should be fostered as a strategic area where growth potential is to be expected while curbing the ever-expanding medical expenses.

PEST Analysis
To have a clearer idea on the scale of this industry, we first have to look at the macroeconomic factors impacting it and a simple way to do this is a PEST analysis (Political, Economic, Society and Technological analysis).

Politics Economy
・ Strategy for growth
・ Implementation of measures to control medical expenses and long-term care expenses
・ Enforcement of laws on pharmaceuticals and medical devices etc.
・ Legislation and deregulation of new fields such as regenerative medicine
・ Rise of medical expenses, long-term care expenses
・ Lapse of large drug patents expired
・ Supplying of healthcare venture funds
・ Deepening industry-university collaboration
Society Technology
・ Growing population increase
・ Higher health awareness
・ Crisis of medical care in rural area
・ Promotion of technology transfer
・ Development of regenerative medicine technology including IT and miniaturization of medical related equipment leading to a price decline

Figure 2: PEST Analysis of the Healthcare Industry

Market Size
According to the Ministry of Health, Labour and Welfare, the current medical cost is approximately 49.6 trillion yen and by 2030, it will increase to about 54 trillion yen. Following this, the market size will also have an approximate increase of about 10 trillion yen every decade putting the healthcare industry with predicted market size of 37 trillion yen by 2030 further proving the continuous growth and expansion of the industry in the future.

Figure 3: Medical Cost and Market Size of the Healthcare Industry in recent decades

Overview of the Current Market and the Key Players

At the mention of healthcare industry, the first key players that come to mind must be pharmaceutical companies, medical institutions, drug wholesalers etc. however, the market involves a whole range of business types ranging from manufacturer to service industry. Listed below are the various business types that are classified under healthcare with the services that they provide and the key players in each area.

Healthcare Needs Product or Services Provided Key Players
Maintaining a Good Health Smartwatch with fitness, portable apps and cloud services to help maintain health, and record personal physical conditions Fitness club, Mobile Application / Cloud Service Vendor, Smart Devices Manufacturer and Producer of Healthy Food
Treatment of Illnesses and Injuries Manufacture and sales of medical services, pharmaceuticals and medical devices (treatment equipment, testing and diagnostic equipment, etc.) Medical Institutions, Pharmaceutical Companies, Medical Device Specialists, General Electronics Manufacturers, Drug Wholesalers and Drug Stores
Improving Physical Disability Care service, manufacture, sale of welfare, care equipment Care Company, Care Equipment Manufacturer, Car Manufacturer and Care Equipment Distributor
Healthcare Business Support Support for drug development (development contract, dispatch of support personnel, etc.), outsourcing services for medical institutions (cleaning, nursing assistance, food service, facility management, etc.), medical IT services/products (electronic medical records, telemedicine systems, etc.) CRO (Drug Development Contract Agency), SMO (Clinical Trial Facility Support Agency), Building Maintenance Company, Staffing Agency, Food Service Company, Software Vendor and System Integrator

Figure 4: Healthcare Market and the Players Involved

Therefore, with these huge ranges of variety in businesses involved, they will serve as business opportunities for small and medium-sized companies as well as venture companies as the market expands.

Japanese HealthTech Landscape

The figure below shows the Japanese Health Tech Landscape as of 2017. From left to right, it shows companies involved in the maintenance of health as well as prevention of diseases to those involved in treatment and discovery of cures to providing caregiving services and equipment on the far right. From a top-down direction, on the other hand, shows larger companies that sell services business to business in comparison with smaller companies on the bottom selling services via business to the consumer directly.


Japanese Digital Health Start Up Landscape

Contact us

Please feel free to inquire using the form below. We will respond as soon as possible between 9:30 and 18:30 (Monday – Friday Japan Tokyo time).

Reference:
Figure 1: Statistics taken from Average life span: Ministry of Health, Labor and Welfare “2013 simple life table”, Healthy life span: Ministry of Health, Labor and Welfare “2013 simple life table”, “2013 demographics statistics” “2013 National Life Basic Survey” Ministry of Internal Affairs and Communications “2012 estimate Calculated from “population”
Figure 2 & 4: Japan Intelligence Mart
Figure 3: Based on the Ministry of Health, Labor and Welfare “Estimates of social security expenses” and “Japan revival strategy-JAPAN is BACK-”