[Edaily Reporter Kim Seung-kwon ] “We are in discussions regarding a contract to use our solution in nationwide clinical trials in Japan. If a major hospital adopts it, it could quickly spread to affiliated regional hospitals.”

Kim Dong-min, CEO of JLK, Inc.(322510), made these remarks in a recent interview with Pharm E-Daily. He explained that the focus of the company’s Japan business is shifting from regulatory approval to hospital supply. With a local sales structure and distribution network already in place, the company plans to concentrate on securing contracts and increasing revenue.

The key lies in collaboration with major local medical institutions. JLK, Inc. is conducting joint research with the National Cardiovascular Center (NCVC) in Japan and Nippon Medical School. The company is also in discussions regarding a contract to supply its solution for a nationwide clinical study involving approximately 40 hospitals.

Five Japanese Distribution Partners… Direct Sales Through Local Subsidiary Also Expanding

According to CEO Kim, researchers from the NCVC and Nippon Medical School will present the results of their studies using JLK, Inc. solutions at the Japanese Society for Neuroendovascular Therapy (JSNET) conference, which opens on the 18th of next month. Both studies used data exclusively from Japanese patients. CEO Kim stated, “Japanese medical professionals place great importance on results obtained by Japanese researchers using Japanese patients,” adding, “It is crucial to secure local research results independently of the achievements we’ve made in Korea.”

JLK, Inc. has received approvals from Japan’s Pharmaceuticals and Medical Devices Agency (PMDA) for seven brain imaging AI solutions. In February of this year, the company obtained authorization to sell directly through its local subsidiary, JLK Japan. Subsequently, the company completed the process of consolidating Designated Manufacturer and Distributor (DMAH) rights under its Japanese subsidiary this summer. A DMAH acts on behalf of overseas manufacturers to handle regulatory approvals and post-market surveillance within Japan.

CEO Kim said, “We have established a system that allows us to sell directly through our Japanese subsidiary without going through other companies,” adding, “It took quite some time to consolidate the scattered licenses under the Japanese subsidiary, and we are now increasing the proportion of direct sales.”

The sales strategy is two-pronged. The local subsidiary directly targets large hospitals, while it utilizes the sales networks of distributors to reach regional hospitals. Excluding CEO Kim, the Japanese subsidiary has a staff of seven, two of whom are in sales.

There are five distribution partners: Creabo Technologies, Century Medical (CMI), Sanshodo, Apex International Niigata, and Takeyama. The largest of these is Century Medical, a medical device trading company affiliated with the Itochu Group. The company, which has been distributing catheters for stroke treatment, has bases in the Kanto and Kansai regions.

Hospitals that have been approached are moving into the purchase consideration phase after attending briefings, demonstrations, and a trial period of about one month. Broadly speaking, approximately 12 hospitals have completed the demonstrations and trial periods. This figure includes cases with varying installation and usage methods and therefore differs from the number of hospitals with paid long-term contracts.

However, CEO Kim believes that regional distributors are the ones who actually influence hospitals’ purchasing decisions. “While nationwide companies manage the overall operations, it is the regional distributors who work closely with hospitals,” he explained. “By contracting directly with regional distributors, we can improve both hospital accessibility and our revenue structure.”

Competing on MRI Strengths… The Key Is Transitioning to Long-Term Subscriptions

JLK’s direct competitor in Japan is the U.S.-based RapidAI. Imaging equipment and systems companies such as Fujifilm and Canon Medical are both competitors and potential partners. CEO Kim noted that while the company is exploring collaborations to integrate its solutions into equipment, these efforts are still in the early stages.

JLK, Inc.’s unique selling point is its product lineup that covers both CT and MRI. In Japan, there are hospitals that perform CT scans first and others that start with MRI scans. CEO Kim said, “While our CT capabilities are similar to RapidAI’s, our MRI solution was developed using a large volume of data,” adding, “Our strength lies in reliably analyzing even small lesions or borderline cases.” However, this is the company’s own assessment.

The key to expanding revenue lies in converting trial hospitals into long-term subscription customers. The company’s target model is a three-year contract. Hospitals that cannot wait for their budgets to be finalized have begun using the service on a monthly paid basis.

CEO Kim noted, “Hospitals are gradually transitioning from demos to paid subscriptions,” but emphasized, “Our target is a three-year long-term contract.” He did not disclose the number of hospitals that have switched to paid subscriptions.

He expressed caution regarding the goal of supplying the service to 200 hospitals by the end of the year. Hospital budget cycles and decision-making processes at top university hospitals were cited as variables. In Japan, there are regions where about 10 hospitals are grouped into a single network.

He explained, “While we could expand our sales efforts to 200 hospitals, there was a specific order to the adoption process,” adding, “We are first transitioning large hospitals to paid service and then expanding to affiliated hospitals.”

Insurance reimbursement rates also pose a challenge. CEO Kim explained that some solutions have secured a foundation for utilization within the existing A1 classification and the facility surcharge system for diagnostic imaging. However, no new reimbursement rate has been established specifically for stroke AI analysis itself. The company is pursuing the C2 pathway—which allows for separate technology fees—while preparing evidence of efficacy and cost-effectiveness.

He said, “Reimbursement rates for stroke AI have been established in South Korea and the U.S., but Japan is the only country that lacks them,” adding, “We cannot simply wait for reimbursement rates, so we are first increasing the number of three-year contracts based on annual subscriptions.”

The securities industry estimated JLK, Inc.’s sales in Japan at 5 billion won. This was a forecast at the time and does not represent current orders or confirmed results. CEO Kim did not provide a separate sales forecast for Japan this year. He explained, “Next year’s performance will depend on how many hospitals complete their trial periods this year and incorporate the product into their purchasing budgets.”