Overview of the Japanese Bio startup market

 Perception of entrepreneurship in different countries:

Reflecting the trend above [1], the investment in Japanese startup companies remains far behind the United States.

However, even in this environment, the number of Japanese bio startup companies is gradually growing. The following chart shows the cumulative number of bio startup companies in Japan between 1992 and 2011. After strong growth in the 90′s, the number of bio startup companies remained flat from 2005. In 2011, six new bio-related companies were founded. [6]

Trend of IPOs

In 2000, the Japanese government conducted some projects to promote the incubation of startup companies. As a result, 22 out of 538 bio startup companies successfully completed their initial public offering. Five of those IPOs were launched in 2011 [8]. The nature of businesses launching IPOs also changed over time. In 2000, most businesses undertaking IPOs were related to supporting research business which provides devices or services for experiments. Between 2009 and 2011, most IPOs were launched by businesses related to drug development [9]. The change from research to drug development was due to the growth of Japanese bio industry.

Distribution of bio startup companies

The three most popular areas are Tokyo, Hokkaido, and Kansai. At first, Tokyo, being the capital of Japan has many research oriented universities like Tokyo University. In addition, financial institutions such as venture capitals have offices in Tokyo area. Convenience for business is the main reason for the concentration of bio startup companies.

The northern island, Hokkaido is home to the Hokkaido Bio Industrial Cluster. The Hokkaido Bureau of Economy, Trade and Industry (METI Hokkaido) has been actively supporting bio-startup companies as part of an overall revitalisation of the region. Programs such as the “Hokkaido Super Cluster Promotion Project” bring together private industry, national universities and regional governments to share resources and expertise. METI Hokkaido also has specific programs to help innovation in the biotechnology industry.

In the Kansai area, the Osaka prefectural government has been promoting the growth of a bio cluster since 2000. As the result, Osaka was introduced as “one of the world’s most successful biomedical clusters” in the magazine, Nature. As early as 1660, this area has been manufacturing chemicals used in medicine and currently hosts research institutions such as Osaka University and National Cerebral and Cardiovascular Centre.

Conclusion

In Japan, the bio startup community is not big yet, but it is steadily growing. I believe the Japanese bio startup community is key to the revitalisation of the Japanese economy. To promote the growth of bio industry, investment for bio startup companies and hands-on support from management or commercialisation perspective are necessary.

[1] Babson college, Global Entrepreneurs Monitor 2012 Global Report (accessed on 2nd Feb 2013)

[2] Venture Enterprise Center  (accessed on 2nd Feb 2013)

[3] British Private Equity & Venture Capital Association, BVCA Private Equity and Venture Capital Report on Investment Activity 2011.  (accessed on 2nd Feb 2013)

[4] Venture Enterprise Center

[5] KVCA statistics (accessed on 14^th January 2013)

[6]Japan Bioindustry Association (accessed on 2nd Feb 2013)

[7]Japan Bioindustry Association (accessed on 2nd Feb 2013)

[8] Kiyokazu Yamazaki, Capital Market Research Institute No.318, 2012

[9] Kiyokazu Yamazaki, Capital Market Research Institute No.318, 2012

[10]Japan Bioindustry Association (accessed on 2nd Feb 2013)