Japanese Continue Relentless Biotech Stake in Midwest

19 Aug Japanese Continue Relentless Biotech Stake in Midwest

CHICAGO – The Midwest has been approached by a variety of country economic development groups with interest in developing ties between regional biotech communities. These groups include:
1. The Swiss
2. The Germans
3. The Irish
4. The Taiwanese
5. The Israelis
6. The Singaporeans
7. The Danish
None, however, have taken biotech more seriously and more persistently than the Japanese.
In at least two previous columns, you have seen me talk about a biotech linkage between Japan and the Midwest that in part is fostered by the prior pharmaceutical industry linkage. I continue to be so impressed by how diligently the Japanese are taking biotech in the Midwest.
It started some 12 or so months ago when JETRO (the Japanese Economic Trade Organization) assembled a traveling road show of Japanese pharmaceutical companies, universities, economic development experts and research institutions to visit every state in the Midwest.
This traveling Japanese biotech road show (which is known as KAMBI, or the Kansai Midwest Biotechnology Initiative has arguably done more to highlight biotech activities in the Midwest and bring together the biotech community in this region than any activity by the state biotechnology associations themselves or for that matter any other country organization.
Fomented by JETRO Chicago, KAMBI has also been a force in building bridges to one of Japan’s most prolific life science areas, which includes the core cities of Osaka (pharmaceuticals), Kobe (medical devices) and Kyoto (nanotechnology and tissue engineering).
This is not so different from Chicago (pharmaceuticals and nanotechnology), Minneapolis (medical devices), Indiana (orthopedic devices and diagnostics) and Madison (genomics).
Before we take a look at what KAMBI and JETRO are up to next, let’s take a look at some key health care statistics (relevant to life science companies) comparing Japan and the U.S.

Some conclusions from the above table and overall comments on health care in each region:
1. Both regions have to deal with rapidly aging populations (particularly the 65 and older group). In Japan, this group in 2000 represented 37 percent of total medical expenditures. This level is expected to reach 41 percent by 2010, which would cause great concern to the Japanese government.
2. Although the U.S. currently outspends Japan in health care, Japan may be quickly catching up. As it is today, Japanese use of pharmaceuticals almost doubles that of the U.S. as a percent of total health care expenses (even with the average Japanese patient spending six times as long in a hospital as his American counterpart).
3. One reason for high Japanese drug expenditures is that Japanese physicians make money from patient consultations and from the dispensing of medication. As a result, most Japanese prescriptions include multiple drugs and drug safety in Japan is far more important than drug efficacy.
4. The practice of medicine still varies widely due cultural differences. In Japan, most patients still aren’t told when they are diagnosed with cancer (you can imagine the difficulty in running oncology product clinical trials when patient-informed consent is almost non existent).
5. One beneficial impact has been the global harmonization of the review and approval of drugs between the U.S., Europe and Japan, which has resulted in far more acceptance of foreign clinical data in Japan and shortening the overall drug development time.
6. Pharmaceutical prices are usually cut every two years on average 7 percent to 8 percent. This pushes the pharmaceutical industry to bring out new drugs that usually garner premium prices. On the flip side, generic drugs (mostly branded generics) don’t do well because there is no incentive for the physician to necessarily dispense them. This is an area that the Japanese government is looking at as a way of controlling health care expenses.
So what is driving this large push into biotech by the Japanese given their latecomer status to the sector and the field?
One of the key drivers is Japan’s aging population, the diseases that afflict them and ways of capturing health care expenses (particularly in a society where health care is almost universal and where the government and private sector cover a much larger part of the population than the U.S.).
Another key driver is Japanese prime minister Junichiro Koizumi, who in July 2002 upon addressing the newly formedJapanese Biotechnology Strategy Council stated that his administration sees biotechnology playing a pivotal role in the future of the nation. Perhaps even politicians are seeing the looming costs of health care and are looking for solutions now to curtail these costs and improve disease outcomes.
The Japanese Biotechnology Strategy Council appropriately assembled the Biotechnology Strategy Guidelines for the country, which pointed out that advances in biotechnology could cause fundamental changes to the way people live in Japan. Furthermore, for Japan, which must stake its future on knowledge-intensive industries, biotechnology along with information technology is an area of great strategic importance.
It’s a no wonder that the Japanese aren’t only looking to their own biotech to help resolve their health care issues but also to the leading country in the world for biotech: the U.S.
According to a study done by the Japan Patent Office that covered patent applications between 1990 and 1998, Japan leads both the U.S. and Europe in new patent filings in the area of glycoengineering and bioinformatics but trails in the areas of genetic engineering, genome sequencing, protein engineering and developmental engineering.
Another structural change that has encouraged the development of biotech companies in Japan has been the change in university regulations starting in the year 2000. This has allowed professors from national universities to become corporate executives while still retaining their university roles.
This change alone has stimulated a proliferation of new biotech companies. One notable example is the biotech company AnGes MG, which listed its stock in September 2002 and was started by Ryuichi Morishita, an assistant professor at Osaka University (one of the prestigious national universities).
Similar to challenges for commercializing biotechnology in the Midwest, changes in the way universities create intellectual property (patents) from research and reward individual inventors (instead of an emphasis on publishing first) still need to be implemented. But Japan is catching on!
Midwest-Japan Biotech Summit
To further help stimulate the growth of biotech in Japan, JETRO (and particularly JETRO Chicago) has created a bridge between the two countries particularly in regions (Kansai and the Midwest) where there is a strong pharmaceutical tradition.
The culmination of the U.S. part of the program will take place on September 10 at the Chicago Hilton and Towers where JETRO Chicago has created a Midwest all-star life science lineup consisting of U.S. and Japanese life science companies and institutions. These will include:

If this isn’t enough, the KAMBI road show continues its trajectory in the Kansai region in October for a full week from October 18 through 25.
For Midwest life science companies that desire to see the Japanese market first hand, they should plan on heading over to the Kansai region for a unique perspective. It is also a great time of year to be in Japan (not the winter cold and the heat and humidity of the Japanese summer). See you next week!
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Since debuting Yer Biotech Blues earlier this year, eP contributor Michael Rosen has profiled biotech development in four Midwestern States – Illinois, Minnesota, Iowa and Wisconsin. This week, Rosen explains how each state is contributing to an emerging economic cluster.
Michael S. Rosen is the vice chairman of human health at the Illinois Biotechnology Industry Organization (IBIO). He can be reached at rosenmichaels@aol.com.