Aspiration over Action in Japan's Approach to Health Innovation

How would you broadly define innovation in the context of Japan’s existing healthcare landscape?

Over the past few years, a range of stakeholders in Japan—including policymakers, industry, the medical community, and civil-society groups—have begun talking in increasingly similar terms about the challenges and opportunities that should inform a domestic “call to action” on healthcare 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 this combination of resources not only to meet the distinct challenge of caring for a rapidly aging (and shrinking) population but also in the process to make Japan a more attractive global hub for pursuing next-level health solutions.

In this way, the challenge of an aging population presents Japan with a unique opportunity to test new approaches for and lead global innovation around aging-related issues, such as dementia and chronic disease management, providing a model of excellence for other countries facing similar challenges.

How does this translate into specific ambitions for strengthening public policy?

For Japan, numerous government agencies such as the Ministry of Health, Labour and Welfare (MHLW), the Ministry of Economy, Trade and Industry (METI), and the relatively new Japan Agency for Medical Research and Development (AMED) have responsibilities in this strategic space. And as I’ve touched on in other work for NBR, Japan 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 healthcare policy vision led by the minister of health to meet the needs of the next two decades.

How would you summarize the government’s vision for how the country should be fostering innovation?

From my own analysis and conversations with government stakeholders, I would argue that the Japanese government’s vision consists of three prongs.

The first prong focuses on the ways in which policy can encourage socioeconomic approaches to increasing longevity. Here, improving quality of life for a population that is already living longer is a critical consideration. With this in mind, efforts leveraged by METI and MHLW have included a call for increased investment in workplace, community, and education programming to prevent and manage chronic and lifestyle disease and disability associated with aging.

The second prong focuses on improving the country’s biotech and IT ecosystem. In particular, the Japanese government has been attuned to the question of how to better leverage healthcare IT to generate innovations that address the specific underserved needs of the elderly and an aging population. Part of this involves a comprehensive cabinet-level strategy for healthcare and medical R&D by leveraging AMED’s streamlined budget and funding system.

Finally, the third prong calls for innovation and investment in specific areas associated with aging. This includes regenerative medicine, diabetes, dementia, and elder care.

Does this government vision align with the potential you see for and in Japan?

If we think about the areas that Japan has excelled in, and where public policy could play a useful role in enabling new gains, this is absolutely the right aspirational direction. The country is already one of the world’s largest markets in pharmaceuticals and medical devices, and the intersection of aging, population decline, patients with resources, and a public medical insurance system that makes pharmaceutical drugs and a range of medical and health treatments highly accessible should create an attractive place to innovate and do business. And yet Japan continues to struggle with bringing innovation from the bench to the bedside. Why? I would argue that policy efforts to date have been aspirational rather than achievable because they fail to address key underlying domestic challenges.

Where do you see policy efforts falling short?

Having a comparative advantage does not guarantee an inevitable outcome. There has been a tendency to suggest that the clear and undeniable trajectory of Japan’s demographic shift, coupled with the country’s history of implementing efficient systems, will on its own incentivize next-level innovation and collaboration and play a central role in revitalizing Japan’s overall sluggish industrial sector. But I would argue that past success in other areas has created an expectation among policymakers of perfect technical solutions, which actually hinders innovation. Perfect solutions to the many demographic challenges that Japan faces are impossible in the near term, and to reach them over the long term would require an innovation culture to welcome the never-ending cycle of testing, failure, learning, and retesting that leads to success in the life sciences. Currently, the culture punishes failure, which will fundamentally stymie any efforts to make Japan a hub for life science innovation.

Innovators understand this, but Japanese policymakers do not. Policymakers should be encouraging risk-taking, supporting long-term planning that makes generous allowances for failure, and cultivating and retaining the next generation of researchers. And here there are several warning signs that should give us pause about Japan’s outlook.

What stands in the way of a true innovation culture in Japan?

Japan’s policies are calling for investments of money, time, and faith, but they offer no incentive to invest. The country’s workforce is notoriously behind in English-language integration, making it very difficult to tap into cutting-edge, international research when you consider that English is the international language of scientific collaboration. This is an educational issue that affects Japan’s prospects as an innovation leader in many fields, not only health.

At the same time, the government lacks a comprehensive policy that offers crucial financial incentives for newcomers who are looking to address the challenges posed by Japan’s aging population, which is something that we have seen deployed in the United States and other countries. It also does not provide a safety net for experimentation and the inevitable failures that accompany great success in health R&D. And so, tragically, one of the trends that we have begun to see over the past few years is an exodus of promising Japanese PhDs from the country—not just in this sector but across the board.

What is the reason for this scientific exodus, and why is it particularly worrisome?

Making rapid advancements in health R&D requires a strong cadre of scientific experts, including data scientists, engineers, and pharmaceutical experts. While the number of doctoral degrees in these fields issued by Japanese universities has more than doubled in the past two decades, once these experts receive their degrees, several surveys suggest that they are increasingly less inclined to view Japan as an attractive country in which to build a career.

Japanese PhDs are experiencing a dearth of permanent positions in both academia and the private sector. At the same time, private firms are often more reluctant than their non-Japanese counterparts to recruit PhDs, despite the fact that such individuals could increase the international competitiveness of Japanese industry, given their English prowess and knowledge of up-to-date technology and global approaches. As a result, Japanese scientists are often left out in the professional cold, forced to either abandon their research careers or leave the country.

Given this trend, is Japan attracting foreign talent to its health innovation sector?

Most innovation hubs throughout the world—such as the United States, the United Kingdom, Singapore, and China—consider the ability to draw on foreign researchers to be a key indicator of success, and these countries often go to great lengths to lure such experts. Beyond the development of research capabilities, a rich mix of talent has been proven to drive innovation and enterprise and realize the full value of discoveries by helping tap into the diversity of research ideas, expertise, and networks around the world.

The sad truth remains that Japan offers few incentives and rewards to attract foreign researchers, who often receive significantly better packages from other countries. This means that the Japanese research community integrates fewer outside concepts, perspectives, and practices, and that Japanese students receive less exposure to these approaches than do students in other innovation hubs.

Has the Japanese government put in place significant policies to address these challenges?

It is true that many Japanese companies and universities are seeking foreign partners and that the government is promoting foreign investment and other business from non-Japanese companies. Additionally, Article 30 of the Industrial Revitalization Act of 1999, based on the influential Bayh-Dole Act passed two decades earlier in the United States, 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. Furthermore, 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.

And yet while the environment for innovative companies and research centers in the life sciences is perhaps slightly less daunting now than it has been in the past—for domestic and foreign innovators alike—Japan is still a difficult place for a truly innovative organization to thrive over the long term.

How is Japan currently attracting or repelling innovators more broadly (beyond incentives and policies specific to the life sciences)?

Existing macroeconomic structures and policies in Japan do not reward the boldness and creativity that move the dial on advancements related to health and aging. For example, innovators at universities and companies rarely receive the intellectual property rights or compensation that are awarded to their peers in the United States or the UK. This is where Shuji Nakamura has been vocal in his warnings that Japan risks a scientific exodus because of the lack of incentives it provides for creativity. In 2014, he won a Nobel Prize for developing LED technology. But while Nakamura is considered one of the country’s leading innovators, he no longer lives in Japan. He left in the early 2000s after a bitter dispute with a former Japanese employer over compensation for this very invention, a dispute that ultimately ended up in court. He now lives in the United States.

The strong stigma in Japan around wealth, profit, and financial power is one reason for the lack of independent philanthropic and nonprofit activity overall and specifically in the sciences (relative to other developed countries), the low investment in bold ideas with transformational potential, and the general discomfort with entrepreneurship. This stigma certainly plays a role in stymieing discussions about paying researchers and making a scientific research career financially attractive in Japan.

What else should the government and other key Japanese stakeholders consider to make the country a more attractive hub for healthcare innovation?

There is no question that Japan is a terrific market for innovation, but it is not a truly global hub for innovators. If the country does not take steps to address the challenges that I’ve identified, it will lose its edge in the healthcare innovation industry at a moment in time when Japan is facing a distinct and relatively unprecedented challenge in providing world-class care for a rapidly graying population.

Ultimately, seeking partnerships and promoting investment are different from securing them. Japan is well-positioned to realize its goals, given the vocal support of the government, the tradition of leadership in the life sciences, and the enthusiasm of the Japanese population for science. But policies must be more ambitious and more actionable. Addressing all these challenges will require shifts in both the political and cultural mindset, and I acknowledge how difficult those can be. However, ignoring the need to integrate these considerations into a strategic focus on innovation is inexcusable. Japan’s future as an innovation leader, as well as the health of its population, depends on the country’s success in 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 and a visiting professor at Keio University School of Medicine. Dr. Kubota holds an MD and a PhD in Medicine from Keio University.

This interview was conducted by Claire Topal, Senior Advisor for International Health at NBR.