Why this is important to Wisconsin businesses: Rising incomes, as well as rising health needs, are driving massive growth in the sector.
The Association of Southeast Asian Nations (ASEAN) medical device market has is forecast to reach $9 billion by 2019. The growth in this sector within ASEAN, whose 10 member countries are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, is bound to lead to an improvement in health outcomes for the region’s population.
The following factors are driving the demand of medical devices in the region:
- Economic prosperity manifested by fast-paced urbanization and a rapidly expanding middle class. Almost 50 percent of the region’s population lives in urban areas, according to a report released by the ASEAN Economic Community in 2016. Meanwhile, the Asian Development Bank expects that the proportion of middle-class inhabitants of the region will almost triple, that is, from 24 percent of the total population in 2010 to 65 percent by 2030.
- Demographic shifts such as population aging. The population aged 60 and above in Indonesia, Thailand and Singapore is expected to go up from 10 percent in 2007 to 40 percent in 2050.
- Chronic diseases such as obesity and diabetes are becoming more widespread in the region due to sedentary lifestyles. Additionally, cardiovascular and communicable diseases such as tuberculosis and HIV are still highly prevalent in ASEAN countries.
- More countries in the region have begun to move toward the provision of universal health care. Moreover, there is an increasing intervention by the public sector in terms of the investment in the health care sector and the level of spending.
The market potential for medical devices in the region is immense. With the exception of Singapore, the local medical device manufacturing markets in the ASEAN countries are not sophisticated, relative to more developed economies. In other words, not many medical devices are made by local manufacturers. For example, the Philippines imports 100 percent of its medical equipment, while Vietnam, Indonesia and Thailand import more than 85 percent of their medical devices.
Just as the region's member countries are diverse in terms of development, economy, religion and culture, opportunities in the health care market are heterogeneous as well. Considering this, product segmentation will be one of the best strategies to enter the market. For example, those that produce higher end devices can focus on Singapore, which is wealthy, before expanding into middle-income economies like Malaysia and Thailand. Meanwhile, lower-end devices would sell well in price-sensitive market such as Vietnam and the Philippines, which explains the growing presence of inexpensive equipment from China and South Korea.
Aside from the aforementioned growth drivers, the ASEAN medical device market still has ample room for growth, and market access and penetration are expected to improve in the coming years, with the signing of the ASEAN Medical Device Directive (AMDD) in 2015 by all 10 ASEAN countries. The agreement, scheduled to take effect in 2020, aims to harmonize medical device regulations and common technical documents, allowing for better penetration of medical devices in the region. Although the AMDD will not create a single market like the EU, where a product certified for sale in one member state can be sold in all others, the agreement will make it easier for an organization that registers a medical device in one ASEAN country to be registered in other member countries.