Espicom View: The Malaysian branch of St Jude Medical expects to double its revenues for 2013, and this is line with the Asia Pacific being one of its fastest growing regional markets. While neighbouring Singapore has traditionally attracted foreign direct investments for multinational manufacturing activities in the South East Asian region, the improving medical device regulatory climate, business friendly policies, stable political climate and growing economy are some of the factors that has seen a growing number of multinationals setting up their regional manufacturing operations in Malaysia.
In September 2013, the Malaysian subsidiary of St Jude Medical said it expects to double its revenue for the year to MYR700mn (US$237.3mn), compared with the MYR350mn (US$113.3mn) achieved in 2012. Managing director Torbjorn Andersson said that the Implantable Cardioverter Defibrillators (ICDs), which had been produced at its Bayan Lepas facility for over a year, would contribute substantially to this year's projected revenue. Besides ICDs, the company also manufactures pacemakers and leads. "Next year there will be a couple more new cardiovascular medical device products being manufactured in Penang, which is in line with our expansion plans," said Andersson in a local news report.
The company's 300,000 sq. ft. production facility can be expanded by another 700,000 sq. ft. There are currently 500 employees at the plant and Andersson said this could rise with expansion. In terms of growth, the Asia Pacific is still one of the fastest growing regions for the company, driven by demand from China. The USA is still its largest market, followed by Europe and Japan.
Increasingly Important Location For Multinationals In Asia Pacific Region
Neighbouring Singapore has been a strong hub for multinational manufacturers in the South East Asian region for a while now, but in recent years Malaysia has begun to attract more multinationals using it as a manufacturing base meant for export to the Asia Pacific region and beyond and this is due to the stable political climate, business friendly government policies, growing local & regional customer base and a new, developing regulatory framework for medical devices.
Besides St Jude Medical, other major medical device companies that have set up manufacturing plants in Malaysia include:
|Source: BMI Espicom|
|Accelent Inc||Pacemakers, orthopaedics and endoscopy products|
|Ambu||Artificial respiration products and ECG electrodes|
|Ansell Medical||Surgical & examination gloves|
|B Braun||Needles, catheters, surgical instruments, sutures and IV solutions & sets|
|Bard||Latex foley catheters and urological procedural kits|
|Cardinal Health||Surgical & examination gloves|
|Johnson & Johnson||Medical disposables|
|Haemonetics||Blood management products|
|LMA International||Laryngeal mask airway respiratory products|
|Symmetry Medical||Orthopaedic implants|
|Teleflex||Urology, anaesthetic and respiratory care products|
Exports Of Medical Devices Rise By 18.6% to June 2013
Increased manufacturing activity, both by local manufacturers and multinationals, has seen exports grow by 18.6% to reach US$1,583.3mn in the year ending in June 2013. All categories posted positive growth except for other medical devices, which fell by 6.0% during the period in question. The strong gainers were patient aids (94.7%), orthopaedics & prosthetics (37.0%) and diagnostic imaging (33.8%).
In terms of latest full year data, in 2012, Malaysia exported medical devices worth US$1,433.6mn, representing an increase of 9.9% over the previous year. Exports experienced strong growth in 2010 and 2011 after falling in 2009. Overall, the 2007-2012 CAGR was 14.2%. The leading product area in 2012 was consumables, with exports valued at US$734.5mn, representing an increase of 5.0% over 2011 and equal to more than half of the total. The value of exports is considerably higher than the value of imports, with a balance of trade surplus of US$320.0mn in 2012.
|Strong Export Growth Ahead|
|Medical Device Exports, 2002-2012 (Millions)|
Improving Medical Device Regulatory Framework
The improving medical device regulatory framework is Malaysia has been well received by the leading manufacturers - both local and multinationals, since its inception. The country's first set of regulations, the Medical Devices Act 2012 (Act 737), was approved in March 2012. Effective November 2012, it became mandatory for all medical devices to be registered with the MDA). The regulations are aligned with the guidelines drawn up by the ASEAN Harmonisation Working Party (AHWP) and the Global Harmonisation Task Force (GHTF).
To further enforce its implementation, on 1st July 2013, the Ministry of Health announced a deadline of two years for all medical device companies to become registered with the Medical Device Authority (MDA). As part of the Medical Device Act 2012, all companies dealing with medical device in the local market needed to register online via the Medical Device Centralised Online Application System (MedCast).
"One of the issues raised in the past is that medical devices were not regulated and we don't want to be a dumping ground, where medical devices are being used but not being monitored according to the standard or benchmark of the devices," said Datuk Dr Noor Hisham Abdullah, chairman of the Medical Device Authority (MDA) during the launch of MedCast in July. The MDA is responsible for the enforcement of regulations relating to medical devices.