Commentary / Japan

Aspiration over action in Japan's approach to health innovation

by Ryo Kubota

Over the past few years, stakeholders in Japan — including policymakers, industry, the medical community and civil-society groups — have been advocating for a domestic “call to action” on health care innovation. Broadly speaking, they see an opportunity for Japan to engage its technical strengths in the life sciences, robotics and digital innovation in ways that merge with the country’s operational strengths in process and efficiency. The ultimate objective is to harness these strengths to better care for a rapidly aging population — and in the process, also make Japan a more attractive global hub for pursuing next-level health solutions. However, realizing these opportunities will require more than just aspirational platitudes. It will require tangible and specific new policy actions.

In Japan, government agencies such as the Health, Labor and Welfare Ministry, the Ministry of Economy, Trade and Industry (METI) and the Japan Agency for Medical Research and Development (AMED) have responsibilities in this space. Japan also recently established a new governmental position — chief medical officer — that, if fully empowered, may play an important role here as well. And of course, there is also activity and dialogue through interagency collaborations, which in turn build on high-level guidance such as Japan Vision: Health Care 2035, a long-term health care policy vision led by the health minister.

The government’s focus on health care innovation can be summarized in three prongs. The first prong focuses on the ways policy encourages socioeconomic approaches to increasing longevity. Improving quality of life for a population that is living longer is a critical consideration. Efforts by METI and the health ministry included increased investment in programming to prevent chronic and lifestyle diseases associated with aging.

The second prong focuses on improving the country’s biotech and IT ecosystem; in particular, the government is working to leverage health care IT such as telemedicine and using artificial intelligence for the medical data analysis. The third prong calls for innovation in specific areas associated with aging. This includes regenerative medicine, diabetes, dementia and elder care.

The government vision overall aligns with Japan’s potential. Japan has excelled in several areas and public policy plays a role in new gains. This is the right direction. The country is one of the largest markets in pharmaceuticals and medical devices, and aging, population decline, patients with resources, and public insurance create an attractive place to do business. Yet Japan struggles to bring innovation to the bedside. Why? My position is that policy efforts have been aspirational rather than achievable because they don’t address underlying challenges.

There is a tendency to suggest that the trajectory of Japan’s demographics, coupled with the country’s history of efficient systems, will — on its own — incentivize innovation and play a role in revitalizing Japan’s industrial sector. Yet having a comparative advantage does not guarantee an outcome. Meanwhile, past success has created an expectation of perfect technical solutions, which actually hinders innovation. Perfect solutions to demographic challenges facing Japan are impossible in the near term. Reaching them long term would require an innovation culture to welcome the cycle of testing, failure and learning, and retesting that leads to success. Currently the culture punishes failure, which stymies efforts to make Japan a hub for innovation.

Innovators understand this, but Japanese policymakers do not. Policymakers should encourage risks, support planning that allows for failure and cultivate the next generation of researchers. There are several warning signs that should give us pause about Japan’s outlook. Japan’s policies call for investments of money, time and faith, but they offer no incentives. The workforce is behind in English-language integration, making it difficult to tap into international research since English is the language of scientific collaboration. This is an issue that affects Japan as an innovation leader in many fields.

The government also lacks a policy that offers incentives for newcomers to address the challenges of Japan’s aging population, something that has been deployed in other countries. It does not provide a safety net for the experimentation and failures that accompany success in health R&D. Tragically, one of the recent trends is an exodus of Japanese Ph.D.s from the country — across the board.

This scientific exodus is worrisome. Making advancements in health R&D requires many researchers, including data scientists, engineers and pharmaceutical experts. The number of doctoral degrees in these fields in Japan has more than doubled in 20 years. But once these experts receive their degrees, they are less inclined to view Japan as an attractive country to build a career. Japanese Ph.D.s lack opportunities in academia and the private sector. Likewise, private-sector firms are reluctant to recruit Ph.D.s, even though such individuals increase their competitiveness, given their English prowess and knowledge of technology and global approaches. Thus, Japanese scientists are left out, forced to abandon their careers or leave the country.

Due to this trend, Japan also fails to attract foreign talent. Most international innovation hubs consider the ability to draw on foreign researchers an indicator of success. These countries work hard to lure such experts. Beyond the development of research, a mix of talent drives innovation and realizes the value of discoveries by tapping into research, expertise and networks worldwide. The truth remains that Japan offers few incentives to foreign researchers, who receive better packages abroad. The Japanese research community integrates fewer outside concepts and Japanese students receive less exposure to these approaches.

To date, the government has put some policies in place to address these challenges. AMED streamlines existing funding for integrated R&D in the field of medicine, from basic research to clinical trials. Japan also has eased some regulations, sped up approval times and passed laws that promote the development of orphan drugs. Furthermore, Article 30 of the Industrial Revitalization Act of 1999 seeks to address concerns related to intellectual property rights and has helped research organizations gain ownership of technology that they incubated with government funding, though the bill is more aspirational than impactful in practice.

Yet while the environment for innovative companies in life sciences is less daunting than it has been, Japan is still a difficult place for innovative organizations to thrive. Existing macroeconomic structures do not reward boldness. Innovators rarely receive the compensation awarded to their peers in the United States or the United Kingdom. Shuji Nakamura has been vocal that Japan risks a scientific exodus because of the lack of incentives for creativity. In 2014, he won a Nobel Prize for developing the LED technology. Although Nakamura should rightly be viewed as one of Japan’s leading innovators, he now lives in the United States.

The stigma around wealth is one reason for the lack of independent philanthropic activity, low investment in transformational ideas and the discomfort with entrepreneurship. This stigma stymies discussions about paying researchers and making a scientific career financially attractive.

There is no question that Japan is a market for innovation, but it is not a hub for innovators. If Japan does not take steps to address its challenges, it will lose its edge in the health care industry when it is facing an unprecedented challenge in providing care for its population.

Seeking partnerships is different from securing them. Japan is positioned to realize its goals, given the support of the government, the tradition of leadership in life sciences and the enthusiasm of the population for science. But policies must be ambitious and actionable. Addressing these challenges will require shifts in the political and cultural mindset. Ignoring the need to integrate these considerations into a strategic focus is inexcusable. Japan’s future and the health of its population depends on the country successfully tackling these challenges.

Ryo Kubota is chairman, president, and CEO of Acucela Inc., a subsidiary of Kubota Pharmaceutical Holdings. He is also a member of the board of directors at the National Bureau of Asian Research (NBR) and a visiting professor at Keio University School of Medicine. This commentary was adapted from a Q&A with Ryo Kubota originally published by the NBR.