#204 | Why Japan Is Easier to Export MedTech Products To Than Most Companies Think

In this episode, we're gonna be uncovering the single biggest factor that determines whether your med tech product succeeds or fails in Japan, and why most companies focus on the wrong things first. Welcome to Clinician to CEO, the podcast helping clinicians simplify your go-to-market strategy so that you can stop guessing and turn your working prototypes into international MedTech businesses. I'm your host, Hakeem Aade. Let's get started.

So the three things that you're gonna discover in this episode are, number one, why successful products in Europe or the US doesn't automatically translate into success in Japan. Number two, the regulatory, cultural, and commercial barriers that catch med tech companies out, and how to navigate them when try- when entering Japan, of course. And then number three, how to choose the right distributors, partners, and market entry strategy to maximize your chances of success. So as we all know, Japan is one of the largest healthcare markets in the world, but for many med tech companies, it's also one of the most difficult to crack.

And today what we're gonna be doing is exploring what really drives success in Japan, the mistakes companies make, and whether it's a market that's actually worth you pursuing in the first place. And to help me do that is Kurt Jenewin who is joining me and he has extensive experience helping med tech businesses navigate the Japanese market, so I wanna welcome you to the show. Thanks for coming on, Kurt. Thank you, Hakim.

Great to be here. So we're gonna jump straight into it, but the first question I wanted to ask was, how did you become such an expert in the Japanese market? 'Cause the eagle-eared amongst you and will have heard that you are from North America, and the stereotype is often that Americans only know about America. So how was it you came to know so much about Japan?

That, that's a great question. So I guess my experience growing up was a little bit different than many Americans. My dad moved our family to Hong Kong when I was still in high school, and I had an opportunity to visit Japan the first time at- then as part of a school trip. Fell in love with Japan and when I was at university, started studying Japanese my senior year of college, and then moved over to Japan afterward.

So I spent six years in Japan that time and came back to the US for business school, then went back to Japan for another six years working in the medical industry the entire time. That's how I got started and over the course of my career, I continued to manage Japan as part of my responsibilities at companies like Zimmer Abbott, and and then I started Asia Med Partners, my consulting business, about 10 years ago to help European and US companies into the Japanese market. Excellent.

So thank you. That's that, that burst the stereotypes unless you're the exception that proves the rule, but also gives a good context as to why you know so much about that market. And obviously we've worked together on in, in a couple of different capacities on getting into Japan. I know that you that you have all the experience that you'll be able to impart to the audience today.

So I suppose the first question or the second question, it would be, what's the most common misconception that you find that companies and founders have when reviewing or try enter the Japanese market? Yeah. There, there's a few, and I think you touched on one in your introduction. One is that if you're successful in your home market that you're also gonna be successful in Japan, and that's definitely not n- not necessarily true.

It could be true, but there's different factors about the Japanese market that we'll talk more about that really determine whether or not a successful product outside Japan will be successful there. A- another couple of things that are maybe outdated ways of thinking about Japan are the regulatory environment and also with regard to reimbursement. So on, in terms of the regulatory environment there's a, still a belief that Japan is a very difficult market to get into, and it, that it takes a lot of time.

With harmonization with the FDA that's occurred over the last 20 years, and also during the last few years, the difficulties that the MDR system has erected for getting into the European market, relatively speaking, Japan is a much easier market to get into than ever before So that's one aspect with regard to regulatory. On pricing there's also something that's happened over the last few years with regard to exchange rate differences with reimbursements continuing to decline over time that has made the Japanese market from an average selling price perspective perhaps less attractive, more like Europe than like it had been in the past where the pricing was more similar to the US.

And so that's something that a lot of people, th- their understanding of the market has not yet caught up with the reality of the situation in Japan. So I would say those two or three things. Okay. And how would you say that somebody who's not familiar with the Japanese market, number one, keeps up to date with th- with those challenges, and number two, should approach those challenges in terms of mind frame?

'Cause I know the first time I did any business in Japan, I must have read about six million business books about the different culture, the way they did business, and all that sort of stuff. So I'm just wondering how would you approach it? Because it's not that easy, cause Japan's far away. It's a completely different culture.

How do you keep up to date and understand what you should be doing? Yeah. I think, the short answer is it's easier than ever before with regard to way AI provides with automated translations. Because a lot of things that come out of the Japanese market in terms of new regulations and so forth are only in Japanese.

But with AI, y- a- anyone really has access to that. There's probably a few websites that you wanna keep track of, and you can keep track of the PMDA or the MHLW websites. Those are related to government changes from a regulatory or reimbursement perspective. And then using consultants like myself that are working in the Japanese market every single day will be able to give you an understanding of what's changing real time.

Okay. Thanks. That's really very useful. And then if we...

we talked about a bit in the last answer, but in terms of regulatory hurdles which is obviously one of the biggest things if you just go through that again in terms of specifically what would you see are regulatory hurdles which are specific to Japan that you may not see in some of the other markets? So there's a few things. One, I, I guess the biggest is the fact that in order to have your product regulatorily approved or registered in Japan, you have to have what's called an MAH, a Marketing Authorization Holder, and that can be your own company if you have a subsidiary office in Japan and meet certain requirements.

It can also be your distributor if your distributor is willing to take on essentially the responsibility of if anything goes wrong, being held accountable for that for recall or what have you in the perspective of the Japanese government. The third way of doing that would be to use a third party that specializes in being an MAH or designated MAH on behalf of your company. It can be costly to do it that way, and so oftentimes I recommend companies find a distributor first if you're not ready to set up a subsidiary office in Japan.

Okay. Brilliant, and that, that's a really interesting question actually, 'cause I know, and we've probably spoken about this before, there is What people consider to be distributors in other countries might not be exactly what's considered to be a distributor in Japan. So could you just talk a bit more about that? 'Cause when we're talking about distributors, people are thinking of the traditional, there's a big distributor that works a big area, and that's all they do.

And you just give them the authorization to do it. But it's slightly different in Japan, isn't it? Yeah, no, that's a great question. Thank you for asking about that.

Oftentimes if your product is specified for a particular clinical area, you will wanna find one importer distributor for the entire country of Japan. Because in, speaking simply, you really can only have one marketing authorization holder for your product in the country. There, there are ways of getting around that but fundamentally, that's the way business is done in Japan. So if you're gonna have one company be your marketing authorization holder, that's generally the best company to be your distributor for all of Japan.

So it, it becomes very important that you choose a distributor that has the capabilities of covering the market. But I think what you were alluding to is the fact that in Japan, different than other markets, there's another layer of distribution between the importer distributor and the hospital, and that's called a dealer. And that's the word that they use in Japanese actually, dealer. And dealers are generally hospital specific.

So you will have one dealer that your products go through for each hospital. Those dealers generally will cover a subset of the market. An individual dealer might cover one hospital, or it might cover, 15 hospitals, but it's not gonna cover the entire market of Japan. And those dealers actually act as an extension of the hospital.

It's a, been a way historically that hospitals can outsource some of the work related to billing, related to inventory management and put that outside the hospital so the hospital doesn't have to incur those costs. But those dealers do incur their own margin of 5 to 10% that you have to take into consideration when you're pricing your product to your importer distributor. And so in, just on that term, so would you... what's the process of operation then?

Is it you get your main distributor and then you choose the dealers? Or do you get your main distributor and then they choose the dealers, and then you just authorize them that you're happy with them? Yeah, your importer or distributor will have their own network of dealers throughout the country. And so yeah, you won't be involved in, in, in the selection of those at all.

Okay. But you just need to be aware that there's effectively you've got two margins and not one margin that you're dealing with when you're looking at the pricing to the market, or? Actually, there's three or four margins. So- Okay.

So Japan works very differently than a lot of markets in that it's a single payer reimbursement system. The government pays for everything, and there are products that are reimbursed such as implantable products, and also products that are non-reimbursed. And these might be, some class one products that are, bandages or things like that are... have no reimbursement in Japan.

So for non-re- for reimbursed products the margins that come out of what you're selling i- into the market are first the taxes. So there's about a 10% tax that the government takes off the top of the reimbursement price. Then the hospital wants its own margin. It takes about 10% off the reimbursement price.

Then the dealer takes 5 to 10% off the reimbursement price, and then you have the importer distributor that wants their own margin of about 50%. And so generally like in the US for example I often tell companies to think about their transfer price to Japan being about one-third of the reimbursement price. And th- this would actually hold true for European companies as well- Yeah where there's a reimbursement for your product. It really needs to come in to one-third maximum, maybe 40% of the reimbursement price for the economics to make sense for all of those people in the d- in the chain, in the supply chain.

For non-reimbursed products, you can price it however you want, and the higher the price, just the... y- it's the... you'll have a lower volume. But you can essentially price it however you want.

Okay. No that's very useful. So it the pricing, which is always important whichever market you go into, but it's really important to understand the nuances if you are looking to get into Japan. And we were talking about obviously ju- just previously before the, we were talking about reimbursement and pricing about the distributor and the dealer.

So how important are local partnerships in that Japanese market? Obviously, you have to get a distributor that's based in Japan. But I suppose the question I'm really asking is, what should a manufacturer or company look for in a distributor in Japan that you might not, that, that, that's nuanced to Japan and not just a standard you have to get somebody who understands the market, et cetera? Yeah.

So when you're thinking really local to, like to the hospital, we were talking about the dealers, they're not really part of the sale process. Yeah. And so they are more just logistical management, so you don't really need to think about them. In terms of the importer distributor it's a critical factor that you choose the right company.

It may not be the company that walks up to your booth in a trade show or, that you hear about secondhand from someone else. You really need to be careful about who you choose because, one, they're gonna be responsible for the entire market. Two Japanese companies look at things long term, and generally, if you make a mistake, you might not really understand that till three or four years in, and then changing distributors is a big deal, and so y- it could be a five-year mistake for your business.

In choosing the best importer distributor, you really want to look at a few things. One would be their their regulatory capabilities if they're gonna be doing the regulatory filing for you their sales capabilities in essence, their ability to cover the entire market. How big is their sales force? How good are they at converting business and selling new innovation versus just a me too type of product?

Because some companies are good at one and not the other. You also wanna understand the company's reputation in the market because that comes into play when hospitals are making decisions to work with one company versus another other factors would be their ability to focus on your particular product. That's one of the challenges of choosing too big a company is they may not focus as much on, on your product as you'd like them to. Too small a company is not good either.

Even if they provide a lot of focus, if they don't have the capabilities or the product synergies for you to take advantage of that could be a disadvantage. So I would say those three or maybe four things, when it comes to product synergies, that's also a very important aspect to look at when you're choosing a distributor. They should be calling on the same call point and they should have other products that they can potentially bundle together when selling your product as well So I've got all those down.

You basically said regulatory capability, sales capability, how good they are in terms of the specific portfolio you're looking at. So new innovative products versus me too's, what's their reputation and then the focus but not focusing on focus at the exclusion of size 'cause they need to be able to really penetrate the market and have those synergies with other products that they may have in the portfolio. So that's really interesting actually, 'cause yeah I think that those are a lot of the things that I would say that you should do in every market.

But actually I think the way you've articulated it specifically for Japan is important and you started right at the outset saying you might not be the person you go up to a trade show. That's one of my biggest bug, bugbears that people go, "Oh yeah, this person's come to me trade show and they said they can do this, that, and the other." And you're like, "Okay what evidence have you got? And would you ever recruit anybody for any job like that?"

No, you wouldn't. But people do that with distributors all the time, and I think it's even more important when it comes to Japan, cause Japan is quite a unique market actually compared to lots of other markets. So just on that, is there anything that the manufacturer should be thinking about in terms of what they do? Because obviously we've talked a lot about regulatory, we've talked a lot about when you're going into the market, finding the right setup.

But what about the manufacturer themselves in terms of There, there's this view that Japan has a much higher quality standard than lots of other countries, so which I know for a fact it does. So how should a manufacturer understand that, and what do they need to do to make sure that they- the product is fit? Not just regulatory, but when it actually, the box arrives in Japan, that they are happy with the way it looks, the way it comes out of the box, et cetera. No, thank you for bringing that up.

That's a really important thing for anyone considering going into Japan to take into consideration because if your company does not have high, really high quality standards that will be a big issue for you as you enter the Japanese market. Hakim, you're exactly right. They pay so much attention to every minute detail about the product that might not even be related to product performance, but it's how the product arrives in its shipper. Are there any dents to the y- the corners of your package?

They'll send that stuff back and say, "Hey, I wa- want a return, and give me product that's act- that's absolutely pristine and perfect." Some companies can look at this especially when it comes to the product itself and product performance rather than the superficial things, as an opportunity to actually improve. Because the feedback that you don't often hear in the US and Europe, physicians might say, Hey, it's good enough. Y- I can make it work and, it's not worth really spending time to bother about."

In Japan, that, that doesn't fly, and they will give you feedback on that, those aspects of your product that you have to respond to or you won't make it in the market. So you can look at that as a positive, that's an opportunity to improve or y- you can look at it as a huge headache and a reason maybe you shouldn't be in Japan. And an example- I give to sometime, to people sometimes which, you can cut this out if it ends up being too long, but Timex watches were trying to enter the Japanese market back in the '70s.

Very popular in the US and Europe, and they just weren't getting any traction in Japan, and they were thinking that maybe there was some anti-competitive things going on by the Japanese watch companies to keep them out of the Japanese market. So they sent people over to do market research, and what they found is they watched people picking up the Timex watch and putting it back down and not buying it. They said, "Why aren't you buying it?" And the customer said, person after person the secondhand isn't lining up to the little line on the watch face, so the quality's not very good."

And so that was the reason why Timex couldn't sell their watches. So they fixed the problem and they started doing much better in Japan. But that's an example where, in the US and Europe, people weren't paying any attention to that, or not to the same extent as they were in Japan. But once you improve the quality of your product, it's gonna sell everywhere.

It probably sold better in the US and Europe as well once they fixed that problem for Japan. That's a really good example, and I've seen it in... It's no different in the med tech space, where, you know I've worked with companies where you've actually... They've almost, in the first instance, had a se- slightly separate line for the Japanese because the boxes that they're sending around the world where everyone's not bothered, the actual box it comes in the Japanese w- hospitals weren't happy with it and said, "No, it's not of good enough quality."

So they had to make sure that they changed that and pack, packed the medical device in a slightly different way than the other markets. But you only know that when you actually get to the market and you start speaking to people, I think it's a very good idea and and Timex example, number one, get in the market and actually see what they're doing with the product, and number two, let them see a sample of the product exactly how it's gonna arrive before you start s- shipping it.

Because if you start shipping it in large numbers and then it's not in the right format, you're gonna, you're gonna get a lot of pain at some point. So it's, it makes sense to actually do that investigation. And then in terms of just other cultural nuances, if there are other nuances apart from that perfection type criteria that people talk about a lot that you think that it's important for companies to be aware of when approaching the Japanese market Yeah, there's a whole host of different things.

One that I would I think is very important is the amount of time that it takes to get into the Japanese market and start getting traction is longer than what it would take in the US or Europe. They have the same kind of early adopters, mid adopters, late adopters that we have in the US, but probably the early adopters are fewer and further between over there. And finding the right people to trial your product, letting some time go by, hopefully generating some local clinical data is gonna be very helpful for you, y- in entering the market.

But it does take longer, so that's that's an important consideration. Another one that's just an interesting thing that I was reminded of again recently is that oftentimes doctors feel some kind of an obligation to sales reps based on the effort that sales reps put into showing up and being there and making an effort to try to get their business. And in a lot of hospitals, and this is my experience in the cardiovascular area, they just gave the business out one-third to one rep, one-third to another rep, one-third to another rep, and they rotated their cases.

And it had nothing to do the product, of course, had to be above a certain bar for them to use it. But the product usage really came down to just, are the reps putting in the time and effort to get their business? And that was, a different experience than I had seen in the US That, 'cause that's kind of part of that culture nuance, isn't it? Of not upsetting different people and actually making sure that everyone gets a piece of the pie.

And that was gonna take me to the next question in terms of that culture nuance, is, With those challenges, with those culture nuances, with the fact it takes a bit longer, the first thing you said was, and this is borne out by the example you just gave that distributors like to have long-term relationships and so do the hospitals. So does that change the length of your distributor contract? 'Cause it, generally you work in America, you work in a- across different places it's often three years.

Would that be the same in Japan, or would they want a longer term contract? Yeah, a lot of times they, historically they've wanted longer term contracts, and 10 years was the standard. W- when I started doing Asia Med Partners, I found that some companies when they had negotiated their contracts with Japanese distributors in the past, they didn't give themselves an out, like a performance- criteria that allowed them to terminate the agreement and required that Japanese partner to help them transfer the registration to another company and those things are critical.

Entering into a long-term contract is fine if you have a great distributor who's performing well. But if they're not, you wanna be able to take that registration and the existing business to another distributor without having to negotiate things at that point. You wanna have all that decided upfront. So that's really a key thing that early on in, in Asia Med Partners I was helping companies understand, because up until that point, the contracts I think were outdated and didn't consider that MAH transfer that has to occur.

Okay. Yeah that's really helpful because I think, yeah, it's just useful to know that and then useful to know what the get outs are, because 10 years is a long contract, and if things aren't working, you need to have things written into there to make sure that you can I suppose that's similar to if you've got a three-year contract, but three years is a lot less than 10 to commit to a, to the business relationship, so okay. And then the second part of that was really i- with all these things that we're talking about, and I love G- I love Japan and I've loved working with Japanese companies, I suppose the question that some people say is it really worth all the effort then with all these different things?

I might as well just go to a different market that's a lot easier and a lot closer. Yeah. I definitely think so because, in terms of market size, it's still one of the number three or number four biggest markets in the entire world. If you're gonna be in the US, Europe China and, another country it sh- it shouldn't be, a smaller country in Latin America or Asia, it should be Japan, definitely.

It still does take a little bit longer to get approval there. So depending on your class of product, a class one is a registration, so it might only take, two or three months to register your product. A class two or three product could take closer to 10 months to a year. However, the re- regulatory process is really straightforward now.

Again, I'd mentioned the harmonization with the FDA. It's easier to get your product approved in Japan now than it is in Europe. Yeah. And I tell US companies to think really carefully now about do they go to Japan first or do they go to Europe first?

Because there are definitely arguments to say go to Japan first which is historically never been the thought process, right? It's always been go to Europe even before you launch in the US if possible. Yeah, no, and it's interesting, isn't it? Because I think that my Whenever I'm advising people and I'm looking at markets, so obviously you've got the size of the market, you've got the regulatory burden, et cetera, but then you've also got the thing of w- where have you got a better chance to win?

And I, and my view always is because lots of people are daunted by Japan, you get all the big players there but smaller innovative companies think, "Oh, Japan's too difficult," which is why I was asking the question. Whereas my view is it's not that much more difficult. It might take a bit longer But That people have that perception means that you may well have less competitors from that same segment that you're actually in. Yes, the big players will be there because they understand and they have the the resources to do it.

But some of the smaller innovative products that come into market don't look at Japan, so it gives me you, in my opinion, a competitive advantage. That, that's a great point. And thinking of a like a spine client, a spine implant client that I had in the past, in the US there's probably, over 100 spine implant companies that are doing business. In Japan, there's probably seven.

A- and the market's about one fifth the size of the US market. And so yeah, if you look at the market opportunity there, it can be much, much bigger because of less competition. However, one of the challenges though, becomes in finding a partner that's gonna be willing to take your full line of products. Yeah.

Because it becomes more competitive to get the best commercial partner over there. But if you can get through that process, then yeah, the market opens up and you could probably sell more product in Japan in that particular category than in the US because of the competitive differences. Yeah okay, so in that case, we- we're saying that actually there's pros and cons, but on balance it would make sense to go into Japan for all the reasons we've discussed. What I wanted to just take you through was a real life case study or a, an example if you've got one, of a company that you will have worked with or you're aware of in the med tech space that successfully entered Japan, and then more specifically for the audience, what are the key factors that contributed to their success?

Sure. And may, maybe if it's okay, I'll, I won't mention the name of the company, but I think- That's fine, yeah anyone who's familiar with the space will probably be able to figure it out. But the category is barbed sutures. So barbed sutures are oftentimes used under the surface of the skin to tie tissue together so that you don't need to do knotting.

You can just pull the tissue and it anchors into the or pull the suture and it anchors into the tissue. So in Japan, there were two primary players J&J and Medtronic and my client was a US company that was the, is the third biggest player in the market and wanted to enter the Japanese market. They actually had a a person who was responsible for growing the business in Asia Pacific, and that person had identified a Japanese company that was a major player in the suture industry in Japan that they thought would be a good partner for them.

And they had gone through two years of discussions of back and forth, answering questions, and they still weren't at the point where they were actually discussing a distribution contract. The company was still doing their evaluation, and it just seemed like it was taking forever. So at that point the company reached out to me and said, "Hey, can you help us with this? One, we're not sure that this is really the right company for us, and we have some concerns about the fact that they're a manufacturer and maybe they'll copy our product further down the road.

And two, we just don't know who the other options are and if maybe there's a better company for us to work with." So I started an engagement with them, and within the first month came up with 20 to 30 additional companies for them to consider. Reached out to all those companies and narrowed it down to about five that had interest in the distribution opportunity. We had those five companies do business plans three-year sales plans to say what they thought they could sell and how they would go about doing it.

We provided them with information on the product so that they could determine, internally that this is something that they wanted to move forward with. And then at the end of that process y- looked at all the information together, looked at those criteria around sales regulatory capabilities product synergies, focus what would make a good distributor versus a not so good distributor, and ultimately made a decision. And it wasn't the company that they were... had been talking to for two years.

So we moved forward. They actually was an interesting case because they had started the regulatory process on their own with a designated marketing authorization holder because these sutures could be used in a whole lot of different clinical areas And they said, "Hey, we might wanna choose one distributor for one area, another distributor for another, and so we're gonna hold onto the registration and do the registration ourself through a third party." Probably the most uncommon way of doing things.

But in their situation, it made sense because they didn't know who their distributor was going to be, and they didn't want to necessarily delay the decision for two years on getting into the market. So yes, once the decision on the distributor was made, the Japanese distributor could actually cover all of the key clinical areas that their product was going to be sold in. So we transferred the registration from the third party to the distributor to save my client costs in that area.

I stayed involved as we got the Japanese company up to speed, as we got to product approval, as we went through the product launch, and that product has now been on market for about three years, and Japan is the single largest customer of this barbed suture company globally. They are the biggest market outside the US and the biggest single customer that this company has. So they did a really good choice on who the distributor was to be for them and they've executed well over time.

They had to do some product kind of adaption for the Japanese market, like you were talking about before, where their packaging had to match the sizing system in Japan, which was a little bit different. So they have Japan-specific SKUs. Not all companies have to do this, but in their particular situation it made sense to, so they could more easily convert existing Medtronic and J&J business to, to, to their product. So yeah, I, I think that's a good example of a company, how they started and how things turned out for them.

No, I think that's a really good example, and I suppose the key thing for me would be what would you say for example, they were starting again, cause obviously they went down, I would argue, the wrong path, which is good for you 'cause they had to come to you to actually then help them out. But if they were starting... If it was a new person starting in that situation, what would be the key learnings where you'd say actually, don't do these things and do these things," so they could get to where they got to without the two years of negotiations, yeah.

If they had wanted to do this on their own without me, I would've said, You just need to put some more concentrated time and focus into the Japanese market to do the work that I did yourselves." It's often hard though for companies that do not deal with Japan all the time, and that's one of the values that I add is I know all of the key distributors in Japan- and what their reputations are and what their capabilities are, and I know people at those companies not all the companies but the primary ones, especially in certain clinical areas where I can go directly to the right person to start a product e- evaluation.

And without that it's just hard for individual companies that don't have that experience or those connections to do that. But if they wanted to yeah, I would say don't, don't just put all your eggs with one company. Talk to multiple companies at the same time so that you don't end up in a situation where two years have gone by and you're still only talking to one company, and then it doesn't work out that they're your partner. That was just a waste of time for them, unfortunately.

Just on the the language thing. It just popped into mind as you were speaking there because every time I've dealt with the Japanese companies, I generally will get a Japanese speaker from my side, mainly because obviously not everyone in Japan and cer-certainly not in the healthcare company and certainly not in the distributor network speaks English. And what tends to happen is they get the one person who speaks English to do all of the negotiation, who may well speak English but have no understanding of what you're actually trying to achieve, and often is not translating exactly what they're saying or what you're saying back to them.

So what would your advice be in terms of how to manage those delicate negotiations in terms of language and how to set that up? That's a really interesting question. We could probably do a whole podcast just on that topic What's... what I've found to be interesting is the companies that have English speakers are generally ones that have more experience dealing with foreign companies, and generally you're gonna have a better experience working with those companies because they've adapted their way of doing business to a Western way of very kind of direct communication.

If you're working with a company that, that, maybe they can get by on email with written English but they struggle with with spoken English. A lot of times they don't have that experience working with foreign companies, and so you can run into bigger cultural issues where, I told you a minute ago that you should talk to multiple companies at the same time. That can be very offensive to a very traditionally minded- Yeah Japanese company that's very prideful of y- you know, their place in the market, and they're like, "You should only be talking to us.

You shouldn't be talking to anyone else." And if they catch wind that you're talking to someone else, they'll just end the r- end the communication. Those, I think cultural nuances can be important, especially where language becomes more of an issue. But again, with AI now even for video conference calls, you can do that, with an AI translator.

It translates the language so you can get your points across, but sometimes the cultural things won't get translated. So you talked earlier about the harmonization of FDA with the Japanese regulatory. So is there anything else which would make you say to a company now that actually I would either increase my export into Japan or decrease based on recent trends? Is there anything that's gonna make it more difficult," or, "That's gonna make it more easy"?

Yeah, there's probably arguments on both sides. It's easier than ever to get into the Japanese market and I know a lot of companies out there have invested in the MDSAP- program, which is a harmonized quality system that, Japan honors for the most part, and so it can make at least that part of the regulatory process easier. Where it's become a little bit less attractive is, again, in average selling price. Year over year reimbursement in Japan goes down.

Even though the aging population continues to increase, because of the decline in reimbursement, because of re- more recent exchange rate differences, the lack of inflation in Japan Japan overall is a flat medical market, whereas the medical markets in US and Europe are continuing to grow. So there's I think there's arguments on both side. You could say, "Hey, it's a better time than ever to get into Japan," but at least in terms of pricing, don't expect US prices, expect European prices.

Okay. Yeah that's really useful because I think if I go back, I don't know, fi- five, 10 years you tended to get higher prices in Japan. So you'd have Europe, then you'd have Japan, and then you'd have like North American prices, which were even higher. So what you're saying is actually that's changed, and you should just expect the same sort of prices you'd get in Europe and nothing else.

Exactly. I think we've covered most of the stuff I wanted to cover, and I think that it gives a real balanced view of what you need to do to get into Japan. But the things that I'm taking away is that f- like with any market, you need to understand and research it first and not go into it blindly. Understand those nuances and make sure you've done your due diligence on any distributor you're gonna work with.

But also understanding, as you just mentioned towards the end there, that actually if... depending on the company you're working with, Japanese companies may find it offensive if you are trying to speak to two or three people at the same time, which is just standard in other markets. So you have to be aware of that and understand the market that you're in. So we're gonna go onto the lovely little decision scenario that I always give my guests.

So I'll read through it and then you're gonna give us your sage opinion. So the scenario is, you are the president of a med tech company looking to enter the Japanese market, and you have a promising product, but you have limited resources and time. I'm sure everyone listening will recognize that. You need to make a strategic decision on your next step.

So do you, A, focus on building relationships with Japanese distributors before finalizing the actual product? Do you, B, invest heavily in local regulatory compliance before any market outreach? Do you, C, launch a pilot program to test product response in key hospitals? Or do you, D, conduct extensive market research to understand customer needs before taking further actions?

So tune in to the next episode to hear Kurt's answer on that particular scenario. And that you can't believe it, but We've come to the end of our time together. I- if there was like two or three key things you would say are pieces of advice based on what we've discussed today that you'd say if you are trying to get into Japan and you're based in the US or based in Europe, what would those key three pieces of advice be? Boy, it's hard to narrow it down to, to- just a few pieces of advice.

But I think, we talked on are you ready to go into the Japanese market? And I think understanding one, your quality systems. Is your product ready from a quality perspective? And two is the right reimbursement or pricing available there?

And I think that, those are two key criteria that you really need to understand. Everything else, once you've made the decision that that you can get a price that's appropriate for your product and a- and that y- as a top four global market that you wanna be there, everything after that, y- it's just execution. Yeah. And when it comes to the execution, yeah, if you're gonna do it on your own you have to have a person who's dedicated to this.

Ideally someone with experience or you can outsource it to someone like me. But Japan does require a little bit more hand-holding, and it's kinda high-touch service versus how we generally do things in the US and Europe. And fast responsiveness is important. So either having someone internally or externally who can provide that is critical.

Yeah. And not just because I'm a consultant and you're a consultant, but I would certainly suggest that if you are trying to get into Japan, it is a specialist market. I've worked in Japan. I've worked with a lot of people, and you're not gonna get anyone better than Kurt, to be honest, and I think that would make sense.

As, and as Kurt said, if you're a big company, you're gonna get someone yourself, or you're gonna get, you're gonna get people, boots on the ground. But I think when you're a small company and that's maybe your second or third or fourth market you wanna get into, you need somebody who really understands that market cause otherwise as in Kurt's case study, you could spend two years, and two years not getting revenue out of a market is a lot more expensive than paying a consultant to do it who can probably get you in, in, in three to six months.

So that'd be my closing comment. And I really appreciate you coming on, Kurt. I've been trying to get you on for quite some time, so I'm delighted that I've managed to get you on and that you've imparted exactly the quality of information that I was anticipating you would do so thank you very much. Great.

This was fun. Thank you again for inviting me and would love to participate again at some point in the future Thank you. And if you're building a MedTech business and you're not sure whether your next move should be around evidence, market access, commercialization, distributor strategy. Or adoption.

Do not guess. Book a healthcare export accelerator diagnostic Call with me. Use my link in the show notes. And in that session I'll help you identify the specific constraints blocking your momentum and the commercial move most likely to unlock your progress.

Thanks for tuning in. Until next time, thanks for listening. Keep challenging your assumptions and keep growing.