By all rights, Japan’s rich, aging population should be catnip for Orange County makers of medical devices and other products.
The catch: The country’s pensive regulators make the Food and Drug Administration seem nimble and open by comparison.
“Japan’s system for approving use of new medical technologies is the slowest and most costly in the developed world,” said Michael Mussallem, chief executive of Edwards Lifesciences Corp., the Irvine-based heart valve maker.
The result is an exercise in frustration for medical companies doing business in Japan.
By the same token, the country’s 130 million people,who have a median age of 43,can’t be ignored.
Lucrative Market
“It’s in the top five countries in terms of population over the age of 60,” said Mike Neilon, president of Japan for Santa Ana-based Advanced Medical Optics Inc., a maker of eye devices and contact lens care solutions.
“They have a huge senior population, which plays into our cataracts and implant group,” Neilon said. “But then their middle-aged population is quite wealthy. As a society, their per-capita is high. So that middle-age plays into our laser vision correction group.”
Neilon is diplomatic in his assessment of Japan’s regulatory system.
“It’s certainly a hot topic here in Japan for the major pharm and med device companies,” he said. “There’s a sense of frustration. Would I characterize it as a major sense of frustration? No. Japan’s its own little world. They have their own rules and regulations.”
Japan historically is slow to sign off on medical technologies because of past scandals and potential fears about ballooning healthcare spending, industry executives said.
“It’s difficult for a company like us to sell these medical devices that are higher-class, risky products,” said Huimin Wang, Edwards’ corporate vice president of Japan.
Japan classifies devices in four tiers, with products such as heart valves from Edwards falling into class three or four. Regulators are tougher on those.
Edwards has been one of the louder voices seeking change in Japan.
Mussallem, who is chairman of the international board of AdvaMed, a Washing-ton, D.C.-based trade association for device companies, shared stories back in April with the House of Rep-resentatives’ Ways and Means Committee regarding how Japan approves devices.
“Although Japan is one of the wealthiest countries in the world,the second-largest economy in the world,its spending on healthcare is among the lowest of major developed countries,” Mussallem said.
The Japanese government compounds the situation by imposing what Mussallem called “more burdensome and costlier regulations” and lengthy approvals.
Retesting
Regulatory challenges, Advanced Medical’s Neilon said, include the need to retest devices in Japan, even though the government allows clinical trial data from other countries in some cases.
“So if you decide to do clinical in Europe or the U.S., you do have to be cognizant of the fact that Japan may require additional data or different data,” he said. “You have to design as such that you’re going to meet the Japan requirements.”
The country’s rigid regulatory rules lead some device makers to hang on to older products longer than they normally would.
“In Japan, often times we sell products that are three, four or five generations different” than what’s available in the U.S. and Europe, Wang of Edwards said.
“When it comes to Japan, it’s typically a two- to five-year delay,” he said.
Advanced Medical doesn’t have its latest technology in Japan either, Neilon said, including its correction lenses for seeing up close or refractive eye wells.
“We have the files submitted. We’ve had our clinicals done. But it just takes time,” Neilon said.
Some Change
Japan has made some efforts to change things.
The government created the Phar-
maceutical and Medical Device Agency in 2004 to process medical device applications.
Previously, Japan’s Ministry of Health, Welfare and Labor managed the process.
“The government has made great strides,” Neilon said. “They have changed their submission process, and their whole system was revised to make it a little bit easier, more friendly.”
Japan had a backlog of nearly 500 applications as of last February, according to AdvaMed. The approval agency has about 40 people to review those applications, the trade group said.
The U.S. has about 700 people doing the equivalent job, according to the association.
“In our view, it’s still way understaffed,” Wang said.
Cultural factors also come into play. Japan’s tendency toward conservatism plays out in the medical approval process.
“There’s a very big risk aversion generally among the bureaucrats or the examiners,” Wang told Forbes Asia in a July story.
In some cases “it’s almost ridiculous,” he said.
Products that have been used in humans in other countries for three years sometimes are required to undergo animal testing prior to approval, according to Wang.
“There’s no incentive for (examiners) to stick their neck out and try to approve a product,” he said. “Nobody’s going to give them a medal.”
Japanese device reviewers themselves are held liable if a product goes wrong, something Neilon called “one of the biggest hurdles” to speeding up the regulatory process.
Another challenge: The Japanese healthcare culture is geared more toward drugs as a treatment option, executives said.
“The industry is more rooted in a traditional, conventional pharmaceutical mentality,” Neilon said. “They take a very safe approach on those types of things. They are much more pharmaceutical-minded than medical device-minded.”
“The idea is when you go see a doctor, you receive a dose of medication and come home,” Wang said. “That’s the norm, the expectation.”
Pharmacists Dominate
Japanese examiners mainly come out of the pharmacist ranks and have to learn about medical devices that have more to do with physics and electricity, Wang said.
“So there’s that skills mismatch issue, which of course poses some problems for us because they ask some strange questions,” Wang said.
After Edwards changed the color of a logo on one of its catheters, Japanese regulators insisted on reviewing the new shade, according to Wang.
The delay forced the device maker to gather old catheters from other parts of the world to keep its Japanese customers supplied until the new logo color was approved, he said.
Despite the challenges, quitting Japan isn’t an option.
“We want to do business in Japan,we like to do business in Japan,” Wang said. “We want to bring the products that we feel, self-righteously, (are) products that really help people.”
Edwards derived $186 million, or about 20% of its $998 million in sales last year, from Japan.
Advanced Medical, which makes a range of eye devices and products, got about 20% of its $922 million in sales last year from Japan.
“It will evolve,” Advanced Medical’s Neilon said of Japan’s regulatory system. “I truly believe someday, it’ll be more in harmony with the major industrialized countries.”
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Taiwanese Regulators OK IntraLase’s Laser
Irvine-based IntraLase Corp. said regulators in Taiwan have approved the sale of its laser used in vision correction surgeries.
IntraLase plans to start selling its femtosecond laser in Taiwan through Taiwan Hwa-In, the company’s distributor in Hong Kong and mainland China.
Taiwan has a “large number of patients” that could use laser vision correction surgery, said Jay Hsu, Taiwan Hwa-In’s chief executive.
IntraLase’s laser allows surgeons to do vision surgery without manually cutting the eye’s cornea with a blade.
The deal broadens IntraLase’s global business.
More than 470 IntraLase lasers are in use around the world, according to the company. IntraLase sells in 31 countries.
A year ago, the company got approval to sell in China and Poland.
IntraLase did an initial public offering in 2004, raising $86 million.
The company went public to raise money for research and to expand its sales here and abroad.
IntraLase got its start in 1997 and raised more than $70 million in venture capital before going public.
