We sat down with Mr. Tadao Urasaki to discuss the needs and opportunities presented by Japan’s aging society and growing medical market. In our interview we cover the strengths of Japanese medical device manufactures, the impact of the Covid-19 pandemic, and how the Mehergen Group is equipped to meet new market needs through their proprietary information systems, services, and devices.
What do you believe to be the strengths are competitive advantages of Japanese medical manufacturers that allow them to compete in the global market?
Although there is a decline in the population, there is a significant increase in the aging population. That increase in turn stimulates growth in the medical market. The domestic medical industry is a lucrative market that is attracting more major players who have not yet been involved in the medical field before. In addition to these new domestic companies entering this domain, overseas companies are also getting into the mass medical market. With the severe price competition in the mass medical market, SMEs face difficulty surviving. However, they can bounce back with very specialized niche areas that require expertise and experience. Our company can draw on its accumulated know-how.
Major players such as Hitachi and Fujifilm are utilizing AI and entering the overseas digital medical market. Due to language barrier, many medical device developers and distributors were more focused on the domestic than the international market. Nowadays, however, they have more international connections and relationships with overseas companies. Japanese firms' mindset has shifted, and they are moving actively towards the international market. While major companies can put in huge investments, SMEs, like us, turn to utilizing specialized technologies and knowledge to the full extent to provide unique items to the overseas market. Our Drip Eye administers chemotherapy drugs to the patient at a fixed rate. It is not the type that injects by forcibly applying pressure (such as in the gravity drip method), so there is less leakage and no extravascular exposure of the drug. This device has been highly praised, and many overseas pharmaceutical companies have been contacting us. We have been collaborating with Toray for their Hitoe project, a wearable electrocardiogram (ECG). We were able to develop a product that does not cause rash or skin irritation where the electrodes are attached. Usually, the maximum time for ECG-monitoring is 24 hours, but our device can be used for over a month. There is a battery issue, but considering that the patient can wear the use our device for an extended period without experiencing skin rash is a strong point. In this co-development, our technology for attaching electrodes to a material surface has allowed us to serve the niche medical market.
Your company has a strong focus on technology, software and digital services as they pertain to the medical sector. How is your group bringing digital technology to support these major players in Japan's market? Secondly, how do you believe that DX will transform the medical sector in Japan?
We have been actively trying to promote DX products in the domestic medical field. One of the things we have introduced is recording patient records and data electronically, and we have established a seamless catheter and operation room management system that keeps track of hospital data as a one-stop solution. Specific equipment and items are needed for a particular operation, so the system allows for the smooth processing of orders, delivery and recording related information. The patient's record is used for their medical fee receipt; application. This digital one-stop-system; saves labor costs and avoids errors incurred from the traditional paper processing method. We are now testing our one-stop-solution system;with several hospitals.
ICT is slowly but surely making its way into the mainstream of Japan's medical world. Medical institutions, contract research organizations and SMOs tell us two main barriers they encounter in the total embracing of ICT solutions for the medical field: the cost and the difficulty of use & integration. Your SCUNA system aims to shorten the door-to-balloon time of inbound patients suffering from heart failure by transmitting the electrocardiograph data from the ambulance or site to the hospital or clinic. Can you tell us how this system overcomes the challenges of cost and operability?
We have made this system operational in smartphones. It is an application that anyone can download onto their smartphones. Since most people already have smartphones, the cost of the initial investment is kept low. With this system, the 12-lead cardiogram data and the video data can be sent prior to the arrival in the hospital. The communication tool incorporated in the application similar to Line allows the doctors and nurses to ask questions beforehand and get a head start in preparing for the treatment. The cardiogram device usually costs around JPY 4 to 5 million, but our device only costs JPY 1.5 million, which is considerably lower. To encourage its continued use after the initial introduction, we have set up some awareness or educational training programs. Once a year, we support a 12-lead cardiogram study session. Moreover, we visit with the doctors as well as emergency teams to explain the importance of 12-lead ECG and our SCUNA system. We have also made our website and a contact person available to those who cannot join those sessions.
Are these systems like SCUNA optimized and localized for use in other countries as well?
At the moment, it is only used in Japan. Of course, it can be used in other countries too, but some countries require a government license. Some Singaporean companies have expressed interest in using this kind of system.
Mehergen Group, with its nine members, offers a wide array of services and solutions. Do you have any ambition to expand the Mehergen Group beyond its current 9 members? We saw in our research your recent investment in a startup out of of Osaka University called Immunosense that develops devices for rapid diagnosis for point-of-care testing. Can you talk to us about your role in Japan's ecosystem for medical SMEs as an incubator for interesting companies?
Instead of enlarging our group company, we are looking to invest and grow together with the companies emphasizing on unique and indispensable technologies. For example, Fujifilm is able to implement the AI cancer diagnostic system because of its massive investments as a major company, but there are things that only SMEs can do. Major players neglect some areas that are still important and have a demand.
We are working together with Osaka University's venture company because of their unique technology. Also, we are investing in an AI-based company, Medical AI Lab, which sends invoices to the insurance company after receiving treatment from the hospital. It is a crucial part of business management. We conducted a trial in a university hospital in Tokyo. At first, 15 people were needed to process all the information; however, with their AI software, only five people were required, greatly improving efficiency. We are directing our attention on collaborating with companies like them by combining their technologies with our software and other device technologies to have a synergistic effect. With regard to hardware, we have been working with Toray in providing a wearable device that constantly measure ECG. This was organized; by the Japanese government's policy to reduce the number of sudden deaths from heart attacks and stroke. The easing of government regulations has created new opportunities, which is one of the principles we follow in entering into a new market.
Are you seeking this kind of collaboration opportunities with overseas companies as well?
COVID is hindering our path to the overseas market. We had planned to join MEDICA in Germany in 2020 and an exhibition in Shanghai, but we were not able to participate. Despite that, we plan to slowly but surely start attending exhibitions or academic conferences and try to receive approval from governments.
Are there any particular regions, markets or countries that you consider key as part of your group's development in terms of international expansion?
The biggest hurdle in international expansion is obtaining approval or certification from local governments. Since we can apply and receive approval much quicker in Europe, we are considering the EU more seriously. After that, we are looking to apply for approval from the FDA in the US. The Chinese government is quite restrictive, but China is an attractive market, especially with Lab Tech. Mexico and Brazil also have a need, but it takes time to get approval from these countries. We are more focused on finding good dealers or agents and collaborating with them in penetrating other markets. We are working in cooperation with a small Taiwanese company, which does international business dealing with MV monitors. It would be nice if, in the near future, they will expand to MV monitors that keeps track of the blood flow of the lower body. We hope to collaborate with them and increase our product lineup. On account of not having a grand budget for overseas investments, we want to fully utilize our current channels to expand.
Imagine we come in five years to have this interview all over again. What would you like to tell us? What are your dreams for this company, and what goals would you like to have accomplished by then?
We may not necessarily be a large group company. Nevertheless, however small our group is, we want to contribute to the well-being of our patients as well as the medical industry as a whole. We want to improve our products and develop one-of-a-kind devices. We want them to be highly accurate and reliable for our patients.
Furthermore, we want to be a company that can provide full DX support to hospitals and medical institutions. I would like our group to be synonymous with digital transformation in the medical sector. We will continue to work together to create a synergetic effect not only within our company but also with other companies and institutions to contribute to the betterment of the medical industry.