Hello, this is Hamamoto from TIMEWELL.
This is the second installment of the industry-specific TRAFEED series, and this time we are looking at medical device makers. Medical devices carry a "tools that save lives" image, and they rarely come up in export control discussions. But once you get into the operational side, the strict quality rules under the PMD Act sit on top of a separate regulatory axis called FEFTA — and from 2020 onward, core-sector designation and geopolitical risk were layered on top of that. Olympus holds roughly 70% global share in gastrointestinal endoscopy[^1], and Canon Medical ships into over 150 countries and regions[^2]. Those are proud numbers, and they also mean that the blast radius when export control goes wrong is huge.
This piece walks through the concrete issues an export-control officer at a medical device maker faces in 2026, with my own view included. If your company still runs the PMD Act team and the export control team as separate departments, this is written for you.
What the 2020 core-sector designation really put on the table
On June 15, 2020, the Ministry of Finance, METI, and the Ministry of Health, Labour and Welfare jointly announced that two sectors related to pharmaceuticals and medical devices would be added to FEFTA's core sectors[^3]. Precisely, the three categories were pharmaceuticals against pathogenic organisms, pharmaceutical intermediates, and manufacturing of high-risk medical devices. The rules took effect on July 15 of that year.
The core-sector designation itself is a net cast over inward direct investment, meaning "money coming in from abroad." Foreign entities or individuals acquiring 1% or more of a listed company's shares in the target sectors now need prior notification and review. That is a major step down from the previous 10% threshold — in practice, it puts every move by activists and funds in plain view.
The stated rationale was, in the wake of the COVID-19 pandemic, to maintain "a domestic manufacturing base for critical healthcare industries essential to citizens' lives and health." At the time, shortages of masks and ventilators had become a global political issue, and the move was emblematic of pulling the pandemic response into the economic-security frame.
The misread I want medical device makers to avoid is, "We are not listed, we have no foreign shareholders, so this does not concern us." The core-sector designation was the Japanese government's formal declaration that "this industry is tied directly to national security." Investment rules are only one face of it — on the back side, the same standards now apply to export-side management, supply-chain visibility, and counterparty due diligence. METI's Security Export Control Policy Division is, as I hear it, stepping up interviews and internal-control reviews in the medical device space. Five years on, the initial shock has faded, but the operational depth is, if anything, deeper than before.
How to solve export compliance challenges?
Learn about TRAFEED (formerly ZEROCK ExCHECK) features and implementation benefits in our materials.
Who closes the gap between the PMD Act and FEFTA?
The trickiest thing in medical device export control is that two laws with very different character — the PMD Act and FEFTA — apply to the same goods at the same time.
The PMD Act, formally the "Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices," is there to secure product quality and safety. FEFTA's export rules, in contrast, restrict the transfer of goods and technology to specific destinations, end users, or end uses on national-security grounds. Because the purposes differ, it is perfectly normal for a product that fully meets PMD Act requirements to be a "no-go" under FEFTA.
For example, when shipping a device whose name or packaging design has been changed for the destination market, the PMD Act side requires a "Notification of Manufacturer and Marketer of Export-Use Medical Device" and a medical-device manufacturing license[^4]. A June 22, 2022 administrative notice from MHLW's Pharmaceutical Safety and Environmental Health Bureau revised the Q&A on this notification and organized how changes made to meet the destination country's rules should be handled[^5]. In other words, the PMD Act side continues to be updated at a fine level of granularity.
For the same product, however, FEFTA demands an entirely separate analysis — which item of Annex 1 of the Export Trade Control Order it might fall under, and which destination, end user, or end use raises catch-all concerns. The classification record is checked by customs at the time of export, and the end-use undertaking is obtained by the exporter's own responsibility. JETRO's Q&A explicitly notes that medical devices are subject to catch-all controls and that self-declared classification documents must be submitted[^6].
Very few Japanese medical device makers have staff who bridge both laws. Regulatory affairs specialists know the PMD Act, export control specialists know FEFTA, and they usually sit in different departments producing different documents — only comparing notes when the same product happens to come up on both sides. In my own consulting work, I have repeatedly seen cases where the regulatory side says "our Class II device can be exported with no issue," the export-control side says "this destination is difficult," and the operations team is left stuck in the middle. This gap is not a rulemaking problem. It is an organizational design problem.
Olympus, Terumo, and Canon Medical all face the same two-layer wall
Among Japan's leading medical device makers — Olympus, Terumo, Canon Medical Systems, Nipro, Fukuda Denshi — overseas revenue is high, and the US and China together account for a large share of sales.
Olympus is said to hold about 70% global share in gastrointestinal endoscopy and has led the market for years[^1]. And yet in its FY ending March 2026 operating-profit guidance, the company estimated a roughly 16 billion yen hit from US tariff policy, stating directly that a significant portion of GI endoscopes are manufactured in Japan and therefore exposed to tariffs[^7]. Shipping US-bound endoscopes out of Japan means you are not clear of the US Export Administration Regulations (EAR) at customs either; repair flows, re-export, and part movements between local sales affiliates all need to fall inside your management reach.
Terumo, which makes a broad portfolio including catheters and syringes, has publicly said it is already producing a meaningful share of US-bound volume inside the United States. It is pursuing inventory management and price pass-through to soften the tariff impact, but the more you lift local production, the more a second set of risks appears — technology transfer, deemed export, and disclosure of technical information to locally hired engineers. Technology lives in people, so localizing only the product while letting technical information from headquarters move without constraint can itself constitute a deemed-export violation. I have written a separate piece on this; see Deemed Export Risk Guide.
Canon Medical Systems covers CT, MRI, ultrasound, and X-ray systems across more than 150 countries and regions[^2]. In 2024 the company announced a collaboration with Olympus on endoscopic ultrasound systems — a visible example of Japanese makers tying up to take on US rivals[^8]. Diagnostic imaging equipment carries particularly high dual-use potential; it can be used inside nuclear facilities for internal inspection or inside military research institutions, so shipping CT- and MRI-class equipment to specific countries demands careful classification and end-use verification. ECCN (the US Export Control Classification Number system) is a useful lens even for Japan's classification. If you want the basics, our ECCN classification guide is a good starting point.
Beyond these three companies, Japanese medical devices as a whole are often described in the press as "on the road to 21 trillion yen" — a huge market heavily dependent on the US, China, and Europe[^9]. Beyond tariffs, a single export-control miscue that halts shipments can cost hundreds of millions of yen per year. Export control gets treated as a "defensive function," but in reality it sits on the revenue tap. That is how I see it.
The overlooked dual-use angle on Class II and III devices
Japan's device classification runs on its own risk tiers — Class I (general), Class II (controlled), Class III and IV (high-risk controlled). Core-sector designation largely targets Class III and above, but FEFTA risk does not line up with these classes.
Endoscopes are usually Class II, yet you cannot rule out a military medical facility, a facility disguised as a clinical trial site, or a classified military research lab as the real end user. Portable ultrasound is similar — it can be used in battlefield medicine, military field hospitals, or even as medical equipment inside submarines.
Diagnostic imaging adds harder questions. A CT scanner images cross-sections of the human body, but the same technology can perform non-destructive inspection of nuclear weapon parts or electronic components. MRI systems produce strong magnetic fields; their parts or underlying technology have been flagged for potential conversion into military sensors. Ventilators and anaesthesia machines — counterintuitive as it seems — have been discussed as risky inputs for facilities doing animal experiments for biological weapons.
These dual-use angles must be evaluated as a combination of destination and end user. An endoscope for a Chinese Class-A tertiary general hospital and the same model sent to an unnamed research institute in the same country require completely different levels of verification. On January 6, 2026, China's Ministry of Commerce issued a notice tightening export controls on dual-use items destined for Japan[^10]. Controls are moving not just from Japan to China but also from China to Japan, so makers are starting to revisit procurement routes for repair parts and consumables.
I have organized the relationship between list controls and catch-all controls in separate pieces. For the big-picture regulatory architecture, read Export Compliance Program Guide and Japan-China Export Control 2026 first — everything flows more easily after that.
Three things medical device makers should revisit under 2026's geopolitics
Here is what I tell medical device makers: "If you only look at three things first, look at these." I am prioritizing rather than going for completeness.
First, upgrade classification from "per model number" to "per model number plus destination plus end user." Many companies classify a model once and reuse that record for years. That does not match a 2026 environment where FEFTA-controlled items are being added and revised frequently and destination risk scores are moving around. Russia-bound shipments in particular have, since March 2022, been effectively unapprovable by the METI minister[^11]. Middle East destinations and circumvention through Southeast Asia have to be re-scored by destination on an ongoing basis.
Second, integrate decision-making between the regulatory affairs team and the export-control team. At the medical device makers I know, regulatory affairs sits against MHLW, export control sits against METI, and the two organizations are completely separate. You need a forum that bridges them, so that PMD Act and FEFTA requirements are discussed at the same table from the development stage. Companies that front-load launches in the US or Europe tend to get pulled toward FDA or CE work and leave FEFTA items to the back burner. That has to be consciously corrected.
Third, deploy automated screening against denial lists (sanctioned-party lists). Medical device customers span hospitals, medical corporations, distributors, and trading companies — multi-layered — and manually cross-checking all of them against OFAC, EU sanctions, and Japan's Foreign End User List does not scale. With China's dual-use rules taking effect in January 2026, some partners are starting to appear on the Chinese side's entity lists, so three-way screening across the US, China, and Japan is becoming the operational standard. For the counterparty-vetting mindset, see Deemed Export Risk Guide and past articles.
None of those three hold up if attempted by human effort alone. That is exactly where AI agents become a real option.
How TIMEWELL's TRAFEED helps medical device operations
At TIMEWELL we offer TRAFEED (formerly ZEROCK ExCHECK) as an AI agent built to support export control operations. It is aligned with METI's Security Trade Control standards and covers the full stack: drafting classification records, screening counterparties across multiple languages, and organizing end-use documentation. We have tuned it through interviews with medical device operations teams, building templates for Class II/III classification and workflows for denial-list matching.
My stance is that TRAFEED is "not a tool that replaces people," but "a mechanism that lets the control manager focus on judgment." Medical devices go directly to human lives, and the final decision must always rest with a human accountable manager. What AI can compress is the time-consuming work leading up to that decision — information gathering, document drafting, cross-checking, record-keeping.
A small export-control team facing 1,000+ SKUs and shipments to more than 150 countries — you cannot solve that with more rules. You solve it with the right mechanism. That is my conclusion.
If you want to talk through TRAFEED for medical device operations, reach out via the contact form. We welcome sessions where regulatory affairs and export control attend together. We like to start by mapping the real operational issues on the ground, not by pitching features.
References
[^1]: Diamond Online, "Canon, Fuji, Terumo, Olympus — Japanese medical device makers on the road to 21 trillion yen and how they plan to beat the US giants" https://diamond.jp/articles/-/356746 [^2]: Olympus, "Canon Medical Systems and Olympus agree to collaborate on endoscopic ultrasound systems" https://www.olympus.co.jp/news/2024/nr02608.html [^3]: Sustainable Japan, "[Japan] Government designates two pharmaceutical and medical device sectors as core sectors under revised FEFTA" https://sustainablejapan.jp/2020/06/18/japan-forex-act-2/50996 [^4]: Nishimura & Asahi, "Core-sector designation under FEFTA for manufacturing of pharmaceuticals and high-risk medical devices" https://www.amt-law.com/asset/pdf/bulletins1_pdf/200709.pdf [^5]: MHLW Pharmaceutical Safety and Environmental Health Bureau, Pharmaceutical Evaluation Division, "Revision of the Q&A on handling notifications for export-use pharmaceuticals and related products" (June 22, 2022 administrative notice) https://www.pmda.go.jp/files/000247110.pdf [^6]: JETRO, "Approval matters for pharmaceutical exports in Japan" https://www.jetro.go.jp/world/qa/04A-000925.html [^7]: Newswitch, "Olympus, Terumo — unavoidable US tariff impact on medical devices and each company's countermeasures" https://newswitch.jp/p/46746 [^8]: Toyo Keizai Online, "[Medical devices] Canon, Fujifilm, Olympus — Japanese makers on the global stage face a defining moment" https://toyokeizai.net/articles/-/892051 [^9]: JETRO, "Import procedures for medical devices: Japan" https://www.jetro.go.jp/world/qa/04M-010754.html [^10]: JETRO, "FY2026 NDAA enacted — expanded restrictions on Chinese biotech firms and US investment into China" https://www.jetro.go.jp/biznews/2025/12/28e03471e6967274.html [^11]: METI, "Exports to Russia and related destinations" https://www.meti.go.jp/policy/external_economy/trade_control/02_export/17_russia/russia.html