Expectations and Realities of Health-Tech Market in Japan

HIDEKAZU TAOKAEXECUTIVE DIRECTOR,

CORPORATE DEPARTMENTDOCOMO HEALTHCARE, INC.

NOVEMBER 6, 2019

CEWIT 2019

Introduction

Hidekazu Taoka

2018- Executive Director, DOCOMO Healthcare, Inc. (Tokyo, Japan)2017-2018 MIT Sloan School of Management (Boston, MA)2013-2017 President & CEO’s Office, NTT DOCOMO (Tokyo, Japan)2010-2013 5G Wireless R&D, DOCOMO Euro-labs (Munich, Germany)2000-2010 4G/LTE Wireless R&D, NTT DOCOMO (Yokosuka, Japan)

DOCOMO Healthcare, Inc.

Company Name DOCOMO Healthcare, Inc. Date of Foundation July 2, 2012Location Shibuya, Tokyo, Japan President & CEO Shinichiro MURAKAMICapital 1.3 billion JPYShareholder Distribution NTT DOCOMO, INC. & OMRON HEALTHCARE Co., Ltd. #of Employees 53 (as of March 31, 2019)

Contents of Business Healthcare Platform & App/Web Business for enterprise customers and mass consumers

Japan Entered a Super-Aging Society

What percentage of the Japanese population will be over 65 years old in 2050?

Hint: Aging rate in 2019 is 28.4% in Japan

Question 1:

Aging Rate Prospect

37%

Resource: United NationsWorld Population Prospect 2019

(%)

How many Japanese will be over 65 years old in 2050?

Hint: 35 million is over 65 years old in Japan

Question 2:

Elderly Population Prospect

35 million

0

100

200

300

400

500

600

700

800

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

Aged Population

India China Japan US Resource: United NationsWorld Population Prospect 2019

Why?Elderly populationAging ratio

Total population127 millions 97 millions

(million)

How will be the Social Security Cost of Japan in 2040?

(Relative ratio to GDP)

Question 3:

Social Security Cost Projection in Japan

Will increase by 2.4 pt21.5%

21.7%

23.9%

Why?Elderly populationSocial security cost

(trillion JPY)

Source: Social security cost projection,Ministry of Health, Labour and Welfare, Japan

Social Security Cost Projection in Japan

41% 45%

49%

(trillion JPY)

Publicpension

Medical service

Long-termCare service

OthersLate-stage elderly

population

Medical and care service expenditures

Source: Social security cost projection,Ministry of Health, Labour and Welfare, Japan

Insight

It is essential in a super-aging society to manage the increase in social security costs in a sustainable wayMinimizing the difference between average life expectancy

and healthy life expectancy can reduce medical and nursing expenditures.

Preventive healthcare services become more important. Health-tech innovations by individuals, society and industry

are highly expected in a super-aging society with less labor population.

Insight (cont.)

The elderly market should not be categorized into a “single” segment.Various elderly markets

1) Active elderly who can do the same activities as young generations2) The elderly who can do basic activities in the daily life3) The elderly who need support and care in the daily life

Many services for the elderly failed without segmenting the elderly market.

Health-Tech Market in Japan

How much does the medical IT/ICT market increase in Japan?

Hint: 15.9% annual increases in the world

Question 4:

Medical IT Market Projection in Japan

Medical IT market (World)2016 134 billion USD

Medical IT market (Japan)2017 471 billion JPY

2025 Projection510 billion USD（3.8 times）

Rapid growth15.9pt/year

2025 Projection530 billion JPY (1.13 times)

Slow growth1.5pt/year

Source: From International Strategy Working Group for ICT Global Strategy in the Age of Digital Transformation, Ministry of International Affairs and Communications

Growth of Preventive Healthcare IT Market

Medical insurance system in Japan1. National health insurance program2. Medical Fee Point System3. Free access to medical institution

Preventive health-tech market also grows less in Japan.

It is often the case that individuals pay less for medical expenses after getting sick rather than spending money on maintaining health.

Signs Possibly Breaking Through Health-Tech Market Stagnation

Japanese labor market・Public criticism for the harsh working environment・Many enterprises (especially medium- and small-size enterprises) suffer from severe labor shortage・Transportation companies are mandated to check health conditions of drivers every working day

Signs Possibly Breaking Through Health-Tech Market Stagnation (cont.)

Increasing demand for employees’ health management Productivity improvementRecruiting and turnover reductionCompliance with regulationsReduction of insurance premium burden

Preventive health-tech services targeting ordinary people might grow through BtoBtoC solutions.

Insight for Successful Health-Tech Services

No healthcare services succeed if “health” is the final goal. The effect of investment is hard to be observed for many

(preventive) healthcare services.

It often gets better if the objective of a service is not related to health and health is a by-product.

Success: Actively used by ordinary people with less/no activities for health maintenance

Summary

Introduced Japanese health-tech market. Health-tech solutions are highly expected to manage

the increase in social securities expenditure. The majority have less motivation to invest in health

maintenance and improvement due to national health insurance program in Japan.

BtoBtoC could have potentials to permeate the health-tech services to the ordinary people.