Medical Device Outsourcing Opportunities in Malaysia

8/17/2019 Medical Device Outsourcing Opportunities in Malaysia

1/23

Growth opportunities for medical

device outsourcing in Malaysia

Dato’ Hans Brenner

Executive Chairman and Board Member, Small BoneInnovations Asia Pacific Sdn Bhd

CEO of GMMI Sdn Bhd

6/17/2012 All rights reserved 1


2/23

Content

- Market overview MEDTECH global, Asia

- Growth drivers and major growthsegments

- Trend of outsourcing to Asia- Contract manufacturer point of view

- Customer point of view



3/23

Global vs. APAC: The New Frontier



4/23

Growth drivers for health care in

Asia

> Fast aging Population> Increasing wealth> Funding and health insurance system available> Surgeons are much better trained in the

meantime

> Outsourcing to Asia - Main reasons: reducetime to market; focus on core competencies;access to low cost supply base; entry into newmarkets; augment R&D; rationalize complexoperations. “Without doubt, outsourcing ishere to stay. The value of the medical

device outsourcing sector is around $17billion globally “(Source CLINICA).



5/23

The Healthcare Industry Has Been Growing in Asia onAverage by 14-16% Annually Because of Rising Domestic

Demand and Increased Outsourcing

Rising domestic demand – the pull factor

Young populations with increasingdisposable income

Aging population requiring moreexpensive healthcare treatment

Increasing Contract Manufacturing, ContractResearch and Medical Tourism – the pushfactor

Outsourcing trend – transfer ofmanufacturing and R&D from developedcountries to Asia has only just begun

3.8

3.3

2.8

2.4

2.0

1.7

0

1

2

3

4

2006 2007 2008 2009 2010 2011

3.8

3.3

2.8

2.4

2.0

1.7

0

1

2

3

4

2006 2007 2008 2009 2010 2011

Revenues($bn)

2 0 0 6 - 2

0 1 1 C A

G R : 1 7. 7

%

Medical outsourcing to Asia

(Source: Broker’s research report)

14449

327

61 5

587

2,165

483

60 85 58 5

693 690

0

500

1,000

1,500

2,000

2,500

China India Japan Korea Singapore 5 Asian

Countries

US

2007E Incremental annual demand by 2015E

(US$ bn)Healthcare Expenditure



6/23

MedicalDevice Growth Areas

Cardiovascular Devices

Orthopaedic Devices

In Vitro Diagnostic Devices

Electro medical Equipment

Wound care products

Home-healthcare products

High Technology Medical Devices

Contract Manufacturing Organizations

Contract Research Organizations

Most growth areas represent a Large Cross Section of theMalaysian Focus Areas



7/23

Contract manufacturer point of view

- Capabilities

- Markets

- Pre requisites



8/23

Capabilities

Precision Molding & ExtrusionAssembly & Packaging

Box building/ElectronicsCNC machining

R & D / Process EngineeringCapabilities

Medical Quality

Control / RegulatoryISO 3485/FDA

TOTAL MEDICALDEVICE

SOLUTIONS

Technologies



9/23

Markets

Regional strategy – questions toanswerMalaysia as home market

Focus markets Asean, China andIndia first?Other emerging markets such asSouth America

Developed markets Australia,Japan, EU, US



10/23

Major Foreign MedicalDevices Companies in Malaysia

4

New Local Companies and MNC’s are Considering

Malaysia as a Home Every Day – potential customers6/17/2012 All rights reserved 10


11/23

Example 2011EOrthopedic Market (USD)

UnitedStates

Europe

APAC

Americas MiddleEast

APAC:$3.4 Billion

Growing >5%Annually

Total = $43 Billion

Source: Viscogliosi Bros., LLC

APAC Ortho Market Outpacing ROW Driven by strong Population,Technology, Education and GDP Trends



12/23

Orthopedic DiseaseDemographic

Large Bone &Joint60%

Spine25%

SB&J10%

CMF5%

25 Yrs Ago Now 15 Yrs from Now

“Specialty MedicalProducts”

“Orthopedics” “MusculoskeletalDisease Specialization”

“Grandparents”Hip & Knee

“WeekendWarriors”

“Everyone” Movement = Living

LargeBone &Joint

Spine

SB&J - 5%

CMF - 5%

71%

19%

Large Bone &Joint85%

Spine9%

SB&J3%

CMF3%



13/23

Top 5Why Focus on Orthopedics?

1. #1 Most Common Causes of Physical Disability &Severe Long-term Pain in the are MusculoskeletalRelated Conditions

2. #1 Reason For Doctor Visits MusculoskeletalImpairment

3. #1 Chronic Condition Reported by the Elderly in theis Arthritis

4. Arthritis is a More Frequent Cause of ActivityLimitation Than Diabetes, Cancer or Heart Disease

5. Over ½ of the Population Over 65 Years of Age

Has a Chronic Musculoskeletal Condition

100% of Population Living an Average Life ExpectancyWill Suffer From an Orthopedic Injury or Musculoskeletal Disorder

Source: AGV (USA Data)



14/23

Ortho Cluster GmbH'Tuttlingen

Aesculap – The “AnchorTenant”

Spawned 200+ Suppliers / Competitors

Attracted MNC’s toEstablish Operations

◦ Spine Solutions, Inc◦ Small Bone Innovations, Inc◦ Paradigm Spine, LLC◦ Smith & Nephew◦ Syntes

Employment Growth 5x

German Avg Leader In World Wide

Manufacturing Standards

The Orthopaedic Industry of Tuttlingen Provides its Workers withQuality of Life far Exceeding EU and German Averages

6/17/2012 All rights reserved


15/23

(eg.) Ortho ClusterNorthern Corridor, MY

Eco-system Has Evolved Over 40 Years

◦ Experience in dealing with large and small aswell an foreign and local corporations.

◦ Broad range of engineering-based baselineskills.

◦ Businesses are geared towards internationallyrecognized standards.

◦ Creation of an ideal base for the design,

development and manufacturing of “intelligent” life science technologies.

Readily Available Skilled and Industry-Relevant Workforce

◦ Setting up of Centers of Excellence to facilitatecollaborative efforts

Excellent Market Outreach viaExperienced Logistics Network

◦ The logistics sector has been a key enabler oftrade for the NCER, along with an establishedcluster of support services.

The Orthopaedic Industry of Malaysia Would Enable “The Malaysia

Brand” to be Recognized on a Global Scale

Source: 2011 Northern Corridor Implementation Authority

6/17/2012 All rights reserved


16/23

Plastics Prototyping Clean room moulding ISO 7/8 Injection moulding Precision Extrusion

(materials e.g. PEEK, PE, PP, PVC, PA, TPE)

Precision LSR moulding Injection mould fabrication Blow film extrusion Thermoforming

Manufacturing Fully-automatic assembly Semi-automatic assembly Manual assembly (cell based) Clean room assembly

e.g. Capabilities – Single used medicaldevice players in Malasysia



17/23

Packaging Form-Fill-Seal Blister pack Pouch pack

Sterilization (acc. to ISO 11135/11137) EtO (Ethylene Oxide) Gamma Irradiation

R&D / Designing Rapid Prototyping Product Improvements New Product Development Autocad, Unigraphic, Solidworks & Cimatron

e.g. Capabilities – Single used medicaldevice players in Malasysia



18/23

PACKAGING

STERIL-IZATION

Opportunities in Malaysia

MANUFACTURING

QUALITY

CONTROL R & D

TRAINING

CLINICAL

TRIALS

IMPORT–

EXPORT

Malaysia Has a Myriad of Opportunities to Exploit inDevelopment of a Medical device outsourcing Cluster

BIOTECH



19/23

Pre requisites

Knowing the target market – MOSTIMPORTANT!Competitive products/components (Price,quality) – FOCUS!

ISO 13485 and CE mark, SFDA, TGA etc.Supply chainSales team to build distribution networkMarketing back up

Exhibitions and congressesFunding



20/23

Customer point of view

What has Malaysia to offer forpotential contract manufacturercustomers?



21/23

Advantages of Malaysia

Asian footprint (service business from India thruJapan)

Better IP protectionExtensive high-tech electronics and medical device

environmentLower labor cost (Europe & NA)Scalability (growth opportunity for customers) – local

market as test marketLocal funding available for R&D investment to

accelerate new product developmentEnglish!



22/23

Summary

Population Dynamics – ↑ PopulationAge 65+

Growing Current Demand & Long-TermExpansion in the region and globally

Fragmented markets Penetrate &Capture Market Share Majority of Market is Controlled by Small

and medium Players

First Mover Advantage Available toCapture Opportunity

Move Now as Market Forces Converge

Opportunity to benefit from outsourcing trend toAsia



23/23

Thank you


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Medical Device Outsourcing Opportunities in Malaysia

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