Medical Device Manufacturing in Asia
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This white paper discusses trends in the medical device market and manufacturing in Asia. It notes that the medical device market is growing more slowly in Western countries but quickly in developing countries, especially Asia. Many large Western medical device companies are opening new manufacturing facilities and expanding existing ones in Asia to reduce costs and access growing Asian markets. The white paper provides an overview of the size and growth of major medical device markets globally and in Asia. It also summarizes manufacturing facilities and industry zones near Shanghai that are attractive for medical device production.
Medical Device Manufacturing in Asia
- 1. Medical Device Manufacturing in Asia Pacific Bridge Medical 2013 White Paper www.pacificbridgemedical.com
- 2. Medical Device Manufacturing in Asia Pacific Bridge Medical 2013 White Paper Copyright © 2013 Pacific Bridge Medical. All rights reserved. This content is protected by US and International copyright laws and may not be copied, reprinted, published, translated, resold, hosted, or otherwise distributed by any means without explicit permission. Disclaimer: the information contained in this report is the opinion of Pacific Bridge Medical, a subsidiary of Pacific Bridge, Inc. It is provided for general information purposes only, and does not constitute professional advice. We believe the contents to be true and accurate at the date of writing but can give no assurances or warranties regarding the accuracy, currency, or applicability of any of the contents in relation to specific situations and particular circumstances.
- 3. Global Medical Device Market Trends ❖ Growing slowly in the West – US/EU ❖ Western device companies facing increasing cost pressures ❖ More emphasis on cost-effective devices with fewer bells and whistles for developing countries ❖ Growing quickly in developing countries with high double digit growth ❖ BRIC really means China ❖ Developing world experiencing more Western diseases as they eat more McDonald’s and Kentucky Fried Chicken ❖ Cardiology, orthopedics and cancer growing ❖ Developing world needs more devices to manage more Western diseases Copyright © 2013 Pacific Bridge Medical | www.pacificbridgemedical.com 3
- 4. Size and Growth of Global Medical Device Markets Region Market Size Growth (since 2006) North America $105 billion Western Europe $65 billion 10% Japan $28 billion 12% Asia Pacific (excluding Japan) $23 billion 28% 13% Sources: Acmite Market Intelligence, and other PBM sources 2006 North America Western Europe Japan Rest of Asia - Pacific 2012 Source: Acmite Market Intelligence Copyright © 2013 Pacific Bridge Medical | www.pacificbridgemedical.com 4
- 5. Asian Medical Market Size & Growth Rate Higher than Global Growth Rate ❖ Cardiology: The growth in Asia is significantly above the global average (3%). The CAGR for cardiology surgery devices in Asia is predicted to be 15% from 2009-2016 ❖ Orthopedics: Asia will witness much faster growth than the rest of the world (6%). The CAGR for orthopedic devices in Asia is predicted to be 13.4% from 2009-2014. Copyright © 2013 Pacific Bridge Medical | www.pacificbridgemedical.com 5
- 6. Medical Device Manufacturing Moving to Asia (to reduce costs and get closer to growing markets) 2005 US EU Japan Other 2015 *Sources: Frost and Sullivan, Department of Commerce, and other PBM sources **Asia is 90% of Other Copyright © 2013 Pacific Bridge Medical | www.pacificbridgemedical.com 6
- 7. Purchasing Trends ❖ As more device manufacturers set up operations in Asia, more purchasing managers for medical device components and medical devices are being hired locally in Asia ❖ It is sometimes difficult for purchasing managers located in the West to buy components for factories in Asia ❖ Purchasing decisions for medical devices are now oftentimes made in Asia, not in the West Copyright © 2013 Pacific Bridge Medical | www.pacificbridgemedical.com 7
- 8. Other Global Medical Device Trends ❖ Significantly tougher FDA, encouraging medical device companies to launch overseas before the US ❖ Weaker dollar means easier to export medical devices ❖ More local medical device manufacturing in developing countries ❖ Local manufacturing companies in developing world can now make more sophisticated, higher quality medical devices than before Copyright © 2013 Pacific Bridge Medical | www.pacificbridgemedical.com 8
- 9. Asian Medical Device Market Trends ❖ Explosive demand for medical devices in the Asian markets attracts Western and local medical device companies ❖ Western medical device companies increasing sales to Asia with basic models and lower costs of their top of the line Western products (outsource) ❖ Many more local Asian medical device manufacturers now in business making more sophisticated products with components of better quality as demand increases in the region and globally Copyright © 2013 Pacific Bridge Medical | www.pacificbridgemedical.com 9
- 10. Main Asian Markets for Medical Device Manufacturing 1. Japan – largest device market in Asia ($28 billion); quality is key 2. China – fastest growing device market; quality rapidly growing 3. Korea – 3rd largest device market in Asia, increasing exports 4. S.E. Asia – growing demand for devices with an expanding middle class Each medical device market is different. Local staff is needed in each country for the project to be successful. Copyright © 2013 Pacific Bridge Medical | www.pacificbridgemedical.com 10
- 11. Asia Medical Device Manufacturing Trends ❖ Western medical device manufacturers are closing Western facilities (especially in the EU) and opening new facilities in Asia ♦ Smith and Nephew has been relocating device manufacturing processes from England to China ♦ Boston Scientific laid off 1,000 employees worldwide in 2010 but is expected to hire thousands of additional workers in China by 2016 Copyright © 2013 Pacific Bridge Medical | www.pacificbridgemedical.com 11
- 12. Western Medical Device Manufacturers Setting Up Facilities in Asia ❖ Medtronic ♦ Set up an R&D center in Shanghai in 2012 to move towards local product development and commercialization in China. The company plans to hire 1,000 additional employees over the next 5 years, many of whom will be placed in the R&D center. ♦ Set up Asia and international headquarters in Singapore in 2009 and invested $65 million on a manufacturing plant in the country in 2011. The new manufacturing facility was set up to fulfill strong future growth of cardiac devices in Asia. ♦ Launched a joint venture with Shandong Weigao Group Medical Polymer Company in China in 2007. Copyright © 2013 Pacific Bridge Medical | www.pacificbridgemedical.com 12
- 13. Western Medical Device Manufacturers Setting Up Facilities in Asia ❖ Boston Scientific to invest $150 million over the next 4 years to expand manufacturing, training and marketing facilities in China. In addition, the number of R&D and clinical study employees in China will increase from 200 to 1,200. Revenues are expected to reach $500 million by 2016. ❖ Biomet set up $15 million manufacturing facilities for orthopedic implants and medical devices in Changzhou Export Processing Zone in China ❖ Smith & Nephew opened a 10,000 sq. feet orthopedic manufacturing facility in Beijing, China and expanded existing facilities in Suzhou, China Copyright © 2013 Pacific Bridge Medical | www.pacificbridgemedical.com 13
- 14. Western medical Device Manufacturers Setting Up Facilities in Asia ❖ Flextronics/Avail opened a 600,000 sq. feet medical device manufacturing facility in Shenzhen, China and a 180,000 sq. feet medical device manufacturing facility in Malaysia to support rising demands from medical OEMs ❖ Accellent opened a 65,000 sq. feet medical device manufacturing facility in Penang, Malaysia Copyright © 2013 Pacific Bridge Medical | www.pacificbridgemedical.com 14
- 15. Chinese Drug Eluting Stent Market ❖ 5 years ago, foreign imported products accounted for 75% of the DES market – Medtronic, Abbott, Boston Scientific and JNJ. Local Chinese manufacturers accounted for 25% of the market ❖ 5 years later, 75% of the DES market are local Chinese DES manufacturing companies and now only 25% of the market are foreign made products Copyright © 2013 Pacific Bridge Medical | www.pacificbridgemedical.com 15
- 16. Sample Manufacturing Facilities near Shanghai Industry Zone Level Location From Industry DowntownShanghai Companies Caohejing Hi-Tech Park State Shanghai 20 km FMC Corporation, 86,114 Kerry Bio-Science sq feet Co.,Ltd., Unilever, GE, Philips Minhang Econ. & State Tech. Development Zone Shanghai 30 km Minhang Econ. & State Tech. Development Zone Shanghai 30 km Suzhou Industrial Park State Suzhou 70 km Suzhou Industrial Park State Suzhou 70 km Suzhou Industrial Park State Suzhou 70 km Linang Nicheng Industrial Park Kunshan new & hi-tech industrial development zone ? Shanghai 50 km Province Kunshan, 50 km Jiangsu province Spark Development Municipality Shanghai Zone Information Technology, New Materials, Biotechnology & Pharmaceuticals, Aeronautics, Automotive Accessories Diversity of manufacturing, Hi-Tech, Logistics Johnson & Johnson, CocaCola, Pepsi, Bristol-Myers Squibb Diversity of Johnson & manufacturing, Hi-Tech, Johnson, CocaLogistics Cola, Pepsi, Bristol-Myers Squibb IC, TFT-LCD, automotive Johnson & and aeronautical parts, Johnson, Pfizer, software, outsourcing Lilly, Nabisco, services, pharmaceutical Baxter, Honeywell, Emerson IC, TFT-LCD, automotive Johnson & and aeronautical parts, Johnson, Pfizer, software, outsourcing Lilly, Nabisco, services, pharmaceutical Baxter, Honeywell, Emerson IC, TFT-LCD, automotive Johnson & and aeronautical parts, Johnson, Pfizer, software, outsourcing Lilly , Nabisco, services, pharmaceutical Baxter, Honeywell, Emerson Heavy-duty equipment, Siemens, UPS, international logistics Philips, Volvo Precision GE, Apex Machinery,Solar Energy And Wind Energy, BIO Pharmaceutical Biomedicine, fine DSM Vitamins, chemical industry, Xiaoxi chemical fiber Biotechnology, Whyte Pioneer 50 km Copyright © 2013 Pacific Bridge Medical | Size 72,400 sq feet Rent ($/month) 55,385 34,142 106,146 sq feet 129,171 sq feet 33,230 129,171 sq feet 40,615 150,700 sq feet 34,462 100,000 21,400 sq feet 4 buildings, 25,520 81,163 sqf each 90,549 sq feet www.pacificbridgemedical.com 23,295 16
- 17. Map of Sample Manufacturing Facilities near Shanghai Copyright © 2013 Pacific Bridge Medical | www.pacificbridgemedical.com 17
- 18. Summary of Cultural Issues in Asia ❖ For each Asian country you must know the local traditions and unique cultural factors. ❖ Not all Asian countries share the same Asian attitudes, values and mindset. ❖ Try and get to know about these countries’ histories, culture, religion, the types of people there, etc. ❖ How do you write your emails to Asians? Copyright © 2013 Pacific Bridge Medical | www.pacificbridgemedical.com 18
- 19. Thank You! Pacific Bridge Medical Connect with us today. 7315 Wisconsin Avenue, Suite 609E Bethesda, MD 20814 www.pacificbridgemedical.com Click here to contact us about manufacturing strategies for your medical device in Asia. Copyright © 2013 Pacific Bridge Medical | www.pacificbridgemedical.com 19