Asia Aging Quickly, Many Medtech Opportunities

By Ames Gross
April 24, 2017


• Categories: Business Analysis, Market Access

Asia’s population is aging quickly. The demographics are changing rapidly with declining birth rates and increasing life expectancies, resulting in shifting healthcare trends. The WHO says “ageing well” must be a global priority, because the growing burden of chronic diseases will only increase if efforts are not made to accommodate for the needs of the greying population. Furthermore, aging populations equate to a shrinking workforce, which puts a great economic strain on the countries. Aging is an especially big issue in Asia, because currently more than half of the global population over the age of 65 resides on the continent.

As Asia’s population grows older, the burden of chronic diseases such as cancer, diabetes, heart disease, musculoskeletal diseases (such as osteoporosis) and chronic respiratory diseases increases as well. Treatment for chronic diseases is more complex, so the demand for more medical technology among Asia’s aging population has further risen. Therefore, Asia’s medical device and pharmaceutical markets have a lot of room for growth in the coming years. Many Asian countries are modifying their healthcare approaches in order to accommodate for the aging population.

In Japan, more than a quarter of the population is over the age of 65. This age group is predicted to make up about 40% of the country’s population by 2060; therefore, there is great potential for long-term growth in the medical device and pharmaceutical markets. There is high demand for products such as orthopedic devices, cardiovascular devices and surgical implants that help treat chronic diseases. Japan is even working in the robotics field to create robots that can help the elderly population. The country is unique in that its culture is a lot more open to these types of products than other countries. Robots include mechanical swing lifts that help move patients, robotic arms that allow patients to complete tasks free of pain, and even a robotic animal seal that has been proven to reduce anxiety, stress, depression and perception of pain. The seal especially helps to alleviate dementia patients, and it has even been able to replace heavy doses of psychotropic drugs.

Hong Kong also has a large elderly population, with 15% over the age of 65. To manage the burden of the aging population, the Hong Kong government has been increasing its public healthcare funding. The total government expenditure budget for medical equipment, infrastructure and related services was $10 billion in 2016, which was almost a 30% increase from 2015. The Hong Kong government also plans to use about $25 billion for a 10-year hospital development plan to upgrade healthcare facilities in order to create more hospital beds and new hospitals. The country also plans to create more ambulatory care centers to care for the chronic diseases.

About 10% of China’s population is over the age of 65. Although the population has not aged as quickly as Japan’s, the elderly population will grow rapidly in the coming years due to the country’s large overall population. To prepare, China’s government is spending more money on medical devices to care for this specific group. China began to focus on in-home care and devices that can be used at home, which is much more comfortable and accessible for the elderly. Furthermore, China has a high rate of coronary artery disease, which drives the demand for high-end interventional cardiovascular devices. Currently, China does not produce enough quality medical devices domestically to satisfy the needs of its large population, so the country depends on foreign companies to provide new and sophisticated devices.

South Korea’s population is also aging rapidly, with about 13% of its population over the age of 65. South Koreans are predicted to have the longest life expectancy in the world by 2030, even surpassing Japan. The low birth rate and longer life span will make drastic changes to the country’s demographic structure. South Korea is very dependent on imports for high-end medical devices, which are important to taking care of the growing elderly population. Korea’s medical device imports supply more than half of the total market demand. Another factor that makes imports popular in Korea is that many Korean doctors are educated in the United States and Europe, so they are accustomed to advanced medical devices from overseas. Therefore, they oftentimes already have the trained personnel who will be able to operate devices made overseas.

Singapore, with 12% of its population over 65, is also dealing with increasing healthcare demands and chronic diseases. Singapore’s Ministry of Health (MOH) plans to invest additional money to encourage more mid-career Singaporeans to transition their careers into the healthcare sector in order to accommodate for the increase in older patients. The investment serves to increase funding for training and encourage employers to admit more personnel, especially in the nursing field. The MOH also aims to achieve a 40% increase in day and home care services in the next several years to help care for the needs of the increasing elderly population.

Vietnam’s population over the age of 65 is close to 10%. The growing elderly population and shrinking workforce is putting a strain on Vietnam’s economy, so the government is considering loosening the two-child policy and increasing the retirement age. However, those are just temporary solutions. A long-term solution involves improving healthcare of the elderly, so that they do not put on a greater burden on society.

The aging population in Asia provides a lot of opportunities for medical device and pharmaceutical manufacturers, but there are challenges as well. One of the biggest issues is pricing, because new Western medical technology tends to be expensive. The less-developed countries may not be able to afford to pay for new Western medtech technologies. Therefore, Western device companies need to create efficient and affordable medtech products that the people in the developing world will be able to afford. Medical technologies that reduce the overall costs of surgical procedures, because they simplify the surgical process, are also very popular in Asia because they help to reduce health expenditures.

Accordingly, many large medtech companies are now making a “B line” of their top-of-the-line products with less bells and whistles. Big device companies like Medtronic and Stryker have acquired local competitors in China to be able to sell the local companies’ “B-line” products with a Western label. If more Western companies do not create a “B line,” they may lose this business to emerging device companies in Asia who better understand the price/value equation for middle class Asian customers.