Market Overview

MedTech (Medical x Technology) refers to products, services, and efforts that employ latest technologies such as artificial intelligence (AI), Internet of Things (IoT), cross reality (XR) i.e., virtual reality VR), augmented reality AR), mixed reality (MR), the Fifth-Generation mobile communications system or 5G, and 4K/8K in the medical field to support and bring in new values to medical care, diagnostics, and medical treatment. Similar trends in various industries other than medicine are also underway as “X-Tech (a.k.a. cross tech)”.

Ever since its market launch in 2020 SaMD (Software as a Medical Device) that utilizes AI is increasing in number of products. It is spreading in the fields mainly of radiological and endoscopic images, increasing the number of diagnostic devices that support as well as the target diseases to deal with in recent years, which is expanding the market entries by businesses. Furthermore, the external environment has changed, as reforms geared to AI-assisted SaMD are in progress in the evaluation procedure for pharmaceutical approval and in the legislation, and medical service fee framework where incentives to be newly provided for AI applications.
In 2023, the medical field has shown development of new products and services employing generative AI that attracts attention in society, though it has challenges in generating false information and in management. With technological innovation speed in progress, applications of digital technologies are expected to contribute to improve medical care productivity and quality.

Noteworthy Topics

AI-Assisted Diagnostic System Market in Prevailing Period

For AI to be fully accepted in medical institutions, incentives play significant role in increasing the deployment and applications. Such moves are observed in medical service fee framework in recent years.
The revisions of medical payment system for FY2022 have added AI application and management to the regulatory facility requirement in “Image Diagnostics Management Premium 3”, which has been a turning point for AI applications. In the FY2024 medical payment revisions, new requirement “Image Diagnostics Management Premium 3 and 4” has been newly established, which is expected to expand the deployment of AI-assisted diagnostics solutions in local core hospitals, designated cancer hospitals, etc.
Insurance scores have come to be given not only for the case of AI applications and management as a whole but also to the case when AI assistance has enabled detection of a lesion in colon cancer or polyp and has led to endoscopic surgery. While AI has been in the spotlight in society and has started being approved of for its role in diagnostics, medical institutions and doctors have begun showing interest in AI, which has expanded the introduction of AI-powered diagnostics and has indicated the market having shifted to a spreading period.
Especially, AI applications have become well utilized in normal chest X-ray, whose implementation increased not only at major hospitals but also at health checkup facilities and clinics. Furthermore, remote image diagnostic services providers are introducing AI-assisted diagnostics, aiming to improve accuracy and efficiency.   

Future Outlook

To fuel AI applications and spread AI systems in the medical field, the Japanese government addresses to set incentives to be provided for medical care database development, clinical data applications, and deployment of AI systems. The government also focuses on generative AI by supporting the development of domestically made LLMs (large language models) and forming guidelines, thereby to encourage AI implementations in society.

In FY2024, as workstyle reform for doctors is to be fully effective, requiring workload reductions and improved efficiency for doctors, AI-powered diagnostics is projected to contribute to such reform. In addition, many market entered companies are preparing for new product releases within a few years. Some products are not necessarily developed as SaMD but rather as healthcare equipment, so that the application fields and use purposes are projected to diversify, while the number of products is expected to increase.

In addition, development has been underway for AI systems that support diagnostics to forecast the statuses of the patient before and after the medical treatment by analyzing various data from electronic health records, clinical examination, radiological images, to electrocardiogram in multimodal manners. As multiple numbers of companies and medical institutions have already conducted demonstrations, striving for practical use. As generative AI being in the spotlight, domestic LLMs specialize in medical care are being developed, which is expected to increase the development of AI that can cater to a variety of diseases and situations.

Thus, AI systems for assisting diagnostics and medical treatment are projected to diversify in the future, with the market size of such AI systems, by the sales at businesses, forecasted to expand to 26,400 million yen by FY2028.

Research Outline