Biotechnology

The Japanese focus on making small gains with immediate and widespread applications. For example, they have used biotechnology to improve the efficiency of fermenting soy sauce and sake as well as for basic diagnostic and analytical tests used in various industries. Modest applications like these have made biotechnology big business in Japan.

But Japanese research is not limited to basic applications. Researchers in Japan are using biotechnology to work on a variety of concerns, like cleansing away residual pesticides and chemicals; cleanup of hazardous spills; developing special strains of vegetables; creating non-petroleum based plastics; high efficiency bioreactors; plasminogen activators; research on interleuken 2 and granulocyte colony stimulation and just about everything else you can think of. But again, focus is on those technologies that will be lucrative in the short term, and not on the ones that require a lot of time and energy to bring to market.

For many companies there are gaps and hence the interest in collaborative arrangements with foreign health science firms.

There are two sources of Japanese biotechnology growth. The first is the Japanese government, which designated biotechnology as a key "future technology" back in the 1980s. This designation, along with millions of dollars in incentives, got the industry rolling. Having done its job however, the government is now backing off and allowing the market to take its own course. That leaves the other main source of growth: links to overseas biotechnology firms.

Overseas firms have been essential to Japan's growth. As the Japan Economic Institute reported, "Establishing links with American biotechnology firms was one reason Japanese companies were able to jump straight into the thick of the race." Indeed, their links to biotech producers on this side of the Pacific are both deep and diverse. They include but are not limited to testing and approval pacts, licensing deals, equity investments, joint university research and marketing agreements. These are the links that will continue to make the market grow; largely because Japanese R&D has yet to catch up with R&D in North America. And as long as we are one step ahead, trans-Pacific links like these become the best way for them to know what's going on.

Medical Devices

Although the population of Japan is only half that of America's, Japan has the world's second largest health care expenditure, and the world's largest per capita consumption of pharmaceutical products. The reason for this is simple: the Japanese as a nation are an aging society. By the year 2024 over 23 percent of their population is expected to be age 65 or over. That means that Japan will have the third largest proportion of senior citizens in the world. However, because Japan is also experiencing a sharp decline in its birthrate, it will experience the fastest proportional increase. As The Economist reported, health spending in the future will be concentrated "even more than it is now on the last third of life, and particularly on the last few years." So the market for medical devices will be increasingly skewed towards the diseases of the elderly. As the nation with longest average life span in the world, in Japan this trend will be even further exaggerated.

In an increasingly competitive field, medical institutions are using every weapon at their disposal to attract Japan's ageing citizenry. High technology items have been the best sellers. However, as medical technology is an area where Japan lags behind many western nations, more medical instruments are being imported. Even when the market began to suffer from increased price competition, imports remained unaffected. Imports now make up almost one fifth of the Japanese market.

Although horror stories (both real and imagined) of exporting to Japan abound, the Japanese have taken several steps to see to it that the importation of medical devices in particular is trouble-free. First, there are no import duties whatsoever. Second, the licensing process has been simplified. Lastly, Japanese hospitals have taken an aggressive approach towards the introduction of new instruments. All of these serve to make exporting to Japan fast and efficient.