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Growth opportunities for medical device outsourcing in Malaysia Dato’ Hans Brenner Executive Chairman and Board Member,
Growth opportunities for medical
device outsourcing in Malaysia
Dato’ Hans Brenner
Executive Chairman and Board Member, Small Bone
Innovations Asia Pacific Sdn Bhd
CEO of GMMI Sdn Bhd
6/17/2012
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Content
Content
  • - Market overview MEDTECH global, Asia

  • - Growth drivers and major growth

segments

  • - Trend of outsourcing to Asia

  • - Contract manufacturer point of view

  • - Customer point of view

Global vs. APAC: The New Frontier 6/17/2012 All rights reserved 3
Global vs. APAC: The New Frontier
6/17/2012
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Growth drivers for health care in Asia
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: reduce time to market; focus on core competencies;

access to low cost supply base; entry into new

markets; augment R&D; rationalize complex

operations. “Without doubt, outsourcing is here to stay. The value of the medical device outsourcing sector is around $17

billion globally “(Source CLINICA).

The Healthcare Industry Has Been Growing in Asia on Average by 14-16% Annually Because of Rising
The Healthcare Industry Has Been Growing in Asia on
Average by 14-16% Annually Because of Rising Domestic
Demand and Increased Outsourcing
Healthcare Expenditure
Medical outsourcing to Asia
Revenues
(US$ bn)
($bn)
4 4 2,500 3.8 3.8 2,165 3.3 3.3 2,000 3 3 2.8 2.8 1,500 2.4 2.4
4
4
2,500
3.8
3.8
2,165
3.3
3.3
2,000
3
3
2.8
2.8
1,500
2.4
2.4
1,000
2.0
2.0
690
693
2
2
587
1.7
1.7
483
327
500
144
85
49
60
61
58
5
5
0
1
1
China
India
Japan
Korea
Singapore
5 Asian
US
Countries
0
0
2007E
Incremental annual demand by 2015E
2006
2006
2007
2007
2008
2008
2009
2009
2010
2010
2011
2011
2006-2011 CAGR: 17.7%

(Source: Broker’s research report)

  • Rising domestic demand the pull factor

    • Young populations with increasing disposable income

    • Aging population requiring more expensive healthcare treatment

    • Increasing Contract Manufacturing, Contract Research and Medical Tourism the push factor

      • Outsourcing trend transfer of manufacturing and R&D from developed countries to Asia has only just begun

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Medical Device Growth Areas  Cardiovascular Devices  Orthopaedic Devices  In Vitro Diagnostic Devices 

Medical Device Growth Areas

Medical Device Growth Areas  Cardiovascular Devices  Orthopaedic Devices  In Vitro Diagnostic Devices 
  • 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 the Malaysian Focus Areas

Contract manufacturer point of view
Contract manufacturer point of view
  • - Capabilities

  • - Markets

  • - Pre requisites

Capabilities Precision Molding & Extrusion Assembly & Packaging Box building/Electronics CNC machining TOTAL MEDICAL DEVICE SOLUTIONS
Capabilities
Precision Molding & Extrusion
Assembly & Packaging
Box building/Electronics
CNC machining
TOTAL MEDICAL
DEVICE
SOLUTIONS
R & D / Process Engineering
Capabilities
Technologies
Medical Quality
Control / Regulatory
ISO 3485/FDA
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Markets
Markets

Regional strategy questions to answer

Malaysia as home market Focus markets Asean, China and India first?

Other emerging markets such as South America Developed markets Australia,

Japan, EU, US

Major Foreign Medical Devices Companies in Malaysia 4 New Local Companies and MNC’s are Considering Malaysia

Major Foreign Medical Devices Companies in Malaysia

Major Foreign Medical Devices Companies in Malaysia 4 New Local Companies and MNC’s are Considering Malaysia
4
4
Major Foreign Medical Devices Companies in Malaysia 4 New Local Companies and MNC’s are Considering Malaysia
Major Foreign Medical Devices Companies in Malaysia 4 New Local Companies and MNC’s are Considering Malaysia
Major Foreign Medical Devices Companies in Malaysia 4 New Local Companies and MNC’s are Considering Malaysia

New Local Companies and MNC’s are Considering Malaysia as a Home Every Day potential customers

Example 2011E
Example 2011E
Orthopedic Market (USD)
Orthopedic Market (USD)

APAC:

Americas

Middle

$3.4 Billion

East APAC United Europe States Total = $43 Billion
East
APAC
United
Europe
States
Total = $43 Billion

Growing >5% Annually

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

Source: Viscogliosi Bros., LLC

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Orthopedic Disease
Orthopedic Disease
Demographic
Demographic

Now

25 Yrs Ago

15 Yrs from Now

“Specialty Medical Products”

Orthopedics

CMF

SB&J 3% 3% Spine 9% Large Bone & Joint 85%
SB&J
3%
3%
Spine
9%
Large Bone &
Joint
85%

CMF - 5%

SB&J - 5% 19% Spine Large Bone & Joint 71%
SB&J - 5%
19%
Spine
Large
Bone &
Joint
71%
“Musculoskeletal Disease Specialization” CMF 5% SB&J 10% Spine Large Bone & 25% Joint 60%
“Musculoskeletal
Disease Specialization”
CMF
5%
SB&J
10%
Spine
Large Bone &
25%
Joint
60%

“Grandparents”

Hip & Knee

“Weekend

Warriors

“Everyone”

Movement = Living

Top 5 Why Focus on Orthopedics? #1 Most Common Causes of Physical Disability & Severe Long-term

Top 5 Why Focus on Orthopedics?

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

Top 5 Why Focus on Orthopedics? #1 Most Common Causes of Physical Disability & Severe Long-term

1.

2.

3.

4.

5.

#1 Reason For Doctor Visits Musculoskeletal Impairment

#1 Chronic Condition Reported by the Elderly in the is Arthritis

Arthritis is a More Frequent Cause of Activity Limitation Than Diabetes, Cancer or Heart Disease

Over ½ of the Population Over 65 Years of Age Has a Chronic Musculoskeletal Condition

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

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Source: AGV (USA Data)

Ortho Cluster GmbH' Tuttlingen  Aesculap – The “Anchor Tenant”  Spawned 200+ Suppliers / Competitors
Ortho Cluster GmbH'
Tuttlingen
Aesculap – The “Anchor
Tenant”
Spawned 200+ Suppliers
/ Competitors
Attracted MNC’s to
Establish 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 with
Quality of Life far Exceeding EU and German Averages
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(eg.) Ortho Cluster Northern Corridor, MY
(eg.) Ortho Cluster
Northern Corridor, MY
(eg.) Ortho Cluster Northern Corridor, MY  Eco-system Has Evolved Over 40 Years ◦ Experience in
  • Eco-system Has Evolved Over 40 Years

Experience in dealing with large and small as well an foreign and local corporations.

Broad range of engineering-based baseline skills.

Businesses are geared towards internationally recognized 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 facilitate collaborative efforts

  • Excellent Market Outreach via Experienced Logistics Network

The logistics sector has been a key enabler of trade for the NCER, along with an established cluster of support services.

The Orthopaedic Industry of Malaysia Would Enable “The Malaysia Brand” to be Recognized on a Global Scale

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Source: 2011 Northern Corridor Implementation Authority

e.g. Capabilities – Single used medical device players in Malasysia Plastics  Prototyping  Clean room
e.g. Capabilities – Single used medical
device players in Malasysia
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
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e.g. Capabilities – Single used medical device players in Malasysia Packaging  Form-Fill-Seal  Blister pack
e.g. Capabilities – Single used medical
device players in Malasysia
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
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Opportunities in Malaysia IMPORT PACKAGING – EXPORT QUALITY CONTROL R & D MANUFACTURING STERIL- BIO IZATION
Opportunities in Malaysia
IMPORT
PACKAGING
EXPORT
QUALITY
CONTROL
R & D
MANUFACTURING
STERIL-
BIO
IZATION
TRAINING
TECH
CLINICAL
TRIALS

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

Pre requisites
Pre requisites

Knowing the target market MOST IMPORTANT!

Competitive products/components (Price, quality) FOCUS! ISO 13485 and CE mark, SFDA, TGA etc.

Supply chain

Sales team to build distribution network

Marketing back up Exhibitions and congresses

Funding

Customer point of view
Customer point of view

What has Malaysia to offer for

potential contract manufacturer

customers?

Advantages of Malaysia Asian footprint (service business from India thru Japan) Better IP protection Extensive high-tech
Advantages of Malaysia
Asian footprint (service business from India thru
Japan)
Better IP protection
Extensive high-tech electronics and medical device
environment
Lower labor cost (Europe & NA)
Scalability (growth opportunity for customers) – local
market as test market
Local funding available for R&D investment to
accelerate new product development
English!
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Summary
Summary

Population Dynamics Population Age 65+

  • Growing Current Demand & Long-Term Expansion 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 to Capture Opportunity

  • Move Now as Market Forces Converge

Opportunity to benefit from outsourcing trend to Asia

Thank you