Losing the Lag

Rob Claar’s quest to bring lifesaving innovations to Japan

Rob Claar became interested in healthcare at an early age. Watching his father work on the government-program side of insurance and talking to him about the industry, Claar came to understand some of the issues surrounding public and private systems. But as he entered Yale University to study art history, he did not envision a career helping healthcare innovators from the United States and elsewhere bring their lifesaving drugs and devices to Japan. A twist of fate, however, led Claar to become a champion of Japanese doctors, working to connect them with international peers and innovation.

Ahead of his presentation at a March 13 luncheon hosted by the American Chamber of Commerce in Japan Independent Business and Healthcare Committees, the HekaBio K.K. founder shares his journey from childhood in Detroit to Tokyo, where he helps companies gain regulatory approval for healthcare innovations.

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An extended version of this interview is available on The ACCJ Journal Podcast or by streaming from the audio player above.

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How did you get involved in healthcare innovation in Japan?

Claar: I came to Japan basically out of cultural interest. This was in 1987. I was 23, had just graduated from college, and decided that I wanted to see Asia. I was interested in the culture, art, and language, particularly of Japan.

I forced myself not to come to Tokyo to begin with. I thought Tokyo would be an easier place to survive with English, and I wanted to push myself to learn Japanese as quickly as possible. So, I landed in Nagoya and immersed myself in studying the language. I thought I was going to be good enough at Japanese after one year to move on to my next destination and call my Japan experience a success. That didn’t happen.

I was studying Japanese at the YWCA in Nagoya, and it was going very well. But, as you know, it takes a lot of time. After one year, I was still not where I wanted to be. I gave myself another half a year, and I started really enjoying being in Japan and speaking Japanese.

Then I got a job as a Japanese-to-English translator for Brother Industries and moved into their dormitory in Nagoya. They were setting up manufacturing operations in Malaysia and elsewhere, and I was translating manufacturing and line instructions. That was interesting and a good experience but, once I got good enough at Japanese, I decided it was time to either go home to America and start the rest of my academic career or go up to Tokyo and see what I could do. I decided to move to Tokyo and was lucky enough to get hired by a think tank called Sanwa Soken.

They were essentially a research arm for the government. The day after I joined, a huge project came in from the Ministry of Health. I was put on that project and got to learn all about the healthcare system. I traveled around Japan, met doctors, and began to understand how serious they are about patient care. I really started to fall in love with the idea of the Japanese healthcare system [and] how a national single-payer system can work wonderfully.

What did you discover that led you to want to help innovators?

Claar: As I met doctors, I began to understand their struggles. They wanted to be considered among their international peers as studying, researching, and being able to speak in an international forum on the greatest innovations worldwide. But their frustration was that their research was one generation too late in many areas. I became aware of the innovation lag and wanted to see what I could do to make an impact.

I realized that Japanese doctors struggle to get their hands on up-to-date innovations from around the world. There’s a lot of talk about drug lag and loss, and the same thing is happening on the device side, where innovations that are getting approved in the United States and Europe are not making it to Japan.

There are a few reasons for this, but I thought that if I could focus on how to help these very sincere, wonderful doctors in Japan, then that was going to be a way for me to potentially make a career here and have an impact on society.

So, I left Sanwa Soken to start my own company, Junicon. We would go around and interview doctors, and we found a way to sell those results to large pharmaceutical and medical device companies in Japan, Europe, and the United States.

I also started spending my spare time helping doctors translate their papers from Japanese into English so that they were better able to speak at international conferences. It was a minor thing, but being helpful to Japanese doctors is a way that I got into things and maintained those relationships.

What’s stopping overseas companies from entering the Japanese market?

Claar: Small companies are doing more and more of the true innovation around the world, and they have no bandwidth to start thinking about Japan. So, how do we get more innovative companies to think about Japan? That’s what we’re really focused on at HekaBio, and that’s my personal interest.

Japan is far away, and these companies don’t really know what goes on here. They have this outdated image that Japan is very hard to get into and the regulatory process is super opaque. They’re never going to get regulatory approval on their own, or they’re never going to form the right commercial relationship. I think this is a really outdated image of Japan that many companies have. We’re trying to help solve that. Our doctors and their patients are waiting for these innovations. We want to see if we can bring them in and arrange the capital.

The Japanese government is doing a great job right now with new programs that they’re introducing. They’re making clinical trials easier to get started and operate in Japan, both on the drug and the device sides. They’re welcoming first-in-human studies to be done in Japan, which has not been the case until recently. They’ve eliminated the requirement to have a Japanese principal investigator on international studies. And they’re also offering pricing incentives for programs that get submitted in Japan within a certain number of days or months of the submission in the United States. In some cases, we’ve had an approval in Japan before the United States, even though we started at the same time.

How many companies have you helped get regulatory approvals in Japan?

Claar: More than 50, including at our former subsidiary unit, which was a clinical research organization called Vorpal Technologies. We’re very proud to have been involved in getting those launched and into the market.

What is that process like?

Claar: At the beginning, we do market research. We want to confirm that the doctors who we want to be behind the program are really behind it. We’ll find out who has done the presentations and who has published how many papers in that area. Who’s in the medical society? Who’s on the board? All these different things. The worst thing we could do is partner with an overseas company that doesn’t have the health economics and an appreciation for the Japan system in mind.

Once we do that, and we understand the strength of the clinical data that the company has produced overseas—and whether the Pharmaceuticals and Medical Devices Agency (PMDA) will accept it as valid in Japan—then we start talking with the PMDA to understand the regulatory process [for the specific innovation]. Once we get buy-in from the regulators, then we go forward with the clinical trial. If no in-Japan clinical trial is required, which is often the case for devices, then we can just go forward to the submission and review period, which typically takes 12 months.

Sounds straightforward. Is there something else holding back innovation from overseas?

Claar: What remains is the question of reimbursement price. If companies have no idea until the very end what the reimbursement price is going to be, then it becomes difficult for them to want to invest the time and money. So, that’s part of the upfront market research that we do. What does a comparative product look like in terms of reimbursement? What can you expect, based on your experience in overseas markets, in terms of the ability for the Japanese health insurance system to pay?

If there’s no comparative product, if it’s a new category, then you submit your cost accounting information. The PMDA really wants to see everything in a very transparent way.

What we would like to see in Japan is more clarity. New categories, where nobody knows what the pricing is going to be, is a situation in the market that most people have to deal with. I think that if the government were able to give better guidelines up front, in a consultative process, and you could go to the Ministry of Health, Labour and Welfare and tell them what you are thinking about, more of the issues around the drug and device lag and loss could be solved. But they won’t give you anything in terms of a response with any responsibility associated with it. They’ll listen and tell you yes or no, but their answer is not a promise.

Japan’s healthcare system is the best in the world. I fully believe that. And we all have the responsibility to make sure that Japan’s great healthcare system can survive. We know that the government is fearful of healthcare costs growing. They’re looking for ways to cut the costs of [things such as] long-selling drugs, devices, and in vitro diagnostic tests. But we would like to encourage them to think more long term about some of the things that can be done in terms of digital health solutions for early diagnosis of particular conditions.

What opportunities do you see for ACCJ member companies? Can they replicate the success you’ve had?

Claar: Absolutely. And I hope so. I think we’ve come up with a great business model, and we’re happy for anyone to copy it, because we think it really works for bringing innovations into Japan.

HekaBio is focused, for the most part, on pharmaceutical and device interventions for acute illnesses, hospital treatments, and serious diseases. What we’re not working on are things such as chronic diseases, which are a huge burden on the healthcare system. [Monitoring] chronic diseases with at-home digital health [tech] would also work in our business model.

If somebody wanted to exactly copy our model and go right into exactly what HekaBio is doing in serious acute disease identification and treatment drugs and devices, then be my guest. We’ll be happy to have them [replicate] our business model with no worry.

But there are so many opportunities. For example, if they want to do something different, there are many new molecular entities, particularly for rare diseases. The PMDA has a list showing the status of those that are [only] available elsewhere. So, there’s no development risk, really, because you know that it works. It’s been approved in either the European Union or the United States, but it’s not available in Japan yet. Take one of those for a rare disease, buy the rights for Japan, and get it developed. You wouldn’t even have to build a big organization with your own infrastructure here. You could be a one-person company, get the rights, and then have a contract research organization do the clinical trial and be the in-country clinical caretaker on your behalf. Get it all through and then sell it to a pharmaceutical company once it’s done. That’s another business that could be not only very lucrative, but interesting and of societal benefit for Japan.

Innovation Engine

CIC co-founder Tim Rowe shares his entrepreneurial journey and vision for collaboration in Japan.

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Like so many new graduates, Tim Rowe and his friends from the Massachusetts Institute of Technology (MIT) left their Cambridge campus with diploma in hand and took “ordinary” jobs. A few years later, in 1999, they quit those jobs to build
start-ups.

But they needed offices—not the easiest thing for young entrepreneurs to pay for in a town that’s home to two of the world’s most prestigious universities. So they decided to share a space near MIT and Harvard to lighten the financial load. At least one of their companies would make it, they thought.

The shared space led them down an unexpected path, however, as more companies moved in and they went from five to 10 to 50 to 100. The Cambridge Innovation Center (CIC) was born.

Fast forward two decades and CIC opened its first Asia facility in Tokyo, in the Toranomon Hills Business Tower. The ACCJ Journal sat down with Rowe in the bustling networking hub to learn more about how he went from sharing a space with friends to leading a community for entrepreneurs that includes more than 1,000 companies at centers in eight cities around the world.

How did CIC expand?

For the first 13 years or so, we just grew right there in Cambridge. I had little kids at the time and didn’t really want to travel as much. And Cambridge is an amazing place for start-ups. So, we just kept taking more space and filling it. It was really kind of a surprise to us. We didn’t set out to build a shared space for start-ups as a business. We were actually just
using it for ourselves.

My mother had been the ombudsman at MIT, and one of her friends who had been the provost of MIT, Mark Wrighton, had become the chancellor of Washington University in St. Louis, one of the top medical schools in the United States. She said, “Mark called and wants you to come to St. Louis.” I was about to give all the reasons why I didn’t know if I could do that, but then she was like, you gotta go. Okay, Mom. So, I flew to St. Louis and met with Mark Wrighton. He said, “Look, we want you here, and we’re going to help you figure it out.”

One thing led to another and we opened in St. Louis. A few years later, the federal government was looking for a home for the National Geospatial-Intelligence Agency, and they toured St. Louis. They came to our center and said this is the kind of vibe they were looking for. They actually testified before Congress that they selected St. Louis because of their experience at our center. It was a $2 billion investment, a big deal for the local economy. After that, as other people came and knocked on the door, we said, “Sure, let’s look into it.”

How has the view of start-ups changed?

If you survey new college graduates, they often say the number one thing they want to do is go create a start-up. I think it’s good for the world, because what we’ve learned is that innovation has the power to make the world better in so many ways. But what we’re finding is that innovation gets into the world, is adopted and spreads much more quickly, through new enterprises rather than existing ones.

When we’re part of a larger organization, we want to respect all the rules that exist in that organization. Doing new things becomes rather hard. We hear things such as, “We tried that once and it didn’t work,” or “That sounds interesting, but that’s 1/1,000 of the revenue of this company, so we can’t prioritize it.” That’s normal, and it’s been well studied. But the bottom line is that existing enterprises find it very difficult to introduce true innovation.

“They understand that it’s not about them so, when there’s something really new and interesting that they have in their company, they push it out. It’s like asking your teenager to move out of your house. It’s time now, it’s time to go off.”

I think the smarter of the big organizations understand this. They understand that it’s not about them, so, when there’s something really new and interesting that they have in their company, they push it out. It’s like asking your teenager to move out of your house. It’s time now, it’s time to go off. They do the same thing and take those teams and move them out of headquarters.

Why did CIC choose Japan?

There’s a personal reason and there are professional reasons. The personal reason is that, in my youth, my dad said that if I studied Japanese for a while he would help me get an internship here. And my grandmother spent about 10 years in Asia in her youth, in the 1920s—mostly in China but some in Japan—and she taught me kanji when I was a kid. That all got me interested in Japan, and I was fortunate to do an internship here during high school.

Professionally, if you look at the most successful companies in the world—and you can use any measure, but one would be the Russell 2000 Index—all those companies were at one point start-ups. So, another way to look at that list is that it is a list of the 2,000 most successful start-ups ever. When you break them down by country, you find that the United States and Japan tie for the number of companies on the list adjusted by population. So, historically, Japan ties for number one as a place to build start-ups. That’s a reason to be here.

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Photos: ©CIC Tokyo

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Is the Japanese government doing enough to support start-ups?

Building a start-up ecosystem is a decade-long process. A piece can come from a supportive government, and it’s really terrific that the Japanese government is leaning in. Other governments that have leaned in, such as Israel, have done really well. It’s clear that a national policy that pushes in this direction can pay big dividends.

But it’s not the only thing that needs to happen. You also need the entrepreneurs themselves. And I think the Japanese innovation ecosystem is responding. These days, if you talk to young Japanese people—and this is a change, perhaps just like what started to happen a decade ago in the United States—you see many more who say they want to build a start-up.

I see Japanese universities leaning into this, which is important. They’re doing entrepreneur programs like those US universities started a decade or more ago. I see a growing awareness of, and interest in, what we call innovation infrastructure. This is things such as shared wet laboratories, the physical infra-structure that allows for new start-ups in, let’s say, the biotech field.

We’ve built shared workspaces focused on a number of industries. The largest so far is the wet lab for life sciences. We collaborated with others to found a nonprofit doing that in Cambridge. It’s called LabCentral and is, as far as we are aware, the largest shared wet lab on the planet. It’s over 20,000 square meters and has every possible piece of equipment you would need in life sciences. Then we figured out how to make that commercially viable and built a similar facility, a commercial one, called CIC Labs in Philadelphia. It’s the largest commercial shared wetland facility in the world, to our knowledge.

How can Japan and the United States work together?

The good news is that the interests are very aligned for Japan, for the United States, for Japanese companies, and for US companies in Japan. Everyone in this circle benefits when they figure out how to get these collaborations to work well, and set a different way.

If you aren’t out there working with new technologies, which are often coming from start-ups, then you’re at risk that you’ll be Airbnb’d or Uber’d. You’re in the hotel business and someone figures out another way to have lodging. You’re in the taxi business and someone figures out another way to get people around the city.

“If you aren’t out there working with new technologies, which are often coming from start-ups, then you’re at risk that you’ll be Airbnb’d or Uber’d.”

This is core to the ACCJ itself. Really, what you’re talking about is brokering conversations. You’re getting people to know each other and to talk about what they’re doing, and how they might help each other.

When I was a young person at the Mitsubishi Research Institute in the early 1990s, I was a member of the ACCJ, because I saw—and I convinced my bosses—that the connections that could be made were meaningful and important. I think it’s no less relevant today. And I think that, as many of these companies have evolved, one of the things they’ve come to realize is that, while the connections between larger organizations are important, the connections between larger organizations and smaller fledgling ones are also important. The challenge is figuring out how to find those little companies and how to know which ones to work with.

What’s next for CIC in Japan?

We were approached by Nishitetsu, the major private railway company in Kyushu. They said, we like what we see at CIC Tokyo and we’d like to work with you to build another one in Fukuoka. We have announced that we’re in a formal collaboration and will soon finish all the due diligence to make sure this will really work. Then we can announce if, in fact, we’re moving ahead with construction, but it’s looking very good and we’re excited to be headed to the second site.

We’re also in several conversations about building some of those shared wet laboratories, robotics laboratories, and other kinds of deep tech shared spaces here in Japan.

We’d love to hear from Journal readers on this; if they have ideas, they should let us know. We think there’s a lot of demand for this kind of innovation infrastructure. Not only does it propel start-ups, but it also creates an environment much like CIC Tokyo does, where larger companies can interact with, and find interesting, smaller companies. Those are our two main areas in the future: more in deep tech and more locations around Japan.

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Social Impact

US-raised entrepreneur Priya Sultan opens paths to social innovation in Japan

If the future of Earth as we know it is to be secured, not just for ourselves but for generations to come, the way we do business has to change.

That was the conclusion of scientists in a recently released report by the Intergovernmental Panel on Climate Change (IPCC), a body under the mandate of the United Nations. In August, an IPCC working group found that human activity is changing the climate of the planet in unprecedented ways, and that a change in course is necessary.

Serial entrepreneur Priya Sultan agrees with the report’s conclusions, adding that the education system—in addition to business practices—must be upgraded.

For Sultan, a new focus has to be placed on education and business models driven by social outcomes if the challenges identified by organizations like the IPCC are to be tackled. That’s the reason she established Social Impact Lab Japan, a company that incubates, accelerates, and invests in businesses that have societal solutions at their core.

Since its founding in 2019 in Tokyo, Social Impact Lab Japan has supported dozens of aspiring entrepreneurs, including high school and university students, as well as professionals. Working with partners in industry and education, the company isn’t just trialing new ideas; it is also inspiring a generation of founders in Japan—and, in the future, overseas.

It is Sultan’s hope that, by supporting social entrepreneurship, new, socially minded leaders will emerge to define the shape of future business opportunities and solutions.

Social Business

The chief executive officer and founder of Social Impact Lab Japan, Sultan speaks in rapid sentences, a sense of urgency and determination rising in her voice.

“The way that we are living in the world is not scalable or sustainable, it’s not good,” she told The ACCJ Journal. “There are a billion people going hungry every year, and it’s worse now because of the coronavirus pandemic. Why is that?”

But it’s not just solving the challenge of global hunger that motivates Sultan. Lack of access to education is another of her bugbears.

“Why don’t people have access to basic education, things that we took for granted when we were growing up?”

There are three ways to begin tackling both issues, all of which are priorities at her lab, she explained:

• Education
• Creating allies
• Raising awareness about social impact as a solution

For Sultan, “it’s about people hearing that things need to change. And so, you have to inspire more people to effect that change, because you can’t do it alone.”

What’s more, she added, “it’s realizing that social entrepreneurship is crucial to how we do business in the future.”

Young people are amenable to socially driven change and businesses. “They want to spend their money on companies that are doing things the right way,” Sultan said. “And if more companies start to do things that way, we’re going to be able to make the changes that are absolutely needed.”

Inspiring Founders

The motivation behind Social Impact Lab Japan goes back to 2017, when a conversation between Sultan and a female student at Showa Women’s University sparked an idea.

“I told them my story; told them about the Hult Prize. At the end, I remember some students coming up to me to say thanks,” she said.

At the time, Sultan was speaking at Japanese universities in her capacity as the global projects director with the Hult Prize, a global competition that incentivizes students to pitch socially focused business ideas.

“So, this girl comes up to me—I think she was 20 or 21 years old. And she burst into tears. I asked, ‘Are you okay?’ Clearly there was something there.” As Sultan recalls, the student said, “This is the first time in my life that someone told me that I could pursue my own dreams.”

For Sultan, the student’s comment was eye-opening. On reflection, she remembers thinking, “How can you be 21 years old and have this sense of hopelessness?”

Speaking to other students during her tour of Japan, she discovered that this sense of hopelessness ran deep among students, especially regarding their post-university career.

“They would say, ‘I have all these ideas, but when my third year comes, I have to start job hunting so that I’m secure in my final year, and that’s it.’”

In other words, students in Japan—quite apart from professionals already in the workforce—often sideline their ideas about entrepreneurship for the sake of a risk-free career in a large company. Social Impact Lab Japan was established to provide such people with the resources necessary to take their burning ambitions from idea to product or service and beyond.

Impact Lab

Working with socially minded startups and founders, Social Impact Lab Japan provides a platform where ideas are pitched, tested, and prototyped—and incubated or accelerated.

Entrepreneurs there can tap into a wide network of mentors from the private, public, and non-profit sectors to learn the ins and outs of developing and launching a business.

The company does “a lot of sessions with entrepreneurs to help them get the skills they need, and for them to hear different voices, meet different people, and leverage our network, which can give them more resources if they need it,” Sultan said.

Sessions include seminars and workshops on subjects such as purpose-driven leadership, pitching for contests, and mentoring.

“We’re focused on the education side, because I think there is an education and cultural change that needs to happen,” she explained. “People need to get a better understanding of what social entrepreneurship is really about.”

And the result? “You can see them light up when they feel that they can make a change in society, and I notice that particularly with young people, especially high school students,” Sultan said.

Because of social-distancing rules during the coronavirus pandemic, these sessions are conducted via video conference instead of in person.

But it’s not just founders and aspiring entrepreneurs who are the focus of activities at the lab. Companies, too, are important players in their social impact ecosystem.

“In talking to, and doing sessions with, corporates, I noticed that there is a big misunderstanding about the concept of social entrepreneurship,” Sultan said. “I think [they believe that what we do is] charity, but it’s not charity. And the reason it’s not charity is that charity doesn’t work, because it’s a donor-based model, which makes it donor-dependent. If charity worked, we wouldn’t see the problems that we are seeing, such as so many people going hungry, or without water or electricity.”

Time to Change

Born in India and raised in the United Sates, Sultan’s own journey into entrepreneurship could not have been predicted from the choices she made early in her career. Like so many in her peer group, her priority on graduating college was to join the workforce, and to do so in a sector that conformed to societal expectations for job security. That’s why she joined multinational financial services provider Wells Fargo & Company in New York, where she worked for a couple of years as a credit manager.

“It’s banking in New York, so working 90 hours a week [was] normal,” she recalls.

But it was not long after joining the bank that she hit a crossroad: continue or change path. In the end, it was her father’s worry for her well-being that helped her decide.

“My dad came up to me and said, ‘Priya, it’s six in the morning. You’re stressed all the time. And you don’t seem happy with your job, so think about changing it.’”

That very same day, Sultan walked into her workplace and tendered her resignation.

“I walk out of there with no job. I’m 25 years old, and I don’t know what I’m doing with my life,” she remembers.

And yet, only two months later, she set off on a new course, boarding a plane to New Delhi, India’s capital. That was 2009.

Meaningful Mentors

Starting her life in New Delhi, Sultan found refuge in a small garage apartment. Her goal? To begin work at World Health Partners, a sustainable healthcare services provider in the city.

In hindsight, her experiences at the organization played an important role in setting her on her current trajectory. In particular, she found a mentor there who inspired her to pursue a career in the social impact sector.

“Gopi Gopalakrishnan, the director of World Health Partners, took me under his wing and said, ‘I’ll teach you everything I know.’ What I learned was that you can do business and make socially positive changes. And that was something that was not often spoken about more than 10 years ago,” she explained. “He really opened my eyes to how you can make profitable companies and create the positive change that society desperately needs.”

After nine months at World Health Partners—but desiring to add new skills to her knowledge belt—Sultan enrolled at the Hult International Business School in London.

During that period, she herself became a student competitor in the Hult Prize (then the Hult Global Case Challenge). Her team made it to the regional finals.

When she graduated with a masters in international relations, another mentor connected her to a job opportunity at the Hult Prize, which was at the time—more than a decade ago—taking on its very first hires.

Full Circle

As the global projects director at the Hult Prize, Sultan is able to leverage the platform’s international network to support her work at Social Impact Lab Japan.

“We exist in over 121 countries; we have over 3,000 universities that participate every year—and that’s just in the on-campus program,” she noted, speaking about the prize.

In Japan alone, student teams from 50 to 100 universities take part in the Hult Prize’s annual pitch contest. The challenge for students in 2022 is “to create 2,000 jobs by 2024 by thinking globally and acting locally.”

Pitches are made at the campus level, with successful ideas going through regional finals and an accelerator program in the United Kingdom. The top prize of $1 million in startup funding is awarded to one team at a ceremony at the United Nations in New York.

Promoting participation in the competition among universities in Europe and Asia was the main thing that drew Sultan to Japan in the first place.

“I first came to Japan because we saw an opportunity to grow the Hult Prize here. Ahmad Ashkar, the founder of the Hult Prize, said, ‘Priya, why don’t you go and check out the scene.’ This was at the end of 2016,” she recalls.

A year later, Sultan had the encounter with the student at Showa Women’s University, a despairing moment that opened new paths of hope and entrepreneurship. And she has been helping young Japanese talents pursue their dreams ever since.

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