Japanese Growth Markets

Part
01
of three
Part
01

Japanese Growth Markets: Smart Robots, Biopharmaceuticals, Life Sciences

Japan is poised for growth opportunities in the industry of smart robots, biopharmaceuticals, and life sciences. Japan is already a market leader in these segments and government is further trying to enhance the growth opportunities of these industries by marketing various programs such as National Strategic Special Zones, tax benefits, New Robot Strategy, and others to retain their leadership.

SMART ROBOT MARKET

  • Japan ranks number one in robot operations and more than 50% of robots are manufactured in Japan. Japan has one of the largest number of service robot manufacturers (4th place) in the world.

1. Market Size and Growth Rate

  • Japan smart robots are categorized under industrial robots and services. It has a growth rate of 13.9%.
  • Japan industrial robots sales increased by 34% and exports are sold thrice when compared to domestic sales.
  • According to the Japan Robot Association (JARA), 168,342 smart robots were produced in 2018 which account for 744,444 million yen (USD 6,917,931,981) with a growth of 4.7% compared to 2017.
  • In 2017, Japan smart robots export growth rate increased by 28.9%.

2. Growth Factors and Opportunities

  • Factors influencing growth of smart robots sector in Japan includes cultural influences such as Manga comics, historic robot adoption, labor shortages, increased stats of aged generation, and government promotional activities such as New Robot Strategy.
  • New Robot Strategy was launched in 2015 by the government of Japan to improve opportunities for robot production which aimed at encouraging investments around 100 billion yen by public and private sectors and planned to expand up to 2.4 trillion yen by 2020.
  • Japan government also proposed a new robot test field at Fukushima with the aim of reducing the cost of producing robots.
  • Major sectors of smart robot sales include material handling robots and robots in the painting category.

BIOPHARMACEUTICALS MARKET

  • Japan has taken second place in the biopharmaceuticals market (Biologics) across the globe. About 70% of Japan biopharmaceuticals market was dominated by foreign companies.

1. Market Size and Growth Rate

  • As of 2018, Japan biopharmaceuticals market had a growth rate of 7.5%.
  • In 2020, Japan biopharmaceuticals market is projected to reach 500 billion yen (USD 4,646,000,000).

2. Growth Factors and Opportunities

  • Biopharmaceuticals contribute to 17% of healthcare expenses in Japan.
  • The government recently launched Honebuto Policy to develop biosimilar productions and promote National Health Insurance schemes, high-cost medical care benefit programs and other reimbursements which will improve the use of biopharmaceuticals which in turn increases the market size of biopharmaceuticals/biosimilars.
  • The government of Japan provides feasible procedures to market biopharmaceuticals by offering opportunities such as minimizing clinical trial, ease in drug approval procedure, subsidies, and tax incentives for new investments.
  • Japan Government also created multiple bio-clusters for R&D cost reduction.

LIFE SCIENCES MARKET

  • Major sub-segments in Japan life sciences market include pharmaceutical and medical device market. Japan ranks second in life sciences markets after the United States.

1. Market Size and Growth Rate

  • According to the International Trade Administration, in 2017, the Japanese pharmaceuticals market size was around $95 billion.
  • The Japanese pharmaceuticals market has a growth rate of 3.3% from 2017 to 2022.
  • In 2018, Japanese medical device market was $54.5 billion and is projected to reach $74.7 billion in 2025 with a CAGR of 4.6%.
  • Major medical devices include pacemakers, orthopedic implants, and PTCA catheters.

2. Growth Factors and Opportunities

Part
02
of three
Part
02

Japanese Growth Markets: Smart Agriculture, Virtual & Augmented Reality, Tourism-Related Businesses

The Japanese market for the smart-agriculture will grow steadily to about ¥33.19 billion by 2022. For some years to come, the Virtual Reality/Artificial Reality technology industry of Japan will serve a wide variety of other industries, including medicine, tourism, retail, and manufacturing. Osaka Japan will draw about 2.2 million visitors by 2030 to Japan and create an economic impact of ¥760 billion yearly.

SMART AGRICULTURE IN JAPAN

  • Available data estimates that the size of the domestic market for smart-agriculture in Japan was ¥9.72 billion in 2015, ¥11.05 billion in 2016 is set to grow to ¥33.19 billion by 2022.
  • Several sectors, such as agriculture, fisheries, forestry, and the food industry, have experienced a severe shortage of labor in Japan due to declining farming population and the effect of aging. This declining farming population will present a market opportunity as smart agricultural equipment will be needed to augment the efforts of the declining farming population and aging workers.
  • However, future improvements are expected in Japan due to the anticipated growth of smart agriculture.
  • As of 2017, Japan's agriculture focused on "cultivation support solutions," such as production/control of farm products. By 2018, the sales and operational support solutions expectedly increased. Besides, precision farming expectedly expanded from 2018, as more systems implemented interworking between manned and unmanned agricultural machinery. Agricultural systems that operate unmanned are expected to become more popularized in Japan.
  • According to Reuters, some smart (unmanned) agricultural equipment getting popularized in Japans smart agricultural system include drones, which now offer high-tech assistance to Japan's aging farmers.
  • The next-generation farm workforce in Japan may be a drone. A 2018 Reuters publication reveals that Nileworks planned to commence the sale of drones in May, with an annual sales target of about 100 units within the first year and achieve a sales of 4,000 within five years.
  • A recent Science Direct journal reveals that Japan is one of the countries contributing the most significant number of scientific studies to the field of research and development in smart agriculture and this could indicate that it will become one of the countries that will become known as "leaders in smart farming."
  • The market size of the Japanese smart agriculture segment is expected to reach a value of ¥33 billion by 2023.

2. VIRTUAL REALITY/AUGMENTED REALITY (VR/AR) IN JAPAN

  • The 2017 to 2023 market analysis by PRNewswire reveals that Japan is one of the few countries that currently represent a significant demand for the global augmented reality gaming market and will remain in this position up to 2023.
  • As of 2016, the size of Japan’s Virtual Reality/Augmented Reality market was about ¥14.1 billion and is projected to grow to ¥211.1 billion by 2020.
  • Experts revealed that the Japanese VR/AR market is expected to grow more than ten times (exceed a multiple of ten) within five years, counting from 2016.
  • The most significant use of VR/AR is for entertainment in Japan. However, an analysis of the coming years reveals that the VR/AR technologies will serve a wide variety of industries, including medicine, tourism, retail, and manufacturing.
  • The governments of Japan is attracting more foreign tourists, and several indigenous bodies in Japan are creating smartphone apps that feature virtual reality videos and target foreigners. Virtual reality is an initiative of the Japanese government to spur tourism and create new industries. The high volume of visitors to enter Japan (about 40 million by 2020), during the Olympics and Paralympic games will present significant market opportunities and unprecedented growth for the VR/AR industry in Japan.

3. TOURISM IN JAPAN

  • A principal Japanese travel agency, H.I.S., recently launched an augmented reality travel pamphlet that requires users to possess a smartphone to enjoy its contents.
  • The Japanese tourist industry is set to grow significantly for the period between 2017 and 2020.
  • The number of incoming tourists into Japan reached the highest ever figure (28 million) by 2017. Significant business opportunities are coming up across several sectors in Japan, including tourism. The Japanese tourism industry will see substantial activities due to the market opportunities from the upcoming Tokyo Olympics games and Paralympics scheduled for 2020.
  • The 2020 Olympics and Paralympic games will attract more visitors to Japan and create a market opportunity for the tourism industry, which is projected to grow to about 40 million visitors by 2020 from 28 million in 2017.
  • Indeed, inbound tourism is well-positioned to be a vital element of the Japanese government in its efforts to achieve the economic GDP growth of ¥600 trillion by 2020 (from the present ¥500 trillion).
  • Facilities in Osaka Japan will draw about 2.2 million visitors by 2030 to Japan and create an economic impact of ¥760 billion yearly.

METHODOLOGY

Our research team scoured through expert interviews, market surveys, and industry analysis published by credible resources such as Augment Brightly, an augmented and mixed reality publication among other resources for insights into the smart agriculture, virtual & augmented reality, and tourism-related businesses of Japan. There was no comprehensive article that gave a detailed analysis of the items under study. We researched for the future profitability of the Japanese virtual reality (VR) and augmented reality (AR) markets. Insights obtained from Augment Brightly, IDC, and several other publications revealed that Europe and the Asia-Pacific region are likely to remain significantly profitable in the global virtual reality market. The report failed to give statistics specific to Japan as it is excluded from the analysis.

We researched through market industry publications such as Invest Japan (Jetro) for trends regarding the Japanese smart agricultural sector. Insights obtained from the Invest Japan market report published by Jethro revealed that smart agriculture would experience steady growth due to the need to augment the aging agricultural workforce of Japan. Due to limited insights into the study of the current and future Japanese smart agriculture market, we depended on insights uncovered from an Invest Japan market report published by Jethro. This Japanese smart agriculture market data (growth statistics) published by "Invest Japan" is not corroborated by any other web resource.

Going further, we researched through various academic publications, scholarly articles, and journals such as the journal of the United States National Library of Medicine (National Institutes of Health), Research Gate Journals, Sage Journals among other academic publications. We studied through the publications for the revenue analysis, contributions, and significance to the Japanese economy accredited to smart agriculture, virtual & augmented reality, as well as tourism. This strategy failed to uncover comprehensive projected revenue statistics for smart agriculture, virtual & augmented reality, as well as tourism in Japan. We then researched the GDP contribution of the VR industry to the Japanese economy. The National Institutes of Health journal revealed that significant VR contributions came from several countries of the globe, including Japan, but failed to give the monetary breakdown of the VR market or its GDP contribution to the economy of Japan. There were no insights into the revenue or other contribution of smart agriculture, augmented reality, or tourism-related businesses to the economy of Japan or the world.

Research through credible databases such as Statista, IBISWorld, the library of the E.U. Business In Japan, among other resources for the cumulative annual growth rate of the smart agriculture, virtual & augmented reality sectors of Japan failed to uncover comprehensive insights into the growth of the Japanese AR/VR market. Insights obtained from EU Business In Japan revealed that augmented reality and virtual reality are new fields across the globe. However, Japan is already a leading market and an innovator, particularly in the area of gaming.

Due to the limited availability of credible future insights into the tourism sector of Japan, we also reviewed a few articled older than the usual 24-month credibility range. We researched through media publications such as Reuters, Forbes, etc., for the growth of smart agriculture, virtual & augmented reality, and tourism-related businesses in Japan beyond 2020. The insight obtained from Reuters revealed that Osaka Japan would draw about 2.2 million visitors by 2030 to Japan and create an economic impact of ¥760 billion yearly. The Japanese AR/VR market analysis for 2025 is behind a paywall.
Part
03
of three
Part
03

Japanese Growth Markets: Renewable Energy, Electricity, ICT

Japan is poised for growth opportunities in the Renewable Energy, Electricity, and Information & Communication Technology (ICT) markets. The Japanese government and Renewable Energy industry are embracing the renewable energy revolution taking place around the world. The Japanese electricity industry is undergoing deregulation and the Japanese electricity market will see more opportunities arise as the market is fully deregulated, scheduled in 2020. When it comes to the Information & Communication Technology industry, Japan is already a market leader and growth within the market is inevitable moving forward.

RENEWABLE ENERGY

  • When an earthquake and tsunami significantly damaged the Fukushima Daiichi nuclear power plant in Japan in 2011, Japan's power sector was marked by significant turmoil. Japan turned off its entire nuclear network, creating a severe energy supply challenge that also spurred an important and unprecedented opportunity for renewable energy developers throughout the country. Since then, Japan's Renewable Energy industry has become a growing market. And while the market has always been important, a decision to use policy incentives to adjust Japan's energy mix meant that growth was all but assured.
  • A "Feed-in Tariff (FIT) system was implemented in 2012 to promote renewable energy deployment," and the generation capacity by renewable energy has increased steadily. The FIT rates are reexamined and revised annually and have been decreasing year by year.
  • Japan currently generates most of its energy needs from fossil fuels. They plan for that figure to fall to just over 50% by 2030, reinforced by energy efficiency policies to reduce demand. "The Japanese Government has pledged to boost the amount of energy coming from renewable sources to 22-24% by 2030 from the current level of 15%."
  • Japan's reliance on coal increased after the 2011 Fukushima disaster. With the recent market liberalization, Japan’s energy market is transforming itself gradually, towards more renewables.
  • The hope for the future is high with some challenges as Japanese entrepreneurs and corporate leaders check out the latest advances in solar panel technology, wind turbines, biomass generation, battery storage technology and smart grids. Renewable Energy is a trendsetting market that provides learning opportunities in order to be more competitive at home. Japanese companies are eager to collaborate with overseas firms and conduct pilot tests all over the world.
  • The total revenue from energy sales in Japan for 2018 was 18,023,581 million yen which is $167 billion USD.

ELECTRICITY

  • The total electricity production has been decreasing, but the government expects growth in electricity demand, as an effect of continued economic growth. After the oil crises in the 1970s, Japan has expanded its energy sources through increased use of nuclear energy, natural gas and coal, as well as the promotion of energy efficiency and conservation. Japan’s electric power companies are fully committed to implementing the closed nuclear fuel cycle and plutonium utilization consistent with all domestic laws and international nonproliferation standards.
  • The government has decided to aim to maintain the energy demand in 2030 at the same level as it was in 2013. In order to achieve this, the Japanese government is proceeding with energy saving regulations. According to the Government, the "transmission and distribution lines will be unbundled by 2020." The market has been growing positively to ensure competitive neutrality. This is monitored by the former ten General Electricity Utilities, which consistently handle all functions from power generation to distribution.
  • The Japanese electricity market is undergoing deregulation, and several opportunities will arise when the market is fully deregulated, scheduled in 2020. In 2016, full electricity deregulation of the retail side was completed. However, the last step in the deregulation is remaining and will mean a full unbundling of power generation and transmission as well as full deregulation of the electricity price. After the end of Feed-in Tariff, experts predict "profit opportunities for new electricity service companies" in Japan. With the three goals of ensuring supply stability, suppressing electricity rates to the maximum extent possible, and expanding the options for consumers and the business opportunities for operators, the government is planning to advance the reforms in three phases. These would be through the three key measures of enhancing nationwide grid operation, full deregulation of the electricity retail and generation sectors, and further ensuring neutrality in the transmission / distribution sector through the legal unbundling.
  • In 2016, the Liberalized Electricity Market in Japan was worth $140 billion.

INFORMATION & COMMUNICATION TECHNOLOGY (ICT)

  • Japan is home to huge multinational ICT conglomerates. These include Sony, Panasonic, Fujitsu, NEC and Toshiba among many other globally acclaimed brands. However, though there are some key players operating here, many of the enterprises are still struggling especially amidst international competition. This is where the latest and most innovative ICT solutions can make all the difference by playing a vital role to stay above the competition.
  • Japan was placed 10th in a global ranking that assesses nations on their level of development in information and communication technology, moving up one spot from last year, according to an annual United Nations report. Japan is an ICT leader, and also an active participant in international standards.
  • The government is steadily coming up with innovative ideas and efforts to significantly impact and contribute on a global scale. The industry is expected to exceptionally boom in the upcoming years. Both the public and the private sectors are aware of the importance of the latest, most innovative ICT solutions to advance the economy and are taking steps towards this. Hence, this sector holds immense business potential.
  • Japan’s government planning, investment in research and development, and sophisticated consumers have contributed to its rapid adaptation of the latest ICT. There is an increase in the Development of IoT in the Information and Communications Industry in Japan. "The number of IoT devices, which connect things to the Internet, is increasing more sharply compared to smartphones, and is expected to reach 30 billion units by 2020." As a communication technology to connect these devices, Low Power Wide Area (LPWA) networks are attracting attention, in addition to 5G.
  • Based on the country data of Japan, there are various opportunities in the ICT Sector. First, the country ranks 3rd as the biggest market with average revenue per user in Asia. Based on the forecast, the country has a projected 160 million number of mobile phone subscribers which will be even more by the year 2019. Second, Japan has a relatively high ARPU and data share of ARPU compared to countries like Germany and United Kingdom.
  • The Information and Communications Technology (ICT) industry in Japan is touted to be the top industry in the country. In 2011 this sector was worth USD 1.2 trillion. The Japanese government aims to take this number to 2.4 trillion by 2020.
Sources
Sources

From Part 01
Quotes
  • "In addition to the growing number of cutting-edge initiatives in Japan, when it comes to demand for industrial robots, the Japanese market ranks 1st globally by number of robots in operation. Production-wise, around 50% of global robot shipments are manufactured in Japan"
  • "Demand for service robots in Japan is expected to grow significantly at a CAGR of 13.9% over the 20 year period leading up to 2035. "
Quotes
  • "Jara’s latest data covers the period from October to December 2017, and show that the country’s industrial robot makers produced a total of 53,918 units, valued at about $1.7 billion. "
  • "Jara calculates total exports of industrial robots from Japan to be 42,263 units, with a total dollar value of about $1.3 billion in the last quarter of 2017."
  • "In the same quarter, domestic shipments were said to number 10,429 units, valued at $460 million. So, Japanese industrial robot makers appear to export three times as many units as they supply to domestic customers. "
  • "Jara is more precise, calculating the increase in exports to be 28.9 per cent."
  • "In the period from October to December 2017, almost 60 per cent more robots in the painting category were sold, although the actual number of units were relatively small: 78 units shipped to domestic customers, and 524 exported – 602 in total."
Quotes
  • "On the contrary, Biologics contribute significant part of the current healthcare spend (17% of total healthcare spend) by government in Japan. As the growth rate of drug cost are higher than the growth rate of the overall health care costs in Japan, and biologics are one of the major contributor to that- to reduce healthcare burden, a biosimilar weapon is a must need in Japan. "
  • "Separately, Government recent Honebuto Policy aims to double Biosimilar API by 2020 from Current (5 to 10), again confirms JP Government stands to aggressively push biosimilars use in Japan."
  • "High cost medical care benefit programme and various Government public Insurance programmes minimize the benefits of co-pay difference associated with biosimilar use. "
Quotes
  • "Use of the product in Diagnostic Procedure Combination (DPC) hospitals, simple protein moiety and reimbursement costs under the medical care benefit programme of the National Health Insurance scheme are key factors which determine the uptake timeline and penetration of each biosimilar in Japan. "
Quotes
  • "Meanwhile, Japan already features the world’s second largest markets in pharmaceuticals and medical devices, behind only the United States. This intersection of aging, depopulation, and rich markets creates a laboratory for how the rest of the world will handle the economic and societal changes of aging. "
  • " Today, in pharmaceuticals and medical devices, in health care services and regenerative medicines, non-Japanese firms are learning from Japan’s markets before the aging trend arrives elsewhere in the world."
  • "National Strategic Special Zones, which are selected regions that offer eased regulations and tax benefits, are encouraging creation of innovative drugs and medical devices"
Quotes
  • "the second fastest global market for growth in biologics (7.5 percent growth)"
Quotes
  • "Given Japan's aging population and the increasing number of patients with chronic and life-style diseases, medical devices that alleviate pain, complement lost functions, and improve the quality of life should show steady growth in demand. Also, the markets for in-home care devices, technologies, and health IT related products are expected to grow as the number of people in out-patient care increases. "
  • "Due to stronger consumer health concerns, other promising growth areas include self-care and preventive care medical devices and products."
  • "The market remains heavily dependent on imports, especially sophisticated medical devices such as pacemakers, PTCA catheters and orthopedic implants. A number of U.S. companies have substantial production capacity in Japan. As such, the total market share of U.S.-origin medical devices in Japan would be significantly higher than suggested by official statistics. "
Quotes
  • "In 2020, the Japanese biopharmaceutical market was forecasted to reach approximately 500 billion Japanese yen"
Quotes
  • "Japanese Pharmaceutical Market Set To Grow 3.3% (Cagr) Between 2017 And 2022, Significantly Lower Than The Worldwide Outlook (6.5% Cagr)"
From Part 02
Quotes
  • " In Japan in the fields of agriculture, forestry and fisheries and the food industry, there is a serious shortage of labor due to decrease in farming population and progress of ageing but going forward improvement is expected due to progress of smart agriculture."
  • "According to an estimate of a research company, size of the domestic market for smart agriculture was approximately 9.72 billion yen in FY2015 , 11.05 billion yen in FY 2016 and it will expand to 33.19 billion yen in FY2022."
  • "Further, until FY2017 it was primarily centered on cultivation support solutions such as production control of farm products but after FY2018, it is expected that sales and operational support solutions will increase. In addition, precision farming is expected to expand from around FY 2018, as the systems that realize interworking between manned and unmanned agricultural machineries and systems that realize unmanned operation will get popularized."
Quotes
  • "Meanwhile, Europe and the Asia-Pacific region, excluding Japan, are also likely to remain profitable in the global virtual reality market."
Quotes
  • "Asia/Pacific excluding Japan (APEJ) spending on augmented reality and virtual reality (AR/VR) will reach USD 7.1 billion in 2019, an increase of 75.2% from the previous year, according to the latest IDC Worldwide Semiannual Augmented and Virtual Reality Spending Guide."
  • "IDC Expects Augmented and Virtual Reality Spending in Asia/Pacific excluding Japan To Reach USD34.9 Billion by 2022"
Quotes
  • "Global Augmented Reality Gaming Market 2017-2023 - China, the United States and Japan Currently Represent the Key Demand Drivers for this Market"
Quotes
  • "In 2016, the size of Japan’s VR/AR market was around 14.1 billion yen, and is estimated to grow to 211.1 billion yen by 2020. "
  • "Both globally and in Japan, the size of the VR/AR market is expected to grow more than 10 times larger over the next five years."
  • " Foreign companies are also aiming for opportunities to commercialize VR/AR technologies.  Research in VR/AR technologies and human responses has been making progress at universities and research institutions.  Exhibitions focused solely on VR/AR are few in number, with more numerous opportunities found in introducing VR/AR as one of many technologies for a specific industry."
  • "VR/AR Trends in Japan  Up until now, VR/AR has largely been used in Japan for entertainment purposes. However, in the coming years, it is expected that the technologies will be applied in a wide variety of industries, such as medicine, tourism, retail, and manufacturing.  Many players, including Japanese electronics manufacturers, have been providing VR/AR technologies for industrial solutions."
  • "Developments among VR/AR Players in Japan iii. Expanded Usages for VR/AR in Japan (Tourism) Major Japanese travel agency, H.I.S., has launched augmented reality travel pamphlets, requiring users only to have a smartphone to enjoy the contents"
  • "H.I.S., one of Japan’s largest travel agencies, launched a “moving pamphlet” that provides videos of tourist spots taken by drones, etc., giving the sense of images leaping out of the screen."
Quotes
  • "Japan contribute the largest number of scientific studies to the field. Countries that invest more in R&D generate the most publications; this could indicate which countries will be leaders in smart farming."
Quotes
  • "Number of inbound tourists crossed the highest ever figure of 28 million in 2017. Many business opportunities are emerging in a diverse range of services including tourism, security and language learning as a preparation due to the upcoming Tokyo Olympics and Paralympic Games in 2020"
Quotes
  • "The Japanese Smart Agriculture market is expected to be valued at approximately ¥33 billion by 2023."
From Part 03