Osaka has long been the beating heart of Japan’s life sciences. From the establishment of the country’s first medical schools more than 150 years ago to today’s biotech startups, the city has played host to breakthroughs that shaped modern medicine. Now, with the world’s eyes turning toward Expo 2025 Osaka, Kansai, Japan, taking place from 13 April to 13 October 2025, local leaders see a once-in-a-generation chance to accelerate their transformation into a global hub for medical innovation.
The vehicle for this transformation is Nakanoshima Qross, a state-of-the-art ecosystem where academia, industry, and government converge. The sense of urgency was palpable during the media briefing, held on 25 September, where key leaders from academia, government, and industry recently gathered. The topic was “social implementation”—the critical, often elusive, leap from a laboratory discovery to a real-world treatment for patients and a viable commercial product. The consensus was clear: Japan, the nation that gave the world the revolutionary induced pluripotent stem (iPS) cell technology, is at risk of losing the very race it started.
“We have been really at the top of the iPS cell field around the world, but now we are being caught up,” warned Dr. Yoshiki Sawa, a cardiac surgeon, Chairman of the Organization of Future Medicine, and the visionary force behind Nakanoshima Qross. His tone was not one of pride, but of provocation. He pointed to the field of diabetes treatment, where the US and China have surged ahead with multiple clinical trials using iPS-derived insulin-secreting cells. “In Japan, we only have one,” he stated. “The US and China are ahead in social implementation.”
Overcoming The “Valley of Death”
This briefing was more than a status update; it was a declaration of a new strategy for Japan, one being forged in Osaka, the country’s historical life sciences hub. It’s a strategy that acknowledges a painful paradox, as per Dr. Sawa: Japan produces world-class research papers but only a handful of unicorn startups, compared to hundreds in the US and China. Without stronger entrepreneurial ecosystems, he warned, Japan risks repeating the story of semiconductors—an innovation born in Japan but later dominated by foreign competitors.
To understand the ambition of Nakanoshima Qross, one must first grasp the scale of the challenge it aims to solve. The story begins with a monumental scientific achievement. In 2006, Professor Shinya Yamanaka of Kyoto University discovered that mature cells could be reprogrammed into an embryonic-like state, creating iPS cells. The discovery, which won him a Nobel Prize in 2012, promised a new era of regenerative medicine, with the potential to grow patient-specific tissues for repair and therapy without the ethical concerns of embryonic cells. Japan was, unquestionably, the global leader.
Yet, as Dr. Sawa and other speakers outlined, leadership in science does not automatically translate to leadership in medicine or commerce. Mr. Yoshiro Hano, Director of the Office of Pharmaceutical Industry Research and Medical Information Planning at the Ministry of Health, Labour and Welfare (MHLW), presented stark data. Japan’s share of the global prescription drug market has been steadily declining, falling from second place around 2010 to fourth today, behind the US, China, and Germany.
The New Ecosystem
The problem is not a lack of innovation but a breakdown in the ecosystem. The global model for drug discovery has shifted. The era of large pharmaceutical companies conducting all research in-house is fading. Today, innovation is increasingly driven by agile, risk-taking biotech startups, which are then acquired or partnered with by big pharma for late-stage development and global distribution. This is a model perfected in Silicon Valley and Boston.
In Japan, this engine has sputtered. Dr. Sawa highlighted a critical difference in exit strategies: in Japan, 76% of startups aim for an Initial Public Offering (IPO) on domestic markets. In the US, the primary goal is often a merger or acquisition (M&A). This M&A pathway is crucial as it provides the massive capital infusion and global reach needed to navigate the billion-dollar costs of final-stage clinical trials and worldwide regulatory approval.
“If you get the US FDA approval from the very beginning, that’s good. You connect to a larger market that reflects higher investment,” Dr. Sawa explained. He argued that Japanese startups have been too focused on the domestic finish line of an IPO, rather than the global marathon of creating a truly impactful product. The result, as evidenced by the unicorn count (startups valued over $1 billion), is telling: over 200 in the US, around 100 in China, and only three in Japan.
Nakanoshima Qross: Building the “Science Casino”
For Dr Sawa and his peers, Nakanoshima Qross is designed to close this gap. Located in Osaka’s historic downtown district, the facility symbolizes a new approach: integrating academia, startups, industry, and government within the same physical space.
Since opening, Qross has attracted more than 60 organizations with a 95% occupancy rate, including both established players and emerging ventures. The building houses research labs, clinical trial support, and incubation floors designed for up to 200 startups. International pharmaceutical companies, regulators like the PMDA, and even global incubators from Germany, Switzerland, and Australia have expressed interest in joining.
“It provides one-stop service from R&D to clinical application,” Sawa explained. “That is the synergy we need.”
Dr. Sawa described this high-stakes environment with a memorable metaphor: a “science casino.” This is not a place of mere chance, but a venue where the rules of the game are being rewritten to favor winners. The “chips” are groundbreaking science; the “players” are startups, researchers, and investors; and the “jackpot” is social implementation—delivering cures to patients and creating sustainable businesses.
The model is not just about infrastructure but about culture. By embedding regulatory authorities alongside startups and global partners, Osaka hopes to accelerate the notoriously difficult steps of clinical testing and commercialization. The vision is to replicate, in Japanese form, the collaborative ecosystems seen in Boston’s Kendall Square or Silicon Valley.
Automating the Future of Medicine
A grand vision for collaboration requires concrete technological foundations. A key pillar of the Osaka strategy, detailed by Dr. Masayoshi Sugahara of the Kyoto University iPS Cell Research Foundation, is the push for automation. While the creation of iPS cells is a scientific marvel, their production is often a painstaking, artisanal process. Skilled technicians spend long hours in clean rooms, manually tending to fragile cell cultures—a process prone to variability and high cost.
Dr. Sugahara presented an interim report on the “Future Medical Crossover Project,” an initiative subsidized by Osaka Prefecture to tackle this very problem. The goal is to create a closed, automated system for producing iPS cells and their derivatives. His team has spent six years developing machines that can handle the delicate work of cell culture.
This focus on automation is strategic. It addresses the twin challenges of cost and scalability. If regenerative medicine is to become a widespread reality, it cannot be handcrafted for each patient at an exorbitant price. Automation promises to standardize quality, reduce production costs, and make therapies like Dr. Sawa’s pioneering cardiomyocyte sheets, first implanted in humans in 2020, accessible to millions. It also positions Osaka as a potential exporter not just of medicines, but of the automated production systems themselves.
Government as a Catalyst
Recognizing that regional initiatives cannot succeed in a vacuum, the national government is now aligning its policies to support this new model. Mr. Hano from the MHLW outlined a paradigm shift in government thinking. He described the establishment of a new, multi-year fund for innovative drug discovery, a move away from the traditional annual budgeting cycle that is ill-suited for the long timelines of pharmaceutical development.
This vision is being operationalized through a new public-private council, initiated by Prime Minister Fumio Kishida, which aims to strengthen Japan’s entire drug discovery ecosystem. The council is tackling thorny issues like drug pricing, a major barrier for innovation in Japan’s cost-conscious national health insurance system, and how to attract more venture capital and strategic investment from global pharmaceutical companies.
Mr. Hano also highlighted a unique Japanese strength: the ability to break down ministerial “silos.” In many countries, coordination between health, industry, and finance ministries can be a major bottleneck. “The coordination is actually very smooth between ministries in Japan,” he claimed, suggesting this bureaucratic agility could be a competitive advantage if fully leveraged.
A Global Mindset
The briefing culminated in a panel discussion that posed the central question: Can the “Osaka (Nakanoshima Qross) Model” go global?
Dr. Sawa argued that it could—if Japanese startups adopt a global mindset from day one. “Going IPO within Japan does not deliver innovative medical solutions to the world,” he said. He pointed to how US startups, often acquired by larger players, have scaled their discoveries internationally. Japan must learn from this model.
Mr. Hano reinforced the economic necessity. Japan’s national health insurance system cannot sustainably cover the costs of advanced regenerative therapies, many of which are extremely expensive. Global markets are essential both for recovering investment and for delivering treatments to patients worldwide. “These medicines should not be exclusive to Japan,” he said. “They must be delivered globally—that is our contribution to the international community.”
Both speakers agreed that Expo 2025 is a rare chance to showcase Osaka’s model to the world and attract international partners. Already, Nakanoshima Qross has signed memoranda of understanding with organizations in Europe, the US, and Asia. “Expo is the first step,” Hano said. “But the real challenge is what we do after.”
The discussions laid bare the stakes. On one hand, Japan has extraordinary strengths: world-class science in iPS cells, a rapidly aging population that creates demand for innovative therapies, and a government willing to support ecosystem-building. On the other hand, the country faces significant hurdles: limited venture capital, fewer global-scale startups, and cultural barriers to entrepreneurial risk-taking.
From the panelists’ perspectives, the path forward is clear. Japan must foster entrepreneurs with a global vision, attract overseas mentors and investors, and create mechanisms for startups to scale beyond national borders. Nakanoshima Qross, with its integration of academia, industry, and government, is intended to be the catalyst.
