Part II: Changes In The Healthcare Industry

1
Part II Changes In The Healthcare Industry

• Rapidly rising healthcare costs driven by aging
  population
• Hospitals and pension funds in the red
• Government cost-cutting measures
• Aging doctor population
• Increase in Western-type diseases

2
National Medical Expenditure
Unit 100 million yen
Source MHLW, Kokumin Iryohi no Gaikyo 1999
3
Proportion of National Medical Expenditure, By
Age Group
50
28.1
15.3
6.6
Over 70 39.4 Over 75 27
Source MHLW, Kokumin Iryohi no Gaikyo 1999
4
Percentage of Hospitals Operating in the Red/Black

Base 977 Hospitals
Source 2001 Byoin Unei Jittai Bunseki Chosa,
Zenkoku Koshi Byoin to Shadan Hojin Nihon
Byoinkai, February 2002
5
Percentage of Health Insurance Societies in Japan
Operating in the Red/Black
(Estimated)
Source Kenko Hoken Kumiai Rengo, Kenko Hoken
Kumiai no Yosan Mikomi Jokyo, March 2002
6
Government Cost-Cutting Measures

• Reduction in yakka (reimbursement prices) for
  pharmaceuticals. Average 6.3 cut in April 2002.
  Pharmaceuticals as percentage of gross medical
  expenditures has dropped from 30 to 20 in the
  past 10 to 12 years.
• Re-pricing for medical equipment whose foreign
  prices are significantly lower than prices in
  Japan.
• Increase in payment of fees borne by outpatients
  70 years and older. Increase is higher in larger
  institutions to attempt to get aged with chronic
  diseases to more to smaller facilities.
• Co-payments by worker increased from 10 to 20.
  Bill currently in parliament to increase
  co-payment to 30 next year.
• Full-time employees who receive pension payments
  will now have to pay social welfare premiums.
• Reduction in technical fees to medical
  professionals by 1.3 from April 2002, first time
  since WWII over strong opposition from JMA.

7
Number of Doctors
Source Ishi, Shikaishi, Yakuzai Chosa no
Gaikyo, MHLW, 2000
8
Number of Hospitals
Source Iryoshisetsu Chosa, MHLW, 2000
9
Number of In-Patients, Average Length of Hospital
Stay, Annual Number of Operations Japan vs. USA
(1998)
Source Yoji Okabe, Iryohi Shishutsu No
Nichibei Hikaku (2), Institute for Health
Economics And Policy (Iryo Keizai Kenkyu Kiko).
Presented at Pharma Delegates Seminar, April 2002.
10
Age Break of Doctors in Year 2000
Source MHLW, 2000 Medical Census
11
Trends in Age of Doctors in Japan
Source MHLW, 2000 Medical Census
12
Death Rates by Leading Causes
13
Rate of Death from Cancer (per population of
100,000)
14
Medical Treatment Rates for Major Diseases (per
100,000 population)
15
2001 Global Pharmaceutical Sales by Region
Source IMS World Review 2002 and IMS
Consulting, April 2002
16
Government Price Cuts 1990-2002
Source MHLW
17
April Price Reductions

• Reduction on healthcare costs (medical
  expenditure budget basis)
• Medical technical fees 1.3 (first time since
  WW?)
• Drug price cuts 1.4 (6.3 on NHI base)
• Repricing of long-listed products with generic
  competition 4-6 additional to NHI cut
• A-zone 2 (ordinary revision based on market
  prices)

18
Other Pricing Matters

• New innovation premium rates
• Innovativeness up to 100
• Usefulness I II 10 30
• Foreign price reference
• Will review prices for products already approved
  in other countries (basket of 4 countries
  Europe/USA)

19
Current Generics Market in Japan

• Estimated value 400 billion yen (around 6 of
  total market)
• Volume 10 12
• Highly fragmented
• Over 400 companies
• Two largest Towa and Sawai have just under 20
  billion yen in sales

20
Recent Changes in Environment for Generics

• Negative
• GE Rule abolished (40)
• Long-term listed products-additional 4-6 NHI
  price reduction
• 80 for first-wave generics maintained
• Positive
• New point system for promotion of generics use
• MHLW Minister to push for generics use at
  university and public hospitals
• Co-payment increase may lead to patient request
  for generics

21

• Abolishment of GE 40 rule This prevented the
  NHI price of any generic from decreasing to less
  than 40 of the highest NHI price among products
  containing the same active ingredient. Prices now
  expected to drop to 20 level, impacting generic
  manufacturer profitability.
• 80 rule for first-wave generic kept NHI price
  for any first generic is set at 80 of that of
  its original product.
• As a result, new NHI prices of major generics
  have come very close to their market prices with
  decreases of about 30 compared to current
  prices. Such a price cut makes it no longer
  possible for generic companies to sell their
  products on the strength of yakkasa. Mr.
  Y.Sugiura, President, Ethical Manufacturers
  Association (Pharma Japan, February 18, 2002)
• If the 40 GE rule is abolished, only original
  manufacturers with high-priced products will be
  able to offer yakkasa, one of the financial
  resources for medical institutions, and generic
  companies will be excluded from the game. This
  will drive medical institutions, whose income is
  expected to decrease due to the reduction in
  medical fees in April, to switch from generics to
  original products, and only original companies
  will increase market share. Japan Generic Drugs
  Study Group, February 6, 2002.

22

• Additional NHI price reduction in long-listed
  products of 4-6
• Possible increase in branded generics where
  original manufacturers pass on long-listed/small
  volume unprofitable products to generic houses
  without causing trouble to hospitals by stopping
  supply.

23
New Point System to Encourage Use of Generics

• 2 points (20 yen) for writing generic
  prescription (either generic name or brand name
  of generic product)
• 2 points for generic dispensing
• 10 points to pharmacy for providing information
  on drug quality of generics in writing and
  obtaining patients consent.
• But,
• Value of 2 points to doctor within total points
  for a visit?
• No points for dispensing generics unless doctor
  write a prescription for generics
• Pharmacies at this point have little information
  on generics
• Space considerations for stocking generics
• Need appropriate pack sizes for dispensing at
  pharmacies (MHLW to follow up with each
  manufacturer on this)
• March 15, 2002 Minister of MHLW Mr. Sakaguchi
  stated in parliament National and other public
  hospitals should actively use generics and set a
  good example for other hospitals.

24
Medical Devices Price Cut (April 1, 2002)

• 0.1 reduction in standard prices for medical
  materials.
• New re-pricing rule intended to minimize price
  gaps between Japan and other countries
  pacemakers, PTCA balloon catheters and coronary
  stents were re-priced.
• Of the total functional categories, 325 saw price
  reductions, 275 remained unchanged.
• Pacemakers, PTCA balloon catheters and coronary
  stents were re-priced because their prices were
  found to be 1.5 times or more higher than those
  in other countries and their price reduction
  rates in the last two revisions were 15 or less.
• PTCA balloon cathaters price reduction 9 in
  April 2002, 17 in January 2003, and 20 in
  January 2004.
• Pacemakers and corrnary stents re-priced 12 and
  4 respectively.
• Separately, a pharmaceutical industry vision is
  being prepared.

Source Medical Devices Industry Vision By MHLW
25
Regulatory Reform Three Year Deregulation
PlanApproved at Cabinet Meeting on March 29,
2002

• Broad agenda law, finance, education,
• medical, welfare,
  employment,
• agriculture, energy,
  etc.
• Targeting for increased transparency, improved
  efficiency, and freer market access.

26
Problems with Clinical Trials in Japan

• MHLW presented a report on March 6, 2002 showing
  that the speed of clinical trials, determined
  based on the time needed before treatment of a
  target number of patients is completed, is 3 to
  18 times slower in Japan than in 21 other
  countries, including the USA, Canada and EU.
• Hollowing out of clinical trials. The number of
  drug candidates originating in Japan whose
  development stage is more advanced abroad than in
  Japan or which are being developed only abroad
• 1993 23 (18.3 of total)
• 2000
  70 (43.2 of total)
• Number of reports of first clinical trials for
  new active ingredients in Japan is decreasing
• 1996 just below 100
• 2001 43
• Foreign-developed drugs account for as much as
  70 of the total number of new drugs approved in
  Japan in recent years. (MHLW, March 6, 2002)

27
Reason for Decline/Slowness in Clinical Trials in
Japan

• As perceived by MHLW (March 6, 2002)
• Decline
• Tougher NHI pricing for new drugs with poor
  innovativeness
• Successive reductions in NHI prices
• Introduction of new GCP guidelines
• Acceptance of more foreign clinical data
• Slowness
• Poor understanding of the need for clinical
  trials among the public and the lack of
  enthusiasm among patients
• Lack of enthusiasm among investigators
• Poor clinical trial support systems

28
Hospital Malpractice Reports Carried in the Media

• At Japans 82 special-function hospitals (the top
  university, cancer centers, and large hospitals),
  there were 15,003 malpractice and 186,569
  near-miss cases reported in the two year period
  to February 2002, including 387 deaths. This was
  the first ever compilation of such figures, and
  the number of cases is probably under-reported as
  a quarter of the hospitals reported only a very
  small number of incidents. (Source data
  provided in the Japanese national parliament in
  response to a question from the opposition party,
  MHLW 23 April 2002)
• Study conducted by faculty and staff union of
  Japanese universities in late 2000, among 4,937
  nurses in 21 university hospitals.
• 93 have had a medical mistake or a near mistake
• 68 often or sometimes relieved their
  colleagues without getting sufficient information
  about their patients.
• 69 often or sometimes have experience of
  nobody being there at the nurse station when a
  respirator sounds the alarm or a nurse call
  button rings.
• 22 dont have more than one nurse check
  injections or IV bags before use, and a further
  46 did so sometimes
• 82 often or sometimes have to stop
  preparations of injection/IV bags in order to
  answer a call

29

• Study among some 800 nurses with average
  experience of 10 years, chief nurses, doctors who
  oversee interns, chief pharmacists at 79 major
  hospitals, Education Ministry, August 2000.
• 16 of nurses had given the wrong medicine to a
  patient, and 68 said they had experience of
  almost doing so
• 91 of nurses said doctors directives about
  medication were sometimes unclear, with only 5
  saying they were always clear
• Only 27 of supervising doctors said they would
  always confirm prescriptions and other directives
  written by interns, with a further 44 of saying
  they do so as a principle.
• 39 of chief pharmacists would always check with
  the doctor if they had a doubt about the content
  of a prescription, and 50 would check in the
  case of a strong doubt.

30
Growth in Medical Lawsuits

• Supreme Court to introduce a judicial reform plan
  by November 2004, including expert committee to
  deal with specialized cases such as medical
  lawsuits. Details still unclear.
• Data from Supreme Court shows increasing trend in
  medical lawsuits, reflecting increases in
  patients awareness of their rights.
• Number of new medical accidents lawsuits brought
  by patients in 2001 was 805, a 2.3 times increase
  versus ten years ago. The number of pending cases
  increased to 1,968. Number of cases by specialty
  215 for internal medicine, 161 for surgery, 125
  for orthopedic and plastic surgery 108 for
  obstetrics and gynecology.

Source Supreme Court, April 12, 2002
31
Assistance in Operations by Medical Device
Company MRs/Intubation by Paramedics

• Study of university and public hospitals with
  cardiac surgery departments.
• 46 of hospitals admitted that employees of
  heart-lung machine manufacturers were involved in
  running the equipment during cardiac surgery.
• 9 said such employers were in charge of the
  equipment during operations.
• Operations of medical equipment by unlicensed
  people constitutes a violation of the law.
• Ambulance paramedics in emergency cases in
  several prefectures have been inserting tubes
  into the windpipes of patients as a life-saving
  act. This is a violation of the law. MHLW to
  review.

Source Yomiuri Shinbun, April 18, 2002
Source Daily Yomiuri, February 1, 2002
32
Attachment of Pharmacoeconomic Data to New Drug
Applications (June 1997-November 2000)
(N114)
Source Wagakuni no Shinyaku Yakka Santei Ni
Okeru Yakuzai Keizaigaku No Genjo to Seisaku Riyo
ni Okeru Kadai Institute for Health
Economics and Policy, March 2001
33
Regulatory Reform

• First meeting of council for regulatory reform
  (Chairman of Orix Corporation) held its first
  meeting of FY 2002 at the Prime Ministers
  official residence. One of the topics is review
  of why the entry of profit making companies,
  which is permitted in other fields, is not
  permitted in the healthcare field. Report
  expected in mid 2002.
• From April 1, 2002, medical institutions will be
  allowed to advertise their services in order to
  help patients select the most appropriate
  hospital for themselves. Advertising can mention
  types of therapeutic services offered, number of
  surgical procedures and deliveries conducted in
  the past, presence of doctors with specific
  medical expertise, etc.

34
Proposed Shift From Manufacturing-To Marketing
Approval System

• Marketing license would be issued to companies
  who actually ship or release the product by type
  of product, such as ethical drugs, OTC drugs, and
  medical devices. Current manufacturing license
  issued for each product would be abolished.
• Requirements to obtain a marketing license
• Being a juridicial person
• Having a satisfactory quality control system,
  post-marketing control system, and other
  necessary systems
• Each product category would be required to meet
  additional specific requirements
• Marketing license holders would be allowed to
  outsource typical post-marketing safety assurance
  activities to wholsalers.

Source Pharma Japan, February 11, 2002
35
Source Pharma Japan, February 11, 2002
36
Source Pharma Japan, February 11, 2002
37
Regulatory Reform Area of Significance to
Medical Devices

• To expedite review process for approval, propose
  to introduce a third-party certification systems
  in place of the approval of the health minister
  for controlled medical devices or low-risk
  medical devices such as MRI and electronic blood
  pressure gauges.
• Conduct a review of introducing a system that
  requires endorsement by a neutral, independent
  party. If this system is introduced, medical
  devices that are not endorsed by an independent
  organization will not be allowed to be marketed.

38
IT

• Under the governments e-Japan strategy
  target to take all drug-related administrative
  procedures such as NDA submission and ADR
  reporting via Internet by the end of FY 2003.
  (Source Pharma Japan, February 25, 2002)
• MHLW grand design for information systems in the
  field of health and medical care (Dec.26, 2001).
  MHLW plans to accelerate the speed of electronic
  medical charts and medical bill processing in
  accordance with the grand design for the spread
  of IT in the field of healthcare. At present,
  only 0.5 of medical bills are electronically
  processed. MHLW plans to increase this to over
  50 in FY 2004 and over 70 in FY 2006.
• From FY 2004 MHLW will provide therapeutic
  guidelines for 20 diseases and related literature
  to medical professionals and the general public
  through the Internet. (March 2002)

39
Pharmaceutical Industry Vision Initiative by MHLW

• First ever such industry vision provided by MHLW
• Draft version released on April 9, 2002
  discussions with industry/medical
  professionals/patients groups in May final
  version at end of June
• Five-year intensive plan of action with concrete
  measures to improve the environment for the
  discovery and development of globally competitive
  new drugs, and to enhance the competitiveness of
  domestic drug companies as quickly as possible.
• Within 10 years, drug companies predicted to fall
  into four types
• Globally competitive, general pharmaceutical
  companies (mega-players)
• New drug-oriented companies that are globally
  competitive in a particular field
  (specialty-players)
• Generic companies which can supply high-quality
  generics with reliable information at low prices
  (generic suppliers)
• Developers of OTC drugs (OTC-players)

40
Comments By Director of MHLW Economic Affairs
Division Director

• The draft shows not only the current status,
  challenges and future perspectives of the drug
  industry in Japan, but also a plan of action.
  This is an expression of Koroshos intention to
  actively take concrete measures to promote the
  industry.
• Global competition is intensifying, and the
  development of new dugs, including genomic
  research, is entering a new phase. Because the
  government, domestic pharmaceutical
  manufacturers, and market watchers share a sense
  of crisis, Korosho has decided to present an
  industry vision.
• In response to the question of government playing
  a role in industry Unlike other commodities,
  drugs must clear a number of regulatory hurdles,
  and in order to clear these hurdles, the industry
  and government must make a concerted effort.
  Korosho should improve regulatory systems and
  play an active role in promoting the industry.
• Regarding the re-organization of the domestic
  industry Japan has the worlds second largest
  drug market, and domestic companies have fairly
  good technology. Korosho wants to help them grow.
  As the new drug development race intensifies, it
  wants to see two or three global pharmaceutical
  companies born in Japan. In order to form such
  companies, MAs, which make it possible to
  enhance RD capability in a short period of time,
  are one of the most effective methods. Generally
  speaking, it is natural that the government would
  entertain such an expectation.

Source Pharma Japan. April 22, 2002
41
Research
Source Pharma Japan, April 22, 2002
42
Development (three-year national project to
stimulate clinical trials)
Source Pharma Japan, April 22, 2002
43
Production
Source Pharma Japan, April 22, 2002
44
Marketing
Source Pharma Japan, April 22, 2002
45
Measures Targeting the Market
Source Pharma Japan, April 22, 2002
46
Additional MHLW Comments on MHLW Pharmaceutical
Industry Vision

• April 16 meeting of Ihoken, comments by Mr. Hara
  of Economic Affairs Division
• Today is the time of deregulation, and some
  parties even contend that it is the best policy
  for Korosho not to do anything. In the drug
  industry, however, it is impossible to completely
  eliminate pharmaceutical regulation or health
  insurance and other public systems. Korosho is
  responsible for reconciling the promotion of the
  industry with these systems and regulations.
• We hope that foreign-affiliated companies will
  conduct all business activities, including RD,
  in Japan, hire many Japanese citizens, obtain
  great profits, and pay a lot of taxes in Japan,
  as in the case of Nissan Motors.
• The drug industry is one of the few industries
  that can be expected to grow in the 21st century.
  Korosho has come to the conclusion that it can
  openly advocate the encouragement of domestic
  companies if it guarantees that
  foreign-affiliated companies will not be
  discriminated against.

Source Pharma Japan, April 29 May 6, 2002
47
Medical Devices Industry Vision By MHLW

• Feb 15, 2002, Mr. Hara of Economic Affairs
  Division announced that MHLW will prospects a
  vision for the medical devices industry which
  will include future pro of the industry and the
  support MHLW intends to offer to the industry for
  its development. MHLW hopes that such a vision
  will help to encourage the medical devices
  industry in Japan.

48
Medical Devices Deregulation

• MHLW considering the introduction of third party
  certification system similar to the EU for
  low-risk products. High risk medical devices
  will remain closely regulated from development
  through post-marketing safety.
• January 2002 re-classification of
  insurance-covered medical materials in 37 fields.
  Eliminate clinically non-significant
  classification such as those based on materials
  used. For example, membrane- type disposable
  artificial lungs were classified into 15
  categories depending upon material used (silicon,
  polypropylene, etc), now only three categories.
  Similar situations for catheters for vascular
  imaging, artificial hip joints, etc. (Pharma
  Japan, January 28, 2002)
• Japan Federation of Medical Devices Association
  (JFMDA) requests following in review of PAL
  introduction of third party certification,
  establishment of regulating systems for medical
  devices for home use, and development of a
  systems for prior consultations and revision of
  the notification system for clinical trials.
• February 1, 2002, MHLW notification that it will
  accept, on a trial basis, summary technical
  documents (STED) prepared in accordance with the
  guidance proposed by the Global Harmonization
  Task Force (GHTF) for Regulations of Medical
  Devices, instead of conventional summary
  documents when applying for the manufacture
  and/or import of new or modified medical devices.

49
Patents to Be Awarded on Medical Procedures

• Currently the patent office awards patents on new
  medical equipment and drugs, but not on medical
  techniques and procedures. These are deemed to
  fall outside the purview of inventions that can
  be used industrially which is required under the
  current laws.
• Patent office has concluded that private-sector
  RD efforts could be hampered in new fields such
  as regenerative medicine, eg tissue engineering
  of artificial skin for grafts to burn patients.
• An intellectual property (IP) panel will draft
  guidelines on a new policy by early June. New
  bill revising the patent law to be submitted in
  2003.

Source Nihon Keizai Shinbun, May 1, 2002
50
Environment Changing Rapidly in Regard to MA
Among Domestic Pharma Firms

• April 1, 2002, Price revision premiums for
  innovation, cuts in prices of long-listed
  products
• MHLW Pharmaceutical industry vision (April 9,
  2002)
• Continuing series of announcements by foreign
  pharma companies about plans to increase presence
  in Japan, increase number of MRs, etc.
• Decline in cross-shareholdings and increasing
  percentage of shares held by potentially
  non-friendly institutional investors.
• Concern about hostile take-over bid by major
  Western company
• MA activity in other industries
• Increased awareness by management of shareholder
  value.

51
Pharma MA Activity in Japan
52
Devolution of cross-shareholdings
Source Nikkei Shinbun, UBSW, (S. Barker
Presentation to Pharma Delegates, Hakone), April
2002
53
US European Companies Market Cap vs. Japan
Source UBSW, (S. Barker Presentation to Pharma
Delegates, Hakone), April 2002
54
Japan Trails US and Europe In RD Spending
Source UBSW, (S. Barker Presentation to Pharma
Delegates, Hakone), April 2002
55
Improved Sales Marketing Capabilities of
Foreign Companies in JapanNew Enterprise will
have over 1,400 MRs and will be ranked 4
Number of Reps
Source Roche Media Conference December 10, 2001
in Basel to announce Roche/Chugai merger
56
Patient Patients

• Appointment system is uncommon, and long wait to
  see doctor
• Actual time spent with doctor is very short
• Limited explanation by doctor about illness
• Patients not shown their own medical charts
• Considerable patient dissatisfaction with the
  system
• Growing desire by patients to learn more about
  their illness, medicines provided, hospital
  facilities, etc
• Increasing concern about medical costs

57
INFORMATION SOURCES FOR SELECTING A HOSPITAL
Source MHLW, Study on Patient Medical
Experiences, Sept 2000, as reported by W. Hall in
J_at_pan Inc. February 2001
58
INFORMATION ONE WOULD LIKE TO OBTAIN ABOUT
HOSPITALS
Source MHLW, Study on Patient Medical
Experiences, Sept 2000, as reported by W. Hall in
J_at_pan Inc. February 2001
59
CONTENT OF EXPLANATION RECEIVED FROM DOCTOR
Source MHLW, Study on Patient Medical
Experiences, Sept 2000, as reported by W. Hall in
J_at_pan Inc. February 2001
60
PATIENT INTEREST IN KNOWING CONTENT OF MEDICAL
CHARTS
Source MHLW, Study on Patient Medical
Experiences, Sept 2000, as reported by W. Hall in
J_at_pan Inc. February 2001
61
PATIENTS'S REASONS FOR WANTING TO KNOW CONTENT OF
MEDICAL CHARTS
Source MHLW, Study on Patient Medical
Experiences, Sept 2000, as reported by W. Hall in
J_at_pan Inc. February 2001
62
(No Transcript)
63
(No Transcript)
64
SATISFACTION WITH TREATMENT/SERVICE RECEIVED AT
HOSPITAL
Source MHLW, Study on Patient Medical
Experiences, Sept 2000, as reported by W. Hall in
J_at_pan Inc. February 2001
65
Products Whose Price Seems Particularly High
Compared to the Quality and Content of Service
Costs for healthcare-related service
Barber, beauty salon
Toll Road Fees
Water and sewage rates
Electricity, gas rates
Monthly fees for learning activities
Railway fares
Housing Rent
Education costs of schools, etc
Parking charges
Source Cabinet Office, Kokumin Seikatsu
Monitor Study, March 2002
66
Possible Impact of Increased Co-Payment

• Study conducted in December 2001 among 846
  patients who visit medical institutions for
  hypertension
• If co-payment raised
• 33 will decrease number of visits
• 11 will discuss medicine costs with doctors
• 8 will discuss medical fee costs with doctor

Source Nihon Noritsu Kyokai, April 2002
67
E-Detailing

• Questionnaire among physicians utilizing MR-kun
  (Mr. MR), conducted by So-net M3. (Sample of
  1,025 physicians).
• 83 satisfied
• Communication is possible at the most desirable
  time anywhere
• Even by means other than their personal computer
  (44)
• Messages can be kept separately from personal
  e-mail (36)
• Novo-Nordisk to have all of its MRs use KR-kun
  (Pharma Japan, April 22, 2002)
• Japanese society of Anesthesiologists (JSA)
  adopted MR-kun for providing information about
  its Annual General Meeting from April 18-20, 2002

Source Pharma Japan, February 4, 2002
68
Healthcare-Related Business Opportunities Created
By Japans Aging Population- A Non-Exhaustive
List -

• Pharmaceuticals, biotechnology, bio-informatics,
  genomics
• Medical equipment, medical devices, consumables
• Hospital management deregulation in very near
  future
• ICT (information and communications technology)
  Koizumi government has five year plan
• Kaigo (care) services
• Home infusion therapy (HIT) for terminal stage
  patients
• Pre-packed/easy-to-prepare softer food in small
  portions
• Insurance Long Term Care (LTC) insurance,
  hospitalization insurance, two-tier service
• Development and management of nursing homes
• Health information paper and internet based
• Lifelong learning computer teaching, English,
  hobbies
• Health foods
• Continuing medical education (CME)
• Hospital accreditization services
• Home re-modelling
• Real estate-backed loans for daily living /
  healthcare expenses
• Universal design / barrier free service friendly
  products
• Robotics
• Digital / internet / telemedicine

69
Kyoyohin (Universal Design/Barrier Free) Products
Source Kyoyo-hin Foundation February, 2002
70
Universal Design / Barrier Free Products That Are
Senior-Friendly

• In 1998, The Japanese government proposed a new
  global standard for products and services
  accessible and adaptable to all people, including
  the aged and the handicapped. In December 2001,
  the ISO published guidelines for standards
  developers to address the needs of older persons
  and persons with disabilities, known as ISO/ IEC/
  Guide 71. A rare case of pro-active Japanese
  action at the international level.
• NTT DoCoMo Raku Raku Phone II senior friendly
  features include cell phone with larger buttons,
  reads e-mail messages aloud, dials registered
  numbers with the push of a single button.
  200,000 sold in less than two months after launch
  in September 2001.
• Thermometer that measures temperature through the
  ear
• Ceramic daikon (radish) grater that can be used
  with one hand
• Goods in appropriate color combinations that make
  them easily distinguishable by the weak-sighted
  or those with cataracts
• Anti-slip bath pillow
• Braille on cans of alcoholic beverages to
  distinguish them from soft drinks.

71
GROWTH IN SELF-CARE/WELLNESS CATEGORY

• The aged are concerned about health maintenance,
  diet, exercise, avoidance of dementia and
  becoming bedridden, etc.
• We can expect an increased interest in wellness
  products -- vitamin, herbal and dietary
  supplements, functional foods, etc. Already,
  rapid growth in wellness category among direct
  marketers (Amway, Japan Health Summit)
• Greater information availability from Internet
  and increased media coverage of health and
  wellness issues -- both accurate and inaccurate
  

72
Health Foods and Drinks

• Yogurt Morinaga lactoferrin 120g container has
  100mg of lactoferrin . Debut October 2001,
  expected first year sales 3 billion yen.
  Lactoferrin reputedly activates the immune
  system, and has antibacterial and antioxidant
  properties. Claims in advertising to help bones
  grow or invigorate the immune system. Under
  Pharmaceutical Affairs Law cannot list health
  benefits directly on the product, so do in-store
  advertising and CM.
• Meiji Probio Yogurt LG21 contains lactic acid
  bacteria called LG21 which reduces helicobacter
  pylori, believed to be the cause of gastric
  ulcers. Popular among middle-aged men, sales in
  second year will hit 10 billion yen.
• Anti-hypertension drink Ameal S from Calpis.
  Contains lactotripeptide (LTP) which MHLW
  designated as special health food for its ability
  to lower blood pressure. 5 billion yen in sales.
  Not effective unless taken every day.

73
New Entrants to Home Medical Care Market

• Teijin has developed Japans first device
  allowing kidney disease patients to conduct blood
  dialysis at home. Applying for MHLW approval in
  2003. Currently 200,000 renal failure patients
  visit the hospital three times per week, and
  receive a four hour treatment each time. New
  device requires two hour treatment six times a
  week at home. With aging population, number of
  renal failure patients expected to increase.
• Terumo has started operating a system under which
  diabetes patients transmit data on blood sugar
  levels, measured by the patients at home, via
  i-mode cell phone to medical institutions. Plan
  to be in 700 hospitals by 2004. Currently some 7
  million diabetes sufferers, and this is expected
  to increase.
• Similar approach for heart disease. ECG data
  measured at home, transmitted to hospitals.
• If insulin injections by diabetes patients are
  included, current home medical care market
  estimated at around US 8 billion (1 trillion
  yen)

Source Nihon Keizai Shinbun, May 6, 2002