Smaller Economies in Asia to Boost MedTech Market

By Ames Gross
May 26, 2017


• Categories: Business Analysis, Market Access

Asia is the largest and most populous continent in the world. With a population greater than 4.4 billion (or about two-thirds of the world’s population), there are tremendous medtech opportunities in the region. Nowadays, the medical device markets of Asia’s smaller economies are growing even faster than those of the developed Asian countries. This article provides an update of recent healthcare and political changes in the faster growing Asian countries and how they are affecting the healthcare market.

Philippines

The Philippine economy has been growing quickly, along with its population, which has now reached 103 million. The government targeted a 6–7% growth in GDP for 2016, but it actually grew by about 7.2% in just the first nine months. This is among the fastest growth not just in Asia, but also globally.

The Philippines’ $400 million medical device market is almost entirely dependent on imports, with about a quarter of the market made up of U.S. devices. Despite the cost sensitivity of the Philippine market, America’s higher-level technology is preferred due to the quality, and also because the market is already familiar with and very open to American-made products. Therefore, Filipino doctors often prefer U.S. medical products even though they are more expensive than Chinese or locally made products from Asia.

Vietnam

Vietnam’s economy has been strong with a GDP growth rate of almost 7% in 2016. Vietnam’s medical device market totals $630 million. Vietnam has a population of about 95 million, and the population’s demand for better healthcare is rapidly growing.

However, Vietnam is facing multiple challenges in its healthcare sector. Vietnam’s public hospitals are filled with outdated medical equipment, and many hospitals lack the equipment needed for specialized care. The state budget for the health sector has increased in recent years, but it is still not sufficient to meet all of the demand. Vietnam has also recently been confronted with difficulties surrounding the country’s universal health insurance. Vietnam Social Health Insurance found that in 2016, 40 out of 63 provinces spent more than their insurance funding allowed. The demand is high, but the lack of resources and supply present a challenge to the country.

Malaysia

Malaysia’s GDP grew by close to 5% in 2016, and this growth is expected to continue in 2017. Malaysia’s medical device market is valued at $1.2 billion. Malaysia has been known for providing quality health services at very low costs. However, recently there has been a strain on the public health system due to the increasing cost of living. Consumer prices rose by more than 5% in March 2017, which is the highest inflation rate since 2008. Because the cost of living is higher, more people are seeking treatment at public hospitals. In fact, the number of patient visits to government healthcare facilities has increased by almost 10% in 2016.  In order to prevent shortages and overcrowding, the government will look to cooperate with the private sector to see if they can offer healthcare services at government hospital rates.

Malaysia is an ethnically diverse country. Of the 31 million people populating the country, about 51% are Malay, 24% are Chinese, 7% are Indian, and 11% are indigenous. Malaysia’s medical device market is expected to continue growing, especially with its aging population.

Myanmar

Myanmar faced many changes and challenges in 2016. The government changed to Aung San Suu Kyi’s National League for Democracy, and the country also suffered major destructive floods. Despite these factors, Myanmar’s economy continued to grow by about 7.2% over the year. Moreover, this growth is expected to continue and increase to about 8% in 2017. Myanmar has a population of about 54 million.

Myanmar’s demand for medical devices is increasing with the increase in healthcare demand. The prevalence of chronic diseases is on the rise due to the aging population. Therefore, innovative devices, minimally invasive treatments, telemedicine and mobile healthcare are gaining popularity in Myanmar.

Indonesia

Indonesia’s population of 263 million people makes it the fourth most populous country in the world. Indonesia is a fast-growing market with a GDP growth rate of 5% in the past year. Its medical device market value is about $1 billion. The majority of Indonesia’s medical device market is supplied by imports, with local manufacturers only producing basic or disposable products such as surgical gloves and bandages. Public funding for healthcare is low, but demand is still on the rise, especially after adopting a national health insurance system in 2014. Despite the huge growth potential, one challenge Indonesia faces is the shortage of healthcare professionals. Due to this problem, many wealthier Indonesians seek care overseas, mainly in Malaysia and Singapore. However, Indonesia’s government is working to develop medical training programs and improve facilities and equipment in order to encourage in-country care.

Indonesia’s highest demand in the medical device sector is in diagnostic imaging devices, as non-communicable diseases are on the rise. Further, diagnostic imaging devices are standard products in every hospital, so as more facilities open, the demand will only rise. More areas with potential for growth and improvement in Indonesia are telemedicine, electronic medical recording, and innovative products to manage the aging population.

Cambodia

Conducting business in Cambodia is becoming easier. Financial control policies in 2016 introduced score systems for banks and better access to credit information. Cambodia’s GDP grew by 6% in the past year. The financial sector is rapidly expanding, thus accommodating economic growth.

Foreign investment is helping to fuel Cambodia’s healthcare sector. The first Japanese-owned hospital opened in Phnom Penh in 2016 to provide technologically advanced equipment and also to help reduce the number of Cambodian patients who seek care overseas. Cambodia has a population of about 16 million people, but the country does not have enough resources, causing wealthier patients to seek treatment overseas. Vietnam and Thailand are the main destinations that Cambodians travel to for healthcare. However, with an increased import of advanced medical devices, hopefully more patients will be able to find quality care within their country.

Conclusion

While the healthcare markets discussed in this article are tiny compared to Japan and China, they are growing quickly, and when combined include more than 562 million people. Device companies that are first to enter these markets will have a significant advantage in terms of sales and building brand loyalty.