Investing in medical manufacturing in Malaysia

Malaysia's medical device manufacturing industry is likely to experience significant growth in activity and demand over the next 10 years, according to Frost & Sullivan (F&S).

Published on January 26, the F&S 2015 Predictions for the Healthcare Industry in the Association of South East Asian Nations (ASEAN) report revealed that total expenditure on healthcare in Malaysia should increase to more than US$20 billion by 2025, with a compound annual growth rate of 11 per cent in the next five years.

So, what is driving the rise in value in the manufacturing sector? According to F&S, a rise in healthcare awareness in the middle aged demographic, as well as the greying population increasing demand for aged care, are the key factors influencing growth.

"Malaysia provides affordable, high-quality healthcare. Enhancement of our capabilities in medical devices manufacturing with stronger emphasis on use of Made in Malaysia medical products could help to control this unavoidable increase in healthcare costs," said F&S Asia Pacific's senior vice president of Healthcare, Rhenu Bhuller.

"With our growing middle aged and elderly population, as well as increased awareness on the importance of healthcare management, we see a trend also in earlier diagnosis, leading to the ability to manage diseases better."

The changing markets in Malaysia

Currently, the medical device industry in Malaysia relies heavily on imports. This is particularly true in the market for high-end and sophisticated equipment, with local manufacturers more likely to spend time and resources on cost-effective devices that can be utilised in developing countries.

With the ASEAN Economic Community (AEC) and Malaysian government increasing their support for local manufacturing, F&S estimates the domestic market's need for imported equipment will fall by 5 per cent by 2020. In part, Malaysian companies will begin to rely on mergers and acquisitions, as well as strategic alliances with competitors, to help drive this growth in domestic manufacturing.

Across the ASEAN, the value of medical device sales both locally and internationally was worth US$4 billion in 2013, with this number expected to double by 2019. With manufacturing in the sector selected as a key growth area in Malaysia, this country is steadily moving up the chain in regards to the region's value and production of medical devices.

A booming trade across the ASEAN, local medical device markets have been recording double digit growth rates in recent years, according to the ASEAN Briefing, and will likely continue to do so in the decade to come. As demand for health care increases, a significant amount of government spending will focus on public sector growth. However, private healthcare industries should to drive the rise in more sophisticated and high-end equipment, which is the area in which manufacturers are expected to see growth,

High-value devices being manufactured in Malaysia include orthopaedic products, dialyses tools, surgical instruments, medical electrodes, diagnostic radiographic equipment, and ophthalmic lenses.

Growth reflected over the ASEAN

Beyond the rises in Malaysia, individual medical device markets across the ten member countries in the ASEAN are in various stages of development and growth. In addition to Malaysia's strengthening market, Indonesia, Singapore, Thailand and Vietnam are all expected to experience significant increases in this area, according to research by Espicom.

To support further growth across this industry, the ASEAN Consultative Committee on Standards and Quality's Medical Device Product Working Group (ACCSQ – MDPWG) has finalised the ASEAN Medical Device Directive (AMDD). This has placed a set of non-legally binding regulations on the medical devices market, to ensure manufacturing efforts across the region are aligned and contribute to investment and trade under the AEC blueprint.

This is an important step forward for the industry, as rising demand continues to put pressure on the medical devices and healthcare sectors. 

"The need for faster recovery, accuracy, and precision to ensure early discharge from hospitals will drive the development of new technology in medical device products," F&S Healthcare Consultant Poornima Srinivasan said in an August statement.

"Manufacturers are also turning to frugal innovation, designing 'as-is' products to meet the needs of a domestic market burdened by rising healthcare costs."

Getting to know Malaysian medical devices manufacturing

In Malaysia, the main area for medical device manufacturers are rubber gloves and catheters, as the country produces 62 per cent and 79 per cent of the world's supplies of these tools. However, diagnostic imaging exports are another area where Malaysia is becoming a major global player, particularly in regards to electrocardiographs and other electrodiagnostic apparatus, according to Espicom.

In December 2014, operations were launched at Malaysia's first diagnostic imaging systems manufacturing base, led by Toshiba Medical Systems. Espicom forecasts the country will see compound annual growth rate in this area of 16.1 percent between 2015 and 2018, with growth for consumables as high as 24.8 percent.

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