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Economy, No.17  Nov. 25, 2013

Global Companies from Japan

Japan is creating new global products, including robots and regenerative medicine.

CYBERDYNE Inc. — The robot suit obtains certification in Europe

In August 2013, the world’s first medical treatment robot took its first step.

The robot is the Robot Suit HAL (Hybrid Assistive Limb), which was developed by CYBERDYNE Inc., a robot venture from the University of Tsukuba. Its smart design with the basic theme of white is captivating. It conforms to the body and supports and enhances physical functions and helps users regain lost functions.

HAL for Europe Courtesy of Prof. Sankai University of Tsukuba / CYBERDYNE Inc.

HAL for Europe
Courtesy of Prof. Sankai University of Tsukuba / CYBERDYNE Inc.

HAL was recently granted a CE Mark, a medical device certification. This represents the birth of the world’s first robot capable of treating people. HAL works in the following way. When people try to move their bodies, very weak biosignals escape to the surface of the skin, reflecting that intention to move. HAL captures these signals through its sensors and operates its motors in real time to support the movement of the users’ joints.

Professor Sankai Yoshiyuki of the University of Tsukuba is Chief Executive Officer (CEO) of CYBERDYNE. He has been engaged in researching and developing medical devices under the theory that if people with a leg handicap wear HAL for a certain period of time, HAL will facilitate the regeneration of functions in their brain, nerves, and muscles, and improve users’ ability to walk.

Professor Sankai has been conducting ongoing clinical research for the past several years in Japan, Germany and Sweden, and has collected clinical data on the improvement of physical function in patients with disorders of the brain, nerves or muscles. His activities have been recognized, and HAL was successfully certified as medical equipment by a third-party certification body based in Germany. Now it is also covered under public workers’ compensation insurance.

CYBERDYNE’s future business plan is to expand its operations in Europe, which accounts for one-third of the global medical equipment market. CYBERDYNE has established a subsidiary to treat and improve the physical functions of patients suffering from disorders in their brains, nerves or muscles, such as spinal cord damage or strokes. Treatments provided by the subsidiary are covered by public workers’ compensation insurance. Therefore, patients can receive treatment without paying the cost of approximately 500 euros (approximately 65,000 yen) per treatment.

The successful commercialization of HAL in Germany was mostly due to the cooperation of BGRCI, a public workers’ compensation insurance organization and a CYBERDYNE partner, and BG-University Hospital Bergmannsheil, a member of the BGRCI Group. This partnership came about after a Japanese subsidiary of the Economic Development Office of the state of North Rhine-Westphalia, where the hospital is located, introduced the two parties. 

Historically, workers’ compensation hospitals in Germany have practiced a cycle in which they adopt cutting-edge medical treatments and later introduce the medical treatment equipment that they have tried out in the hospitals to other general hospitals. CYBERDYNE also plans to collect more clinical data from eleven workers’ compensation hospitals in the BG Group, and introduce its equipment to as many other hospitals as possible. It is also reportedly planning to begin operations in Austria and Switzerland, other German-speaking countries. Once its operations in Europe are up and running, CYBERDYNE will be in a position to expand its operations to the United States and Asia.

However, HAL has not been approved as medical equipment in Japan, where CYBERDYNE’s headquarters are located. To help the elderly exercise and train, CYBERDYNE is loaning approximately 400 HALs to welfare facilities and hospitals in approximately 1,600 locations nationwide as welfare equipment. A medical equipment clinical trial began at the NationalHospitalOrganizationNiigataNationalHospital and other institutions in March 2013.

HAL’s possible uses extend to other areas besides the medical field. In an effort to provide support to workers at nursing care sites, factories and outdoor operations, CYBERDYNE is developing and testing a prototype that will reduce stress on the waist. In July, it surpassed Fuji Heavy Industries’ robot business, and has expanded its operations to the fields of cleaning and transportation. 

Professor Sankai has enthusiastically declared that CYBERDYNE will become a comprehensive robot company and lead the world. CYBERDYNE began in Japan as a global company.

Japan Tissue Engineering Co., Ltd. — Developing regenerative medicine in Thailand and China

The only regenerative treatment covered by public insurance

Amid a growing interest in Japan’s regenerative medicine using iPS cells, the only company in Japan whose regenerative medicine is covered by public insurance has gradually introduced businesses overseas. The name of the company is Japan Tissue Engineering Co., Ltd. (“J-TEC”). J-TEC has introduced autologous cultured epidermis, JACE, and autologous cultured cartilage, JACC, the only two regenerative medicine products approved in Japan. Since its establishment in February 1999, for the last fifteen years J-TEC has been generating a loss. However, because JACC became covered by public health insurance in April 2013, the company expects to record profits for the fiscal year ending March 2014.

The President and CEO of J-TEC, Ozawa Yosuke, said, “Over the last six months, the environment surrounding regenerative medicine has undergone a 180-degree turn. Our task now is how we can take advantage of a new trend. The change came when Kyoto University Professor Yamanaka Shinya won the Nobel Prize for his production of iPS cells and the second administration of Prime Minister Abe Shinzo positioned regenerative medicine as part of its growth strategies.

The development of a legal system for regenerative medicine is lagging behind, and the policies of the Ministry of Health, Labour and Welfare have also changed a few times. According to Ozawa, “Around the time J-TEC was established, the Ministry said that regenerative medicine was not subject to the Pharmaceutical Affairs Law. In other words, regenerative medicine was outside of regulations. However, the Ministry subsequently changed its policy and asked us to operate under the Pharmaceutical Affairs Law. Furthermore, the Ministry added a guideline to ensure the effectiveness and safety of products before the commencement of clinical trials.” It took ten years for J-TEC to develop and obtain insurance coverage for JACE, and thirteen years to do the same for JACC.     

JACE is only approved for application to patients with severe burns covering more than 30% of their body surface area. Treatment entails cutting a piece of skin the size of a postage stamp from the body of a patient and cultivating it. Because it takes three weeks to form cell sheets, in the case of elderly patients, most of them die before the three weeks are up. All expenses incurred in this process are paid for by J-TEC. If JACE could be applied to patients with light burns, the market would be larger. But such application is restricted due to the limited funds currently available for medical treatment.

The application of JACC is also restricted to traumatic cartilage defects or osteochondrosis dissecans (excluding knee osteoarthritis), with a defect area of 4 cm or more, and only if no other treatments are applicable. Even so, the size of the market is believed to be over 10 billion yen a year, compared with JACE’s market size of 1–3 billion yen.

Many venture businesses in regenerative medicine have failed up to now, as their funds have run out. J-TEC originated from NIDEK CO., LTD., a medical equipment company in AichiPrefecture established by Ozawa Yosuke’s father, Ozawa Hideo. Ozawa’s older brother , Motoki Ozawa is now running NIDEK’s operations.

The secrets of J-TEC’s success were considered to be the company’s management capability, due to the fact that it was established by a business manager; the financial support from NIDEK; and support from TOYAMA CHEMICAL CO., LTD., Mitsubishi UFJ Capital Co., Ltd., and other organizations, which the company was able to receive based on NIDEK’s creditworthiness. J-TEC has now been listed on the Tokyo stock exchange and has established a business partnership with Fujifilm Corporation, which currently holds 44% of J-TEC’s shares. 

J-TEC plans to market regenerative medicine products in China and Thailand in cooperation with Fujifilm. On August 5, 2013, J-TEC’s project for practical applications of regenerative medicine in China and Thailand was selected in the “Project to Promote the Development and Introduction of Robotic Devices for Nursing Care” of the Ministry of Economy, Trade and Industry. J-TEC also aims to establish a business partnership with prominent local companies. It is about to set off on a medium-term growth track by starting to generate profits, accelerating its development of regenerative medicine products, and developing business overseas.

More global companies from Japan
Company names Initiatives
Muscle Corporation A manufacturer of FA machines and robot control systems, Muscle has obtained a certificate from the U.S.FDA for the electric components of mechanical ventilators.
Tokyo Otaku Mode Overseas distribution of updated information on Japanese animation, comics, games, and other items; Tokyo Otaku Mode also helps creators to develop overseas businesses.
WHILL Developing stylish wheelchairs; WHILL has its headquarters in the United States and is raising funds from U.S.venture capital and other companies.
V-cube, Inc. V-cube has a large share of the videoconference system market.It has developed a network that specializes in communications between overseas units with clear voice quality.
KAIZEN platform KAIZEN was established by a former employee of Recruit.It focuses on improving the management of EC sites, travel booking sites, and other sites.
Dennoo Dennoo, headquartered in the United States, has developed the world’s first system to charge fees to advertisers based on advertising time.
AnyPerk AnyPerk was established by a Japanese in the United States to provide outsourcing services for company welfare programs.Pinterest in the United States and other companies have introduced AnyPerk’s services.

Kitaya — Japanese sake receives high marks overseas

A Sake brewery that is entering and winning a number of international competitions

The sake brewing industry has recently become increasingly active in promoting Japanese sake in the overseas market through joint public-private efforts, while the government has established a project to promote sake exports. Kitaya, a sake brewery in YameCity, FukuokaPrefecture, started exporting products to the United States in 1996. Now, it exports to nine countries, including the United States, Taiwan, and Singapore. Its exports for the fiscal year ended June 2013 amounted to 34 million yen, accounting for 5% of its total sales of sake and shochu, a distilled spirit. President Kinoshita Kotaro reports that exports have steadily increased over the past several years, and he expects them to continue to increase at a rate of 20% a year.  

The strong reputation of Kitaya’s products overseas is partly attributable to its robust performance. Kitaya has been participating in international competitions since 2008, and won double gold prize (the best gold award, with all judges giving full marks) in the WSWA competition and the San Francisco International Wine Competition. In 2013, Kitaya’s Daiginjo Gokujo Kitaya was awarded Champion Sake, the highest award in the sake competition for the International Wine Challenge (IWC), one of the world’s largest wine competitions, held in London. Kitaya’s sake is internationally renowned for its clarity and rich flavor.  

Participation in these international competitions has been actively promoted as a strategy to increase the awareness of Japanese sake in the overseas market. In the competitions held in the United States, as a challenge, Kitaya decided to enter in the wine category, not the Japanese sake category. By winning high marks among a number of well-known wines, Kitaya is helping Americans to realize that sake can be as tasty an alcoholic beverage as wine.

Kitaya is also striving to promote its products in the Asian market. Mugi Shochu Goku, Kitaya’s own shochu product, is served to executive class passengers on Japan Airlines’ international flights. As a result, Kitaya is now known as a shochu brewery in Taiwan and other Asian countries. Taking advantage of its high visibility, Kitaya is also planning to sell sake.

Japanese sake produced in different areas or by different breweries has different flavors. Like wine experts judging the taste of wine by growing region, such as Bordeaux and Bourgogne, President Kinoshita hopes that people around the world who like Japanese sake will start talking about sake by growing region. That is his dream.

Special Feature/New Growth Business 100

How to create a growth business at a big company — The power of the first venture business born at Sony

Creating new businesses by using the technologies a company has but isn’t using; under this policy, Sony established its Business Design & Innovation Laboratory by gathering 100 engineers in its Business Development Office in July 2012 with the aim of creating a competitive business by combining its own technologies with internal and external ideas. As a result of this initiative, Informetis Co., Ltd. started operations in July 2013 as the company’s first external venture business.

Its target customers are electric power companies, as described below. Because Sony had almost no business relationships with electric power companies, it felt that it was more important to develop cooperative efforts with external companies rather than pursue internal synergies. Consequently, it established a new company through a carve-out, a method of creating a new company by carving out part of the operations of the parent company. Sony has no investment in Informetis. However, a certain number of its human resources have been transferred and dispatched to Informetis, and some necessary technologies have also been transferred to Informetis. President Tadano Taro says that he felt that starting the company was like changing to a small boat from a large vessel, Sony. He says, “Just chanting the promotion of ecological awareness to protect the Earth will not help us to continually save energy. Therefore, Informetis aims to create independent ecosystems.”  

Applying AIBO’s artificial intelligence

Informetis’s competitive technology is its equipment separation technology. This technology is based on the artificial intelligence technology that Sony obtained when it developed AIBO, its robot dog. This technology makes it possible to estimate the electric power consumption of individual pieces of equipment by analyzing data obtained through wave-type sensors. 

The key part of the technology is its ability to monitor the electric power usage of multiple pieces of equipment plugged into a power distribution board just by installing a sensor in the power distribution board. Usually, it is necessary to install sensors in each branch breaker and each piece of equipment to check how much electric power is being used. As a result, the more data that is required to be specific, the higher the costs become. Informetis’s technology excels in reducing these costs.   

So, what kind of business model is Informetis using? (i) First, Informetis provides its sensor technology to sensor manufacturers and smart meter manufacturers for their use. (ii) Next, Informetis sells the sensors to electric power companies and other companies. (iii) The electric power companies install the sensors in the power distribution boards of customers such as commercial facilities and multi-family apartment buildings. (iv) Informetis then collects the current waveform data via the Internet. (v) Informetis analyzes the data and determines how much electric power is being used by each piece of equipment, and then feeds the processed data back to the electric power companies. (vi) Based on the processed data, the electric companies consult with customers on saving energy, and there is also the opportunity to sell the data to manufacturers of home electronics equipment and other companies as reference data for developing new products. 

According to President Tadano, Informetis is targeting sales of 10 billion yen within five or six years. External Director Fukumoto Taro, who was assigned to the company from JAFCO Co., Ltd., an investor in Informetis, says, “Because Informetis’s technology is cutting-edge, it has great potential in the global market. If expensive sensor equipment is sold in the global market, sales will increase significantly. JAFCO will maintain its long-term commitment in the company.”

Sony is aiming to create several new venture businesses. This initiative to create new businesses is also important from the perspective of revitalizing its internal operations.

Translated from “Uearaburu Tanmatsu mo Zokuzoku Tojo Donaru Nihon no Denshibuhin (Wearable Devices Are On Their Way — What will be the fate of Japanese electronic parts?),” Weekly Toyo Keizai, September 14, 2013, pp. 54-57. (Courtesy of Toyo Keizai) [September 2013]