Life Science VC Funding in Japan: Signs of Growth & Untapped Opportunities


Toshio Fujimoto, MD, MBA, the General Manager of Shonan Health Innovation Park examines why Japan – despite being well established as one of the world’s most innovative and technologically advanced countries – has lagged behind in terms of VC funding, especially in the life sciences and how this can be rectified.


Japan has long been a global source of innovation and technology across many industries. In biotech, however, market growth has been staggered in the last decade, mainly due to the lack of platforms where attractive start-ups are emerging and supported by venture capital. As an open-innovation hub, Shonan iPark aims to build an ecosystem that is open to the world. With that, we have been conducting analyses on the venture capital market and start-up environment in Japan to identify challenges and opportunities.

The size of the VC market in Japan was USD 1.23 billion in 2020, only 2.5 percent of the US market. The key challenges identified are that few ex-Japan VCs invest in Japanese start-ups, and the Japanese VCs provide the funding. This suggests an opportunity for more growth for innovative Japanese start-ups if ex-Japan investors are attracted. For full detail of the report, click here.

Geographically speaking, most incubation centers are established in the Tokyo area, which attracts biotech companies. In 2020, Tokyo received more than USD one billion in funding, which is ten times more VC funding than Osaka, the city that received the second largest amount of VC funding in Japan.

In the last decade, the number of biotech start-ups in Japan has increased (2008 – 2018). However, per capita in 2020, VC investments in Japanese healthcare were still only around seven percent of US healthcare investments.

Comparing startups in the US and Japan, US startups tends to acquire considerable funding earlier than Japanese startups. Abundant funding at an early stage enables US startups to focus on research with a long-term vision, making bold moves without worrying about cash. For Japan, it is necessary to encourage early-stage funding among academia and corporate spin-offs to accelerate research.

Oncology is by far the largest therapeutic investment area in the US, while it is distinctly different in Japan. Trends show that, in the US, infectious disease and immunology are gaining popularity. In Japan, dermatology, neurology, and cardiology are on the rise. We may observe that Japan has not been able to take full advantage of the oncology investment trends happening globally.

Interesting trends can also be observed in the diagnostics and devices sector. In Japan, VC funding in devices is increasing very rapidly. The average deal size for the diagnostics/monitoring and devices is higher in Japan than in the US. While in biotech/pharma average deal size in Japan is 0.5 times that in the US, in diagnostics/monitoring and devices, the average deal size in Japan is twice the size of that in the US.



Looking at life science venture business growth globally, The Economist Intelligence Unit published a comparative analysis of the life science innovation environment in the US, Japan, South Korea, and China. While other countries implement policies that support healthcare investment, Japan seems to be stagnating, especially in some essential aspects such as publication index, researcher employment, and business enterprise investment in pharmaceutical companies.

In summary, there are promising signs for growth and untapped opportunities in Japan’s biotech industry. To boost momentum, all players must work together to create a supportive environment for innovation—where talents, technologies, and funding work together to bring scientific advances to Japan and the world.

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