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Introducing innovative medical devices into Japan is perhaps an unlikely entrepreneurial venture for six graduates of Duke University’s Global Executive MBA programme.
But Nipponica, set up by Mark Lee Ford and his business school colleagues, is doing just that and as a result has tapped into Japan’s $32bn medical devices market.
Working with Frederick Shane, a doctor with more than 60 years of healthcare experience in Japan, Nipponica builds on what Dr Shane has done at his clinic for years – bringing US medical techniques and devices unavailable in Japan to patients at The American Clinic Tokyo.
“We simply capitalised and expanded on that,” says Mr Ford, Nipponica’s managing director.
Nipponica’s business takes advantage of an information gap between the US, where there are numerous innovations in medical technology and Japan, where the healthcare system tends to stifle such innovation.
“We at Nipponica have been good at identifying that gap,” says Mr Ford.
Japanese healthcare workers are often unaware of the advances being made across the Pacific in medical technology from which their patients in Japan could also benefit.
While this may be partly down to language, Derick Du Vivier, Nipponica’s director of medicine and co-owner, believes “that often, especially in healthcare, people just work inside their silos”.
The technology and devices Nipponica brings into the country are not only unknown in Japan generally, they have not been approved by the Pharmaceutical and Medical Device Agency, Japan’s equivalent of the US Food and Drug Administration for medical devices.
But Mr Ford, who first came to Japan in the summer of 1994 on a US National Science Foundation grant, knew through his association with
Dr Shane that Japanese physicians were able to use medical devices and therapeutics even if they had not received approval from the PMDA.
“In the US, physicians are restricted to FDA-approved drugs and equipment. But in Japan, physicians have tremendous latitude to use non-approved devices wherever the physician’s licence covers,” says Mr Ford.
“There is a bevy of FDA-approved devices that have gone through the rigours of FDA approval but are not approved in Japan, which Japanese physicians can and do use,” he says.
“Our target products typically come from small and medium-sized medical companies that are rising stars in the US that have not grown to the size of mega-companies, which we believe we can help get a foothold in Japan,” says Mr Ford.
One product that Nipponica is bringing to Japan is the HAAH early cancer-detection blood test developed by Panacea Global in the US. Nipponica has exclusive rights to market the product in Japan, where it does not yet have government approval.
The group is able to identify devices and medical technologies in the US that might work in Japan because it includes among its partners medical doctors with first-hand knowledge of advanced developments in healthcare in the US and patients’ needs in Japan.
Dr Du Vivier, who is an anaesthetist based in Oregon, has responsibility for overseeing the company’s product pipeline. Salvatore DeSena, a radiologist based in Staten Island, New York, is responsible for regulatory matters and technology transfer between the US and Japan. Both men studied with Mr Ford on Duke’s Global EMBA class at the Fuqua School of Business in 2008.
Meanwhile, in Japan, Dr Shane is able to identify the needs of the market through his daily contact with patients.
Nipponica is a joint venture between the companies of the founders: New York Teleradiology, whose president is Dr DeSena; The Moneo Company, a Tokyo-based consultancy run by Mr Ford; and The American Clinic Tokyo, whose medical director is Dr Shane.
Nipponica works with medical experts in Japan who act not only as early adopters of its products but also as key opinion leaders who endorse the products to others in the medical community, helping Nipponica capture market share. At the same time, Nipponica files the approval documents with PMDA so that it can move to the usual distribution phase, which can target a much wider audience.
The Nipponica founders credit Duke’s EMBA programme for teaching them the skills they need to ensure the system works.
Mr Ford and his partners had different reasons for joining the programme.
“My career was going very well, the company was doing well, everything was going swimmingly along, which was a big red flag for me,” says Mr Ford, who took time off from his job as a consultant in Tokyo to join the programme at the age of 40.
“I wanted a positive disruption to help me go to the next level, rather than maintaining the course I had already established,” he says.
Dr Du Vivier decided to go to business school to get “a good strong base in business”.
“These days doctors really have to have an eye on the financial aspects of medicine, whether you’re in private practice or working for a large hospital, because of the financial pressures on the healthcare sector,” he says.
Duke’s global EMBA programme was ideal for working professionals such as Dr Du Vivier and Mr Ford because it does not require students to pack up and leave their home base but is structured to allow them to continue in their careers.
“It was the only school with an outstanding reputation that allowed me to keep my job in Tokyo,” Mr Ford says. “I wanted to be sure that I would get an MBA with heft.”
Part of the 15-month programme is delivered in different countries such as Brazil, Turkey and India. Students attend two-week residencies in both up-and-coming economies and stagnant economies adjacent to each other in South America, Europe and Asia before returning to their home countries for two months of distance learning.
For the Nipponica founders the overseas aspect of the programme gave them an immersion experience in which they not only learnt the subject matter, such as marketing, but also experienced the local economies first-hand, Mr Ford points out.
“That was a very important experience that transcends what we could have got in Durham, North Carolina,” where the business school is based, he says.
By experiencing the dramatic contrasts of these economies, Mr Ford saw what a difference information could make and realised the potential of information arbitrage. “That was one of the important lessons that I learnt that speaks to the heart of the Nipponica business,” he says.
Students do pay a price for that experience, however.
“In terms of the cost, it was the equivalent of buying a Lexus every three months,” says Mr Ford. (Tuition fees for the class beginning in 2013 will be $158,600).
However, the close teamwork required by the programme and the distance learning were invaluable in preparing the Nipponica team to build and run the venture, which operates over a number of time zones.
“One of the important lessons [of Duke] is the value of teamwork,” says Dr Du Vivier.
The EMBA work could involve people living in New York, Paris, Delhi and Shanghai and they would all have to be online together, Mr Ford explains.
So far the reception to Nipponica’s product introductions has been very positive, Mr Ford says. What is more, when Japanese doctors come across new devices, “they are eager to adopt them and go beyond the original innovation to suggest even further innovations and improvements to the designs”, he says.
“Our ultimate goal is to create a kind of highway that facilitates the transition between the two countries,” Dr Du Vivier adds.