Effective healthcare provision and improved well-being are essential in creating better societies. In this article, we look at how a Japanese company is contributing to the digital transformation of the country’s health system.

The Covid-19 pandemic has highlighted the need for closer collaboration between healthcare providers and their customers to improve all areas of care. But often, technology is a stumbling block rather than an enabler of the greater efficiency necessary for delivering better healthcare outcomes.

Enabling a healthier outlook

One of the United Nations’ 17 Sustainable Development Goals¹ is to ensure healthy lives and promote well-being at all ages. A significant risk in achieving this goal is ‘data poverty’. Poor-quality data hinders effective healthcare delivery, and although inadequate patient information is perhaps more prevalent in developing countries, it is a global problem.

The challenge of improving technology in the healthcare sector is particularly acute in Japan. Its healthcare sector is at a relatively early stage in using data to develop products and services that improve health outcomes for its population.

This was acknowledged by the Japanese government in December 2021, when it recognised that outdated technology systems had hampered the management of the Covid-19 crisis. The response was for the government to establish the new Digital Agency to prioritise greater digitalisation.

Data insights improve healthcare solutions

A key element in a digital transformation is how data is gathered, stored, shared and protected. One company at the forefront of galvanising change is JMDC, a Japanese-listed company in our portfolios. JMDC is a specialist in providing data analytics to the healthcare sector.

What JMDC does well is enable its customers, who are mainly medical institutions, insurers and drug manufacturers, to make their services more relevant. They do this by using data to target treatment and care more effectively for end-users.

In our view, JMDC's comprehensive data library sets it apart. This large and growing resource has been compiled over a long period from a broad range of inputs.

The really clever bit is what JMDC does with the data. It converts the information it collects to provide customers with valuable insights in easily digestible formats. Competitors find it hard both to replicate the data and to match the depth of insight JMDC provides, giving the company a significant advantage in the market.

As a data-driven approach to providing healthcare gains momentum in Japan, it has inevitably come under greater scrutiny from regulators to protect people’s personal information. Customers also look to JMDC to ensure their handling of data is compliant, as well as to help them operate more efficiently and gain new business.

Bold business ideas

JMDC is a relatively young, entrepreneurial business with a visionary outlook from its management team. The company is now broadening the services it provides. It is developing and selling new services that add even more value for customers, for example, through consultancy. These types of services help increase customer loyalty and generate higher profit margins for the company. As a result, JMDC’s profit growth has been outpacing sales growth.

As well as building profitability, the company is focusing increasingly on environmental, social and governance (ESG) goals. In particular, it is looking at increasing diversity in its ranks and ensuring data security for customers.

Aiming for greater diversity

Efforts to date on diversity have included increasing female representation on the company board with a new appointment, as well as promoting more women to leadership roles. Tighter data security is now the responsibility of a chief data-protection officer, giving JMDC dedicated senior-level expertise in this crucial area.

Importantly, JMDC’s management team recognises that further work on its ESG priorities is needed, notably by improving employee engagement and articulating its energy strategy more effectively. We regard these ESG areas as work in progress that we expect will help to strengthen the business in the future.

Final thoughts…

We have seen the market that JMDC operates in grow, as has its share of this market. New products and services should accelerate progress while the company’s commitment to ESG goals should provide a creditable platform on which growth can be sustained. We believe that JMDC has all the right elements in place to become a larger company. Further, a recent change in its major shareholder should open new and significant opportunities.

Companies are selected for illustrative purposes only to demonstrate the investment management style described herein and not as an investment recommendation or indication of future performance. Past performance is not a guide to future results.