Japan occupies an unusual space in the global imagination. At once a futuristic nation of innovation and robotics, and simultaneously, for those on the inside, an iron giant whose innovative sheen is slowly rusting into ruins.

In reality the country falls somewhere in between these two images. Japan is one of the leading innovators in the Asian region, and even globally, but risk aversion and failure to generate groundbreaking ideas means it is losing ground to neighbors such as China in recent decades.

Japan’s position as laggard has been driven home recently however, by results from a recent report on global Life Science innovation by the Economist Intelligence Unit. The report, titled “In Support of Japan’s Life Science Eco-system”, provides a comparative analysis of R&D in the Life Science sector in Japan, America, China and South Korea. The data shows that Life Science innovation in Japan has been stagnating in recent years against growing global competition.

We summarize the results of the report below and consider what Japan can do to revitalize its wheezing life science sector.

Life Science is looking sickly: the symptoms

Beginning with academic output, life science papers published in Japan from 2015 to 19 have decreased by 17%. Cause for alarm when considered against China’s output for the same period which saw a colossal 80% increase in papers.

The situation regarding patents is not much better. Patents in the pharmaceutical and medical device fields have remained static in Japan and the United States in recent years, falling into China and South Korea’s shadows as their output has been gradually increasing. Patents are a useful measure of innovative output as they demonstrate unique and promising ideas. With numbers flatlining, Japan’s Life Science sector looks in poor health.

The one area where Japan seems to show signs of life is drug approval rates. Compared to South Korea and China, Japan has the largest number of drug approvals from the US Federal Drug Administration (FDA), a big deal as the US is by far the largest pharmaceutical market in the world. The Economist’s report dashes even this innovation vital sign however, highlighting that Japan’s FDA approvals are going to Japan’s historically dominant big pharma-companies. In the US on the other hand most new drugs are being developed by small companies including emerging biotech startups, signaling the pharmaceutical industry is alive with new players. In Japan’s case the situation is nothing new, and when it comes to innovation, no new news is not good news.

What’s ailing you? The cause of Life Sciences lurgy

So why is it that Japan is failing to deliver innovation in the field of life sciences? The report identifies 3 key issues that are stunning innovation in Japan.

The first is insufficient funding for R&D in Life Sciences compared to the competition. In 2019, Japan only invested$18.1 billion dollars in Life science R&D which is much lower the US’s $179 billion and China’s $100 billion dollars of investment respectively. Without more funding in place, new innovations will be unable to take off in Japan.

The second challenge to Life Science innovation in Japan is hiring practices in Japanese Universities. Over recent years, many Japanese universities have taken to hiring part-time researchers for short periods or single projects. While this has benefits for cost management, it is poison to the growth of innovation as researchers are deterred by a lack of long term employment prospects. Not only are these researchers unable to explore ground breaking long term projects, short term postings also result in reduced opportunities to build relationships in institutions that could blossom into future collaboration.

Finally, the report highlights a general lack of diversity as a critical factor for Japan’s low levels of innovation. Reviewing the demographics of Life Science researchers in Japan, the report found that only 15% are female and only 5.6% are none Japanese. Compared to the US where 28% of researchers are foreigners, this data underscores that Japan is hindered by the lack of scientifically proven benefits to innovation that diversity brings.

The road to recovery: how can Japan increase Life Science innovation?

While Japan has acute gaps in its strategy for innovation, there are clear salves that will help close the wounds and return the nation to a competitive condition. For a start, increasing investment in the Life Science sector will give institutions and organizations more freedom to fund new, more out-there ventures operated by fresher organizations. It would also hopefully encourage Japan’s dominant larger players to invest in internal startups or partnership with existing startups that could pursue unexplored territories of innovation while leveraging the organization’s knowledge and resources.

Even without additional investment however, Life Science organizations and institutions across Japan can already start to shift their human resource strategy to foster innovation. Hiring more diverse talent like female and foreign researchers will bring new ideas and perspectives into a largely mono-ethnic, male dominated sector.

Not only is hiring diverse employees enough according to Jesse-Quigley Jones, editor-in-chief for the report, but investing in researchers with trainings to provide them with the knowledge necessary for idea innovation will also help Japan stay competitive.

While Japan may be losing ground to competitors, especially in Asia, it is still in a strong position. The country has excellent resources at its disposal, like the know-how and reach of global companies like Takeda, as well as piles of cash being sat on by many large organizations just waiting to be invested in new ventures. What’s more, the challenges Japan is facing aren’t enormous. Increasing diversity amongst researchers requires tweaks to hiring practices and organizational culture which can easily be achieved by learning from the widely published examples of other global organizations. Development programs for researchers can also be adapted from activities of competitors. In this sense, to revitalize innovation, Japan just needs to get the basics right. These ironically can be copied from what’s already being done in other regions. The question is: will Japanese organizations and institutions look for innovation for innovation beyond their own coastline?