Global Market: Japan

Japan’s medical device market continues to be one of the largest and is expected to continue expanding given it’s population demographics and disease burden. The country is heavily reliant on imports when it comes to medical technology. However, the government is keen on curbing the overall healthcare cost.

Population (24’): 124 million. GDP per Capital (24’): $ 32,487.08

Life Expectancy (23’): 84.04 yrs Currency: Japanese Yen

MedTech Maturity level: Mature, Highly advanced

Population Dynamics: Aging, Low birth rate

Health System Structure

• Governance model: Statutory Health insurance system providing universal coverage to 98.3% of the population.

• Coverage model: The government pays for 70% of healthcare cost while the patient pays for the rest. In addition, most residence have private health insurance that is supplementary

Reimbursement Environment

• Japan is the third-largest medical device market in the world, it presents very good opportunities for foreign manufacturers. In the past Japan created a very profitable business for many device companies. Today, the market is strictly gated.

  Given it’s ageing population, there is a focus on pricing and pressure on government budget. However, a well structured market access strategy is required in order to enter the market and grow successfully. I’d recommend that you do your homework well in advance of product launch.

  • Reimbursement mechanisms: The Ministry of Health, Labour and Welfare (MHLW) overseas the National Health Insurance (NHI) system of Japan. Any new technology requires endorsement from the Central Social Insurance Medical Council (CSIMC -Chuikyo).

    Reimbursement for new medical technology is made by MHLW post regulatory approval. To obtain reimbursement, it is crucial for manufacturers to submit an application dossier with clinical and or economic evidence and regulatory documents.

    Although economic evidence is important , the clinical value of your product has higher impact in determining reimbursement.

    The price for new technology is based on its similarity with existing listed technologies in their specific functional category. A functional category is a group of medical technologies that meet a specific category definition. each category has its own reimbursement price and it applies to all medical technologies within the category.

  • Health Technology Assessment maturity: Introduced in April 2019, the Japan HTA landscape is continuously evolving. With most drugs and devices facing a maintenance or downward adjustment in reimbursement price. The HTA process will continue to go through revisions and updates.

  • Pricing controls: Regardless of the path to premium reimbursement, there is potential for price adjustments using the foreign average price (FAP) adjustment rule. The FAP is calculated from the list price in 5 counties (United Kingdom, United States, Germany , France and Australia). Also note, that the MHLW is known to progressively reduce prices and tighten the FAP rules.*

    In addition, the reimbursement price for devices on STM list is reviewed on a biennial bases. This revision also includes price changes due to functional category mergers and splits. For those products on the STM list, the fee is revised based on market price, FAP repricing, unprofitable repricing and functional category restructuring. The FAP can limit how high the lunch price will be and may be beneficial to plan your global launch sequence with this in mind.

  • Time to reimbursement: 6-12 months depending on the application type

Value Drivers for Medical Technology

• Clinical evidence expectations: The clinical value of your device plays a crucial role in determining reimbursement. A few questions you need to consider include but are not limited to, is your device unique and superior to others existing competing products? How does your device help the Japanese patients,

• Economic value levers: While health economic outputs still matter, they currently seem to play a reduced role in reimbursement. However, as HTA frameworks mature and government priorities shift further toward cost containment, economic value is likely to become an increasingly critical driver of access

• Innovation appetite: Japan continues to embrace advanced medical technologies, especially solutions that demonstrate tangible clinical benefit and fill meaningful gaps in patient care

• Digital readiness: ready and improving - Japan continues to demonstrate leadership in advancing Software as a Medical Device (SaMD) policy across APAC, taking concrete steps such as launching DASH for SaMD 2 in September 2023.

Population & Demographic Baseline

• Population size (24’): 124 million

• Age distribution(20’): 28.2% aged 65+

• Healthcare spending per capital (22’): $3,889.36

• Healthcare workforce (20’):

  • Practicing physicians per 1,000: 2.4

  • Nurses per 1,000: 11.3

  • Hospital beds per 1,000: 13.1

Economic Standing

Past

• GDP growth patterns: Stagnant growth

• Healthcare spending as % of GDP(16’): 10.66

• Import vs local production trends: Heavily reliant on imports, fertile market for medtech manufacturers.

Present

• Current GDP (25’-26’)and stability: 4.28- 4.46 trillion with growth rate of about 1.1%

• Healthcare budget priorities: Key focus on cost containment, efficiency, sustainability and creating services tailored to emerging needs

• MedTech market size in US $ millions (25’ estimates) = local production + Imports - exports:

  • Local production: 18,485

  • Imports: 23,533

  • Imports from US: 9,648

  • Market size: 34,240

  • Trade surplus: 8,572

Future

• Demographic pressure scenarios: According to WHO, the population of Japan is expected to decline of 15% by 2050. This will continue to put pressure on the government’s cost containment measures as their workforce evolves.

• Expected Policy changes: We expect continuous updates to the Health Technology Assessment process. A focus on disease prevention and medical technology efficiency and sustainability.

• Digital transformation outlook: Japan continues to prioritize safety, clinical effectiveness, economic impact, and usability in the evaluation of AI‑enabled platforms. While recognizing the growing value of digital health innovation, particularly Software as a Medical Device and its benefits for patients, the country is expected to maintain a steady pace of regulatory approvals.

Regional Opportunity & Risk Summary

• Market attractiveness drivers: Priority for innovative medical technology in areas of high unmet need. Heavy reliance on medical technology imports. A relatively efficient, transparent and predictable pathway to market. Market gatekeepers have a well-defined time frame and remain strictly compliant to it which supports manufacturers

• Key barriers to product entry: Cultural business practices and emphasis on business relationships “who you know”. Who can provide expert opinion letters and recommendations for your device

Strategic Market Entry Recommendations

• Cultivate the right partnerships—because business relationships matter. Secure the engagement of the most influential key opinion leaders in your therapeutic area, along with professional associations that can credibly champion the clinical value of your product

• Synchronize global market entry to ensure that any future reference‑based price evaluations uphold the product’s long‑term commercial viability

• A robust market access strategy developed well ahead of launch and continuously refined as the landscape evolves. Ideally, this is supported by a market‑access–led global launch governance committee that aligns portfolio priorities with planned indication expansions

• Keep an eye on evolution of Japan’s health technology assessment post product launch. Anticipate and prepare accordingly by ensuring that health economic endpoints are included and collected in your post market studies and registries. Most drugs and devices face a downward reimbursement adjustment due to difficulties fitting their cost effective analysis and HTA principles to the existing reimbursement process

• Ensure you have a team on the ground that is capable of engaging directly with PMDA and MHLW and participating in all product-related discussions and meetings

• Japanese doctors can import non-registered deices for their own personal use with their patient. This is a possible pathway for new entrants to get the initial support for their devices
  

In conclusion, a solid market access strategy, partnerships with local stakeholders and an ear on the ground should get you successful entry into this market.