Illustrations by Hiroyuki Izutsu
As with any investment, your capital is at risk.
Imagine a blood test that can detect early signs of Alzheimer’s long before you or your loved ones notice you’re slipping.
Imagine if that were followed by a prescription that could stave off symptoms indefinitely, should the test give grim news.
Matthew Brett likens the prospect to “the ability to fix a wall when the cement shows hairline cracks rather than waiting until it’s begun to collapse”.
Although this breakthrough isn’t imminent, Japanese companies’ advances in blood testing and drug discovery present exciting investment ideas. They reflect the country’s leadership in the race to alleviate the afflictions – and the costs – common to all rapidly ageing societies.
“Japan is the poster child for a society that actually cares about its elderly,” Brett asserts. “Instead of saying ‘They’re old, let’s move on’, it’s investing very hard in these areas.”
With a life expectancy of 87 for women and 81 for men, the world’s fourth-largest economy has the highest proportion of what it calls shiruba (silver) citizens. Nearly 30 per cent of the population is over 65.
The familiar sight of the elderly gathering in parks at dawn for communal exercise or working at supermarket checkouts attests to Japan’s exemplary social inclusiveness. However, longer lives expose its citizens to diseases their grandparents never experienced.
The result is a surge in age-related illnesses such as cancer and Alzheimer’s. With the latter, Japan is projected to have the fastest growth in cases among major economies.
Brett contends that these challenges have spurred innovation, placing Japan at the cutting edge of healthcare and medical technology.
The scale of the need plus the “stubbornness or relentlessness of Japanese manufacturing – almost an inability to give up, even when these diseases were a hopeless area of research” pushes firms to develop pioneering treatments and technologies, he adds.
The commitment to elderly wellness has fostered a medical sector bent on turning long lifespans into ailment-free years. And, as so many other societies are ageing too, global demand for breakthrough therapies will only rise.
With health-related companies presenting a significant opportunity for investors, Brett takes the pulse of four of the pacesetters.
Eisai
Eisai’s anti-Alzheimer’s medicine Leqembi marks a breakthrough in the long and exhaustive quest to slow the buildup of the toxic ‘amyloid plaques’ that clog the synapses, the junctions where neurons communicate in our brains.
The medicine is licensed across much of the world. The UK drug regulator has approved it, but, for now, its cost prevents the NHS from prescribing it.
Brett suggests this might be short-sighted, invoking “the old adage that prevention is better than cure”. Governments, he says, should consider potential savings from reducing and deferring the enormous costs of intensive dementia care.
Taking Leqembi demands twice-weekly trips to the clinic for intravenous injection. Now, trials are underway to prove patients can safely take it at home with a normal injection under the skin. These tests are proving 14 per cent more effective in clearing the dreaded plaques.
Eisai has been innovating for decades. It proved its value after the Second World War supplying vitamins in the malnutrition crisis that followed Japan’s defeat. Today, it has partnerships with commercial peers and research institutions around the world.
“As a family company, there’s a corporate legacy that spans generations, and a long view is helpful with this kind of research,” Brett notes. “Eisai has tracked the needs of Japan, from promoting healthy childhoods to promoting a healthy older age.”
Sysmex
Complementing Eisai’s progress is Sysmex, a specialist in diagnosing diseases. Brett explains: “It’s developed a blood test to detect biomarkers of the amyloid proteins that cause Alzheimer’s.”
That’s exciting for two reasons. “One, a blood test is cheap, easy and quick. Two, in the longer term, it can pick up signs a decade before there are any symptoms whatsoever. So they know who among us is starting down that pathway.
“At present we have to wait until it’s developed, and that’s a harder problem because the brain has already taken a bit of a pounding at that point.”
Blood tests have traditionally had limited ability to detect neurological conditions, which often require costly brain scans that hard-pressed health services tend to ration.
Sysmex’s proprietary systems allow
“high-throughput processing”, making it feasible for hospitals to conduct mass screenings. This is partly due to Sysmex’s expertise in mechatronics – the integration of mechanical, electronic and computer engineering – allowing it to produce faster, more accurate blood-testing machines.
PeptiDream
This Tokyo biopharmaceutical company is at the forefront of an emerging field in drug development: peptide drug discovery.
Peptides are strings of amino acids that support our bodies’ immune systems, regulate their processes and help fight disease. PeptiDream has created synthetic types, some of which can be used directly as medicines.
However, for Brett, PeptiDream’s more exciting breakthrough is in ‘peptide drug conjugates’. Medics use these biochemicals alongside drugs, helping to precision-target cancer by binding what are often “pretty toxic chemotherapies” to cancerous cells. This minimises collateral damage.
“The exciting thing is that if the peptide binds to the cancer cell, you can create a kind of chemotherapy knowing that it will only affect those cancerous cells,” Brett explains. “It’s far better for the body as a whole because it’s not having to take the chemical hit.”
The firm’s innovative approach has led to partnerships with global pharmaceutical giants, including Roche, Novartis and Merck.
Sawai Pharmaceutical
Osaka-based Sawai is Japan’s foremost manufacturer of generics – lower-cost drugs that replicate the properties of out-of-patent branded medicines. This gives it a role in controlling the soaring healthcare bills of a rapidly ageing society. The country’s health spending hit ¥47tn (£238bn) in 2023, a 17 per cent increase over the previous decade.
“The Japanese government has started to support generics,” Brett says. “If you get a prescription, you’ve got the option of paying for the branded drug, but the default is you get the generic.”
Sawai has capitalised on the seeming oxymoron of ‘branded generics’ winning the trust of Japanese consumers, who often seek the reassurance of a familiar name.
“In the early days of generics, doctors themselves weren’t really incentivised to prescribe them, and patients preferred big-name drugs,” Brett says. “But now that the government is more supportive, doctors increasingly use them, and the system gets the cost benefit.”
Brett sees further competition and consolidation coming in the generics sector but is confident that Sawai’s leading position will ensure that it survives – and thrives.
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