Ichiro Matsubara, President and CEO, Atom Medical
To reflate Japan and reform it, Shinzo Abe, prime minister since December 2012, proposed the three “arrows” of what has become known as Abenomics: monetary stimulus, fiscal “flexibility” and structural reform. The first arrow would mobilize Japan’s productive powers and the third would expand them, allowing the second arrow to hit an ambitious fiscal target. The prevailing view is that there have been too few structural reforms however in the health sector we have seen the introduction of “act to promote healthcare and medical strategy”, the revision of the “pharmaceutical affairs law” as well as the “Sakigake Package strategy” all part of the Japan revitalization plan. How do you believe that these policies have affected the medical device industry?
When we analyse the bold fiscal policies that have been implemented under Abenomics, the first effect we can see is the acceleration of the weakening of the Yen which has lost a lot of value. Companies that export medical devices, for instance, have been strongly affected by this. However, in most cases, only the largest companies have already seen the benefits of it. I would say that probably 80% of the companies are not really seeing the benefits that Abenomics could bring yet. In terms of performance, there is a huge difference between large scale companies and medium-sized ones. In 2012 the difference was 9 trillion Yen but now it has grown to 19 trillion Yen.
We have seen that in the administration there is an increasing popularity of the medium and small enterprises and how they can contribute to the healthcare sector. Mr Abe has presented a very clear vision and showed the people what he wants to achieve and how. He has taken the ministries to work together towards a common purpose. In that sense, I see Abenomics as a very positive measure.
It has also had some good effects in the health sector, in particular, Mr Abe has emphasised “medical” as a key word in his approach and that has awakened a lot of interest from other industries, for example parts makers, who are now actively looking to create tie-ups with the medical industry. I see it as revitalising for the health sector in Japan, it has also improved interest in research so we could say that Abenomics has created a new energy for the sector.
We have seen the Sakigake package and other new rules under the Japan revitalisation plan and I think that these have been effective in our sector, but if we could extend this positive environment to other industries we could see much more business movement.
It is claimed that Japan is extremely reliable on foreign medical equipment. For instance, US exports to Japan of medical technologies account for 23% of the market share, meanwhile, when it comes to advanced medical technologies this percentage raises to 60%. You are an example of a company that not only provides the domestic market but is competitive internationally. How do you believe that this scenario will evolve in the near future?
I don’t think that there has been a significant change in that dependency on imports yet. If you go to trade shows and exhibitions in Japan you can see that most of the companies are foreign.
When it comes to the adult healthcare field people look for medical equipment from the US and Europe because it has a solid reputation and that is what companies and hospitals want to buy. That is maybe one of the reasons why we have been losing ground to the US and Europe. On the other hand, in the neonatal segment, Japan ranks in the top of the field and that works very much in our favour.
As I said before Abenomics has driven a great movement of companies from other fields to the healthcare sector and they are coming with great enthusiasm, revolutionary devices to take the sector by storm. But their goal is to stop right after the approval of the Pharmaceuticals Affairs Law. They don’t go beyond.
When it comes to manufacturing Japan is great, but when companies take a step forward and need to really understand the market we aren’t that good, we still need to learn more to have a competitive edge and revert this import situation.
The increasing ageing population is putting pressure on government healthcare expenditures in the country. Currently, the population over 65 years of age constitutes 26% of the total population in Japan, and it is expected
to increase in the near term to reach 40% by 2050. It is therefore crucial for Japan to count on companies such as yours to better the quality of life of this ageing population. Japan is a very particular market that one needs to be familiar with to benefit from it. How is Atom Medical supporting this ageing population through its products?
Our primary focus isn’t the ageing population but we do make products that are used by the elderly like oxygen masks or tubes.
The population is ageing and by 2050 the volume of people over 75 years is going to be a very large percentage of the population. We have to adapt ourselves to this new reality and be ready for it. A lot of hospitals are shifting now to home care instead of attending people in their facilities so our focus is on creating products with the patient in mind rather that the hospital so much.
Most of our products target the whole healthcare spectrum. We have a very strong commitment to delivering quality paying 100% attention to details like sizes, softness, and so on. We put a lot of effort in this sense.
For example, apart from ours, oxygen masks in Japan are usually imported which means that they are designed for people with different face characteristics and they don’t fit so well the Japanese bone structure as ours do.
In order to offer top quality and safety to your customers, Atom Medical has been continuously enhancing technological advancement in the field. In this context, how is the company providing increased value to its clients in order to remain competitive on the market?
We have been in the business for almost 80 years now and we have developed a number of technologies that have been growing with us over the years. Our focus has always been to provide high quality to our customers. We develop our products by involving the customer needs as a priority.
We have never started by a “Hey, let’s make this product because we can make a profit out of it” It has always been a “What can we do for a baby?, what can we do to solve this issue that a nurse has?” Our technology has always been driven to solve existing needs rather than to create new ones.
Considering the Japanese spirit of manufacture and service, Omotenashi, how are you working towards solving these client needs and gain a competitive advantage over the rest of the players?
Our competitive advantage is that we have learned to compete with the giants in the industry and we are still able to speak directly with doctors meanwhile big companies can’t do that. We can learn exactly what the specific need is and we can work on a real one-to-one basis. I feel that this is very appreciated by our clients and gives us a strong advantage to have this personal ties with them.
Something that my father always told the salespeople in our company was that “you don’t sell only a product, you sell yourself.” and that means being someone that the doctors like to be with, someone that supports them. We do
special collaborations with doctors, joint research, study sessions and seminars to lower mortality rates and improve the lives of the new-born.
To reach the ambitioned state-of-the-art medical care, investing in R+D is crucial, in fact, for any company operating within the industry. Could you share some examples of how Atom Medical innovates in the production of medical products?
The healthcare sector is a bit different compared to the rest of the manufacturing and consumables industries. We are always looking to innovate by observing how the doctors are treating diseases, how nurses are using products and devices or what advances in research have been published and how they impact the sector.
Some companies nowadays just focus on developing too fast, providing 2-3 steps ahead solutions of what we have now. We like to go at a 1.5 pace that allows us to go forward but also leaves our products room to grow roots so we can get a proper feedback of what has to come next.
If you come up with a very advanced product you might see that it gets bought but a giant corporation but you don’t achieve market penetration or new clients with that. My philosophy is to take a little more time so that we see good results and remain solid in the market.
When talking about our research, we collaborate with research entities and universities but we also encourage our departments to come up with new ideas by organising idea contests. We reward with a little bonus to those who think creatively and bring new ideas. We like to involve teams so anyone in the company can participate and help us develop products that are easier to repair or that we can optimise somehow on the road ahead.
Japan is known for creating one of the most stylish and innovative products worldwide evoking therefore, an image of reliability and quality. What potential do you see in the ‘’Made in Japan’’ concept and its products?
“Monozukuri” in Japan is our approach to manufacturing that emphasises high-quality manufacturing with an optimised process. The manufacturing style of any country reflects the particularities of the common thinking and culture. In Japan we have for example several writing systems, we focus on every tiny detail. For us, everything has to be precise and exact. We apply that sense of responsibility for any product, we care about its perfection by putting everything that we have into it.
In other countries you may see a defect rate of 3% which is it reasonable but in Japan, we aim for the 0% because we work for perfection.
We export our products and what we hear from our distributors is that “Made in Japan” really counts. It carries a lot of weight because they associate it with high quality.
We take great pride in producing at the best that we are able to, but when you want to take that sense of care overseas sometimes we find difficulties in localising products because other countries don’t have the same quality standards. We can’t always transfer Japan’s values in full. If we are able to understand that we might need different designs to adapt products, we would be able to penetrate deeper into those markets.
As most of the major companies in Japan you cannot ignore the decreasing population of the country. Hence, Atom Medical is exploring external business opportunities and is improving its balance of sales across the regions, including the number one healthcare market, the U.S. In fact, back in 2014 you established your US branch. With the US at the head of the healthcare sector, which are your prospects of growth within this market?
America has been a country that has historically accepted immigration very well and has achieved a good balance in its population mix, even though, it has a population pyramid that is reshaping because of the increase in elderly population. Considering that factor and also the access that some Americans are having now to health thanks to the Obamacare program, both put the US as a huge market with good perspectives.
It accounts now for 35% of the medical devices market worldwide and its seeing annual growths of 6%. Despite the measures that the new administration may take, I don’t see the market falling abruptly.
As a company that is reinforcing its business worldwide and is bringing its products globally, which key products do you believe that can enter or have in fact have already entered this market successfully and provide added value?
Our incubators. They are very innovative, we have worked in every single detail, they are the most silent, and for example, they never get cloudy, some models from competitors get humidity clouds when they reach a certain temperature, ours never get that.
Departing from the fact that this is a family business, what is that unique value that has been transmitted over the years representing Atom Medical’s legacy?
One thing that I often tell my employees is that a company exists within the frame of its relationships with other entities such as banks, dealers, patients, or partners and we have to be aligned with all of them and respect our roles. I see my personal role as the responsibility of bringing happiness to my employees.
Our ultimate goal is to reduce Neonatal mortality in the world to levels as we have here in Japan. I believe that everyone in this company is committed to achieving that goal. Having a management that is based on the philosophy of saving lives says a lot of our company and its something that came from my grandfather and that we are passing to the next generations, the happiness of saving lives.