U.S. Medical Technology Industry's Interest in Japan

¶ … U.S. Medical Technology Industry's Interest in Japan Market share and sustainable growth are the primarily interests the United States has in Japan. With its aging population and subsequently higher medical costs the U.S. intends to position itself as a worldwide power within the medical technology arena. With only marginal growth in the past, the U.S. medical technology industry needed to acquire a viable option that would provide sustainable long-term growth.

Japan was a prime target due in part to its lagging and outdated medical technology and stagnant economic growth prospects. In addition, the Japanese medical technology market is the second largest market in the world with sales of roughly $15 Billion. Even more intriguing is that rapid growth of 11% annually in Japan. By positioning itself within the Japanese market, the United States could provide Japan with a broad away of medical devices that would better service the Japanese community. Concurrently, by servicing the Japanese market more effectively, the U.S.

medical technology sector would utilize excess earnings to provide more effective product offerings in the future. In addition to market share, creating universally accepted principles and guidelines were critical to future business success. By creating a heightened sense of importance of medical device standards, the U.S. could more readily sale its high end brands and services. Although more expensive, these U.S. brands could better serve Japanese constituents and all stakeholders involved. By heightening universal medical device standards, the Japanese market was also protecting itself from predatory pricing schemes.

Often times, especially within business, companies tend to lower prices in an attempt to eliminate threatening competition. Through these pricing strategies, they aim to lower the price below competitors cost of production in hopes they will eventually become bankrupt or exit the market. These practices, although effective, often leave the consumer with product offerings that are inferior to competition even though they are offered at a lower price point. By elevating standards, companies are forced to provide minimum product specifications that ultimately benefit the consumer.

This tactic is especially advantageous to the United States because it eliminates potential competition who have the intention of providing low cost yet low quality services. Finally the U.S. wanted to change the pricing and organizational structure of Japan within its medical device industry. The Japan Ministry of Health and Welfare's (MHW) primary goal was to protect domestic interests.

It believed the best way to accomplish such a task was through long approval times, imposing regulatory constraints such as the "Good Import Practices"(GIP), and a system that favored generic pricing. Although on the surface, these practices seemed to favor Japanese citizens, they actually hurt the development of the industry. First, by favoring generic pricing, Japan was essentially eliminating company's incentive to innovate. Companies didn't need to provide innovative products if the MHW was going to need allow they to receive comparable profits from their endeavors.

Likewise, the overall medical industry will lag behind the world due to lack of innovative products and incentive for foreign direct investment within the country. Similarly, due to extensive approval times, the few innovations that did occur would be rendered obsolete once the approval process was complete. Through proper education and negotiation the U.S. hoped to systematicly integrate pricing controls and import requirements to benefit all parties involved. 1. b) Briefly describe the U.S.

Medical Technology Industry's negotiation strategy with Japan Both the American Chamber of Commerce in Japan (ACCJ) and the Health Industry Manufacturers Association (HIMA) were instrumental in the success of the negotiations. To start, the U.S. had an adequate relationship with the MHW through previous engagements in the Market-Oriented, Sector-Selective initiative. Due to prior negotiations before hand, the U.S. And Japan could negotiate on a good faith basis initially. The U.S.

was also fortunate to have the American Chamber of Commerce in Japan which was also viewed in favorable terms. The U.S. used the ACCJ as a conduit to communicate directly with the MHW. By collaborating with the Health Industry Manufactures Association ( HIMA) the U.S. was positioning itself as a partner to Japan as oppose to an adversary. This was paramount to the overall success of the negotiations because it provided proof of Americans commitment to the overall well being of both parties involved.

Also through regular interaction with both the HIMA and the MHW the U.S. was cultivating a strong relationship forged through time. Many of the negotiators stressed the importance of harmonization. With harmonization, standards worldwide would be increased. This was of importance to Japan because it had a reputation of lagging behind competitors in terms of medical device product offerings. Instead of arguing and bickering over contentious subjects, both nations worked in unison to accomplish each nation's strategic objectives. 1.c) Briefly describe the U.S.

Medical Technology Industry's effectiveness to date? The negotiations were quite effective for both parties involved. The U.S. benefited by becoming exempt of the MHW's requirement for GIP. By being exempt from GIP, the U.S. could more readily provide products and services to the Japanese market. The Japanese benefited by having the latest products, services, and technology available for its constituents. In addition, Japan eliminated its emphasis on generic pricing by not cutting prices.

This provided incentive for foreign firms, who are governed by GIP to provide higher quality products that better serve Japanese constituents. Japan also adopted a much more efficient and effective means of approvals. This European style allowed for quicker processing time which, again, would benefit Japan. No longer, do medical industry firms need to linger as they wait for approval. With a more efficient process, all firms involved could quickly more.