August 28, 2014 12:00 am JST

Medical device makers see gold in silver population

YOICHI NITTA, Nikkei staff writer

GE Healthcare produces CT scanners in Tokyo.

TOKYO -- As Asian countries become more prosperous, they are undergoing the familiar pattern of population growth and aging. But while the lifestyle changes associated with economic development have led to an increase in chronic diseases, many of these countries lack the medical facilities needed to provide quality ongoing care.

     In order to bridge the growing supply-demand gap, medical institutions inside and outside the region are aiming to improve services for chronically ill patients. For manufacturers of medical equipment this represents a golden opportunity.

Gray gold

Jun Kawakami is president and CEO of GE Healthcare Japan, a major manufacturer and supplier of diagnostic imaging systems. "Japan is the front-runner in terms of aging societies in the world," Kawakami said in a recent interview with The Nikkei. "Our business solutions developed in Japan could be applied to other countries in Asia and elsewhere."

     Since 2010, GE Healthcare Japan has been pursuing its "Silver to Gold" strategy, aimed at turning the challenges of an aging population into opportunities for growth by providing innovative medical technology optimized for elderly patients.

     "In an aging society, it is very important to respond to new medical needs, such as the treatment of chronic diseases," Kawakami said. Liver cancer, which is more common among Asians than Westerners, is one example of a chronic condition.

     GE Healthcare is focusing on developing medical imaging technologies to fight this disease. Radiofrequency ablation, a new technique used to treat liver tumors, has a good track record in Japan. The therapy uses high-frequency radio waves to destroy small tumors and has proven most effective when cancer is found at an early stage. For this reason, CT and MRI scans play a vital role, as they are used in early-stage cancer detection.

     In radiofrequency ablation, an electrode-equipped needle, guided by ultrasound, is inserted through the skin into the site of the tumor, where it then emits heat-generating radio waves that destroy the cancerous cells.

     GE Healthcare is developing imaging software to improve the accuracy of such cancer treatments and says the work is close to completion. The software will be used to synchronize a real-time ultrasound image with the corresponding section of an MRI diagnostic image.

     When it comes to developing medical equipment, GE Healthcare pays close attention to the needs of Asian markets. In developing its newest MRI model, the company incorporated the opinions of doctors in Japan and Southeast Asia. For instance, the company said it adjusted the height of the examination table to make it more accessible for elderly patients.

Priceless opportunities

The Asian medical device market outside Japan is valued at roughly 4 trillion yen ($38.4 billion) and is expected to grow to 8 trillion to 10 trillion yen in 2018, accounting for some 20% of the world market.

     Johnson & Johnson is working to increase its presence in emerging markets. Because China has comparatively high rates of lung cancer, the U.S. medical device giant has said it plans to enhance its product lineup in the Chinese market, including a new device used in endoscopic surgery.

     In 2012, Olympus, a global leader in endoscopic videoscope systems that identify cancers in digestive organs, launched a model priced at only one-third the cost of the conventional device. It is considering marketing the product to clinics in India and China. Olympus plans to diversify its business in China to include endoscope-based surgical instruments and treatment devices. It is also planning to beef up its local sales networks.

     Toshiba Medical Systems, a medical devices unit of Toshiba, established a new manufacturing subsidiary in Malaysia in June. The unit, which is slated to begin operations in December, will be the company's third manufacturing base outside Japan, following those in China and Brazil. It will be involved in production of diagnostic ultrasound systems.

     But success for these companies is far from certain. "Realizing potential growth opportunities in emerging markets may be more difficult than previously thought," said the manager of a Japanese medical device company. Hospitals in some countries are increasingly looking beyond their borders for wealthy patients, while ordinary people often have limited access to medical services. The manager is concerned that "the continued trend of wealth concentration will have a dampening effect on overall demand for medical care." The key may be how much each country can improve its public health care programs.