Businesses small and large are looking to cash in on the potential for smartphones and wearable devices as health care trends toward the digital age.

They are especially interested in preventive medicine, an area that could ultimately help rapidly graying Japan slash its ballooning medical costs, which topped ¥40 trillion in fiscal 2014.

“Japan’s medical spending is reaching its limit … if there are things that can be streamlined, we need to do it. I think digital health care services can spark such efforts,” Masato Iwasaki, a director at Takeda Pharmaceutical Co., said at a recent event for health care startups hosted with Daiichi Sankyo and DeNA Co.

But the harsh environment for startups in Japan is making it difficult to find a viable business model, let alone cultivate a new tech-based market, industry insiders say.

“Preventive medicine is really a challenging field” for turning a profit, Yota Yamada, CEO of Tokyo-based startup iCare Co., acknowledged.

The philosophy at Yamada’s company is that practicing preventive medicine, or committing to staying healthy, will help people detect diseases earlier, he said. Information technology devices will play a significant role in achieving that, he said.

To increase public awareness of the benefits of prevention, “it is essential to penetrate people’s daily lives. In that sense, these digital devices come in very handy because people have their smartphones with them all the time,” he said.

ICare markets a digital chat-based counseling service for company workers concerned about their health.

“The truth is that people don’t really care about being healthy,” until they aren’t, Yamada said, explaining why hospitals make money. The former doctor said many people don’t think twice about changing their eating or lifestyle habits until they feel pain, by which time it may be too late.

Yamada’s service connects people with doctors and public health workers through online chat, allowing people to more casually get information on their conditions so they can take actions needed to stay healthy, he said. The service primarily focuses on assessing people’s problems and providing information, he said, adding that it hopes to offer remote medical examinations in the future.

His startup is just one of several that believe digital health care is the key to a healthier society. At the startup event on July 24 at Shibuya’s landmark Hikarie Building, 10 firms including iCARE gave presentations on products and services mainly focusing on preventive medicine.

Officials attending from the major drugmakers said they were increasingly warming to the potential for digital health care services.

While the goal of streamlining medical spending is good, Yamada said that more advanced and costly medical equipment will continue to emerge at the same time, pushing it up. But many others think spending on treatment, especially for such lifestyle-related diseases as diabetes and obesity, can be reduced by digital products.

Given the time and money required to develop innovative products on their own, however, some drugmakers think that teaming up with startups will be a more viable way to get digital services off the ground.

“To spread the use of digital health care and digital solutions in Japan, we think it’s best to involve more startups or people who have brilliant ideas, minds and technologies to launch businesses,” said Katsuhiko Hiwatashi, director of the business innovation group at Tokyo-based drugmaker MSD K.K., owned by U.S. drugmaking giant Merck & Co.

But “the ecosystem in Japan today is very small and immature.”

This is why MSD teamed up with Tokyo-based Globis Capital Partners to set up its Health Tech Program, a mentoring program for startups looking to get into the health care business.

As a drugmaker, MSD knows the issues that need to be solved in the field, has an abundance of connections and is familiar with the regulations, putting it in good position to give startups with support and know-how.

Globis can then advise them on how to grow and find financing.

“We need to start making an ecosystem to encourage more companies to enter the business,” Hiwatashi said.

Building on its core drugs business, MSD wants to expand into a wider range of health care services, represented by its new slogan “beyond the pill.”

And as technology marches on, other drugmakers are looking to do the same.

Thanks to the internet, information that was once restricted to doctors can now be accessed by smartphones nearly anywhere at anytime. In addition, with wearable devices logging people’s vitals on a daily basis, IT innovations are only going to make it easier for people to check on their health by themselves, Hiwatashi said.

This monthly feature, appearing on the second Monday, looks at technologies still under development or new to the market.

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