BMI View: Japan's delayed entry into the medical tourism industry will see the country facing significant headwinds in developing the sector. Leading medical tourism hubs in the Asia Pacific region, such as Malaysia and Thailand, have already firmly established their sectors, offering medical treatments at a significantly lower cost. Moreover, Japan faces distinct challenges, including the country's considerable distance from the growing South East Asia markets and the limited inclusion of medical tourism in the business plans of the country's healthcare providers.
Headline Expenditure Projections
Pharmaceuticals: JPY11,239bn (USD106bn) in 2014 to JPY11,490bn (USD95bn) by 2015 with a year-on-year (y-o-y) growth of 2.2% in local currency terms and -10.5% in USD terms. The contraction in the US dollar amount is due to the strengthening of the dollar against the yen.
Healthcare: JPY50,277bn (USD475bn) in 2014 to JPY51,305bn (USD424bn) in 2015 with a y-o-y growth of 2.0% in local currency terms and-10.7% in USD terms. Healthcare spending revised downwards due to new data from the World Health Organization. The lower US dollar amount is driven by the weakening of the yen against the dollar.
Japan's continues to be ranked as the most attractive region according to our Pharmaceutical Risk/Reward Index, scoring 73.3 out of 100 in Q415, significantly ahead of peers such as Australia (65.8) and South Korea (66.2) as well as the region's average at 52.4. This is driven by the country's high market expenditure scoring (18.0 out of 20.0) as well as a high spending per capita score of (10.8 out of 12.0). However, dragging down the country's score includes a declining population (population growth score of 1.0 out of 5.0). In addition, we highlight that the country's score has been lowered due to the weakness in the Japanese Yen, which translates into a lower value returns in US dollars.
Key Trends And Developments
In July 2015, local news sources reported that the government will allow non-Japanese doctors from the US, UK, France and Singapore to practice at four selected hospitals without a Japanese medical license. However, these doctors would not be allowed to treat Japanese patients.
In June 2015, Japanese authorities disclosed that they intend to allow patients in special economic zones to purchase prescription medicines through video calls, removing a requirement for face-to-face visits that has impeded the uptake of telemedicine.
In May 2015, the House of Councillors passed and enacted a reform to the country's public healthcare system. Under the bill, contribution percentages to Japan's medical insurance programme for patients aged 75 and above will rise. The legislation also plans to hike fees for patients seeking treatment at large hospitals without referrals.
BMI Economic View
HSBC's flash Purchasing Managers' Index (PMI) printed at a disappointing 49.1 in May, reflecting a continued contraction in China's manufacturing sector, and with credit growth also continuing to slow, we note that broad economic momentum has yet to recover. With Premier Li Keqiang once again showing confidence that real GDP growth will come in 'around 7.0%' in 2015, we believe that more supportive measures are in store from the government over the near-term.
BMI Political View
Rising geopolitical tensions over territorial disputes in the South and East China seas are raising the risk of a military clash between China on one side and the US, Japan, Vietnam, and the Philippines on the other. This could quickly escalate into a major global crisis.