Healthcare

August 2005

Medical Expenses Hit All-Time High In FY03
Medical expenses paid to medical institutions in Japan hit an all-time high of 31,537.5 billion yen in the fiscal year that ended in March 2004, the Ministry of Health, Labor and Welfare said Tuesday. The amount represented an increase of 586.8 billion yen or 1.9 percent from the previous year. The ministry attributed the increase to the aging of Japan's population as average expenses for people aged 70 or older rose by 2,800 yen to 734,400 yen compared with average expenses at 247,100 yen, up 4,200 yen. Expenses for the elderly alone accounted for 12,415.8 billion yen, or 39.4 percent of the total. The ratio of medical expenses to national income in fiscal 2003 came to 8.55 percent, unchanged from the previous year. Health insurance covered 15,822.5 billion yen or 50.2 percent of the total medical expenses in the year, while national and local governments paid 10,746.8 billion yen or 34.1 percent. Patients paid 4,945.1 billion yen or 15.7 percent. Patients' payments rose 8.0 percent from the previous year as salaried persons' share of medical expenses was raised to 30 percent from 20 percent in April 2003. For fiscal 2004, the ministry earlier estimated medical expenses at 31.4 trillion yen, of which expenses for elderly people amounted to 40.6 percent. The estimate usually covers 97 percent of medical expenses actually paid to medical institutions. (Nihon Keizai Shimbun, August 23, 2005)

Meiji Seika To Speed Drug Development Via Partnerships
Meiji Seika Kaisha Ltd. has decided to seek development and licensing collaborators to accelerate its drug-creation process. The company will find partners for a hepatitis C treatment and a rhinitis drug, both of which are currently undergoing phase II clinical testing in Japan. Assigned the code ME3738, the drug for hepatitis C is designed for patients who do not respond to treatment with interferon. It appears to work by inhibiting programmed cell death, or apoptosis, and protecting liver function. Meiji Seika plans to seek pharmaceutical companies in the U.S. and Europe that would be interested in licensing the compound or collaborating on the drug's development. The drug for rhinitis, coded ME3301, works against the cells that trigger inflammation and is expected to be particularly effective against sinus congestion. Meiji Seika intends to find development partners for this drug not only in the West, but also among Japanese pharmaceutical firms. (The Nikkei Business Daily, August 23, 2005)

Tokyo Hospital Becomes 1st Health Care Operation To Issue Corp Bonds
Kawakita General Hospital has issued corporate bonds worth 700 million yen in cooperation with Mizuho Bank, effectively making it the first health care corporation to do so, The Nihon Keizai Shimbun learned Sunday. Because health care corporations are not permitted to directly issue bonds, the core Mizuho Financial Group Inc. unit extended a 700 million yen loan to the hospital and transferred the claim to a special-purpose company (SPC). Using the loan claim as collateral, the SPC issued the corporate bonds on Thursday. From the perspective of investors, the collateralized loan obligation will be evaluated on whether Kawakita has the financial resources to repay the loans, the same assessment standard that would be used for directly issued bonds. The hospital is located in Tokyo's Suginami Ward. Both the loan and the bonds mature in five years. The annual yield on the bonds is about 2%, while the loan's interest rate is around 2.5%. Mizuho Bank will receive a portion of the spread. Kawakita will use the funds procured from the issuance to purchase equipment for an emergency wing slated for completion in October. Mizuho Bank plans to support similar fundraising efforts for other high-profile, well-regarded hospitals. Financial management and disclosures by health care corporations have been seen as inadequate compared with conventional firms, presenting challenges to procuring funds from capital markets. In October 2004, the Health Ministry released guidelines for bond issuances by such entities as part of its efforts to provide them with alternative financing sources. (The Nihon Keizai Shimbun, August 22, 2005)

Protein Wards Off Intestinal Chemo Damage, Kirin Finds
Kirin Brewery Co. has discovered with U.S. therapeutics developer Nuvelo Inc. a protein that can help avoid the intestinal damage that is a side effect of cancer drugs and radiation treatment. The Japanese firm has begun working on the development of a new drug making use of this protein. Research results are to be published in Friday's issue of the U.S. journal Science. The two companies focused on a gene presumed to stimulate the growth and development of new epithelial cells that line the gastrointestinal tract. They investigated the effects on mice of injections of a protein made from this gene. Mice not given injections of the protein were found to have damage to the intestinal epithelial lining following cancer drug administration or radiation exposure. Mice injected with the protein in advance showed almost no damage to the lining. And when the mice that sustained damage were injected with the protein, they recovered. Researchers reported that injection with the protein did not lead to any particular abnormalities outside the intestines. (The Nihon Keizai Shimbun, August 19, 2005)

Telemedicine Market Expected To Grow 10-fold To Y53.8bn By '15
The domestic telemedicine market will grow about 10-fold to 53.85 billion yen by 2015, from an estimated 5.32 billion yen in 2004, according to a survey conducted by research firm Seed Planning Inc. The highest growth is expected in the home medical care field, which is seen expanding by a factor of 55 to 40 billion yen as a result of an increase in physician consults with patients at home via the Internet. The market for radiodiagnosis will likely expand to 8.2 billion yen and that for pathologic diagnosis to 4 billion yen due to improved broadband communications enabling the transmission of large volumes of image data. The survey covered 54 firms in the telemedicine business and three hospitals. (The Nikkei Business Daily, August 17, 2005)

Fuji IT To Sell Medical Image Auto Writer Device
Fuji IT Co., a developer of medical information systems, will in October begin marketing a device that automatically writes diagnostic images on recordable compact disks. Fuji IT, which belongs to a business group led by Fuji Electric Holdings Co., will sell the machine to hospitals seeking to be more responsive to growing calls among patients for enhanced disclosure of their diagnoses. Utilizing the automatic CD production know-how of Rimage Corp., a U.S. venture business, the device is hooked up to medical equipment, such as a computer tomography (CT) scanner and an image processing system, so as to record images of patients' internal organs on a CD. Patients can then take their CD to other hospitals for a second opinion. A model capable of writing diagnostic images on 100 CDs at a time will be sold for about 2.5 million yen. (The Nihon Keizai Shimbun, August 17, 2005)