“APAC is the biggest driver of global growth in medtech”
In the past few decades, medical advancements have helped extend life expectancies across the globe. Home to nearly half of the world’ population, Asia has huge and diverse medical needs. In its recent report, McKinsey, has predicted that the region will be the second largest medtech market by 2020, surpassing the European Union. This market is expected to reach a value of $190 billion over the next decade, which potentially makes up a third of global sales. Asia–Pacific is a complicated collection of individual markets with challenges and regulatory hurdles. However the scenario is changing fast, with the emergence of startup hubs, increased government support and venture capital investments. Global medical device production value will record strong growth in the coming years and analysts estimate that opportunities for maximum growth of medtech sector lie in Asia. Speaking to BioSpectrum Asia Magazine, Fredrik Nyberg, CEO, Asia Pacific Medical Technology Association (APACMed) and Simranjit Singh, Vice President, QuintilesIMS, MedTech Asia talk about the unique challenges and opportunities that APAC offers in the medtech space.
In your opinion, what are the biggest challenges medtech companies in the APAC region face today?
Singh: One of the biggest challenges is the region’s complex, fast-changing regulatory environment. Unlike the EU and US, Asia Pacific is a diverse “market of markets”. Each country has its own regulatory body and set of rules – which can change very quickly. Without in-depth countrylevel knowledge a company might miss an opportunity forfaster, cheaper approval or be stymied because they haven’t collected the rightdata.
Companies also must deal with APAC’s economic diversity. A device considered affordable in the EU and US would be a non-starter in India or China, where the annual health expenditure per capita is just USD$75 and USD$420, respectively, according to World Health Organization.
Nyberg: Asia Pacific’s multi-leveled complexity is a major challenge. The region’s medical needs are vast and spread across many countries, cultures, and development levels. The diversity in demographics, disease profiles, healthcare systems, and regulatory regimes presents a big challenge.
In addition, medtech companies in general have traditionally focused on the premium segment in Asia Pacific. They havenot yet penetrated middle or lower-income market segments as fully as many other industries have because multiple customer segments are difficult to serve efficiently. This is a challenge and an opportunity.
Other challenges include:
Limited financial resources and a frugal attitude toward health care spending.
Underdeveloped medical infrastructure and workforce, which inhibits the adoption and use of new technology.
Talent sourcing and retention, which remains a
concern for many senior executives across the region. Disparate pricing and reimbursement systems, which hinder access to medical technology in the region; this is likely to become more problematic as governments take larger roles in providing healthcare.
What is APACMed’s role, and how does the Association help companies overcome these challenges?
Nyberg: APACMed was established in late 2014 as a non-profit trade association. Our founding members are some of the world’s largest medical devices, equipment and in vitro diagnostics manufacturers.
Our mission is simple: to improve standards of care and shape the future of healthcare in Asia Pacific. It is a patient-centric mission that focuses on collaborating in new, innovative ways with a diverse range of stakeholders within a complex healthcare ecosystem, from regulators and policy makers to academics and payers; and, of course providers, clinicians, and patients.
Country-specific industry associations have existed in many part of the region for some time. But APACMed is the first medical technology association covering the entire region. We work proactively with bilateral, regional and local government bodies to shape policies, demonstrate the value of innovation and promote regulatory harmonization.
Please outline some key trends and factors driving Asia’s Medtech industry.
Singh: Demographics, economics and unmet health needs are powering medtech growth here. Asia Pacific’s population in 2050 is predicted to be 5.3 billion – almost 900 million more than now! Many Asian countries have rapidly aging populations, in particular Japan, South Korea and China, further driving demand. The UN projects that more than 40 percent of Japan and South Korea’s populations will be age 60+ in 2050. China’s share is projected to grow from 15 percent now to 36.5 percent in 2050. Those numbers are staggering in terms of demand for health care services. Asia Pacific’s well-documented overall economic growth, while uneven country to country, has given individuals and governments the ability to pay for better health care and expanded access. China and Indonesia, for example, have launched programs to provide basic health care for all their citizens. And finally, there are large unmet health needs in the region. Lifestyle diseases traditionally associated with the West, such as heart disease and diabetes, are on the rise here, as is cancer.
Nyberg: These megatrends are converging with science and technology. Almost daily we hear of breakthroughs in the use of sensors, robotics, artificial intelligence and other technologies. These offer vast potential for medical devices to ease suffering and save lives; companion diagnostics to realize the potential of personalized medicine; and connected health technologies to make health care more accessible and affordable. Realizing the potential of medtech in Asia will require innovative thinking on the part of all stakeholders. We will need to collaborate differently to solve our common health care challenges and demonstrate the value of innovative products.
What makes Asian nations an attractive destination to Medtech companies?
Nyberg: Asia Pacific is of major strategic significance to our member companies. It’s the biggest driver of global growth in medtech. A decade ago, the focus was almost exclusively on Japan and China. Today, the region as a whole contributes to 15 to 20 percent of global sales for many of our members and markets such as India, Indonesia and Vietnam are getting much greater attention. South
Asia, as well as Singapore, South Korea, and Taiwan, also are emerging as key medtech innovation hotspots. Emerging markets in Asia Pacific are source of growth and innovation for medtech companies they look to serve broader patient segments in emerging markets. It’s becoming clear that “de-featured” devices developed in the US or Europe are no longer adequate. Instead, products must be designed to be market-appropriate and developed locally.
Where do you see the Medtech industry heading five years from now?
Singh: I see a continuation of what we call the “eastern tilt” as multinationals continue to expand here, attracted by the relatively low cost of conducting trials, massive markets, and growing health care spending. Adding to that is the strong growth of Asia’s homegrown companies, many of which are looking to expand to the EU and US. I think you’ll see companies using partnering and outsourcing more to execute their growth strategies. Both allow companies to better manage risk and acquire expertise and infrastructure more efficiently vs. building or buying. Industry competition will continue to be keen in Asia; companies will struggle to attract and retain the talent needed to innovate and grow. That’s another reason to outsource. Globally and in Asia you’ll see device and diagnostics innovation driven by personalized medicine, genomics and “connected health” – the use of technology to connect disparate streams of health care data across patients, payers and providers.
Nyberg: The industry will be much bigger because of the factors Simran mentioned. Asia Pacific’s medtech market is growing at 8 percent CAGR through 2020,with some markets growing in double digits, according to a McKinsey report. In 2022 Asia Pac should be firmly established as the world’s second largest medtech market behind only the US.
In comparison to US and EU markets, how do you see Asia’s Medtech market growing?
Singh: In addition to the Asia Pacific megatrends mentioned earlier, we also see a large number of local companies in Asia with regional or global growth ambitions. These companies frequently receive government support as part of country-level economic development initiatives. Multinational companies don’t have that advantage. Those are some of the factors we see in differentiating Asia medtech growth vs. the US and EU. Nyberg: Medtech companies are looking to Asia Pacific for growth and innovation. The need to efficiently serve broader patient segments in the vast emerging markets of Southeast Asia, China and India will drive product innovation. The region’s economic diversity with some very rich countries and some very poor ones, will require that medtech companies tailor their products to meet local needs to a much greater degree than the EU and US.
Please elaborate on regulatory hurdles in Asia’s medtech space.
Nyberg: To ensure that patients have timely access to new, safe medical technology innovations, industry and regulators must work together. For example, in emerging markets where device regulations are new and evolving, the industry can play a key role in supporting regulatory capacity building and provide training on new technologies. For compliance reasons, regulators nowadays often prefer to deal with an industry body-rather than working on a one-on-one basis with individual companies. The regulatory environment in the region is complex, and there are several initiatives aimed at regulatory harmonization or convergence. An independent association such as APACMed is well placed to be the voice of the industry and lead a constructive dialogue with regulators on these topics. We are already working actively with organizations such as AHWP (Asian Harmonization Working Party), APEC-RHSC (APEC Regulatory Harmonization Steering Committee) and CIMDR (China International Medical Device Regulatory Forum).
Singh: It’s impossible to generalize because the hurdles are different country-by-country – some require less data, some more; some have “fast-track” approval processes for certain device types, others don’t. Overall, regulatory complexity is the biggest hurdle for companies to overcome. Nothing beats on-the-ground expertise in navigating this complexity. Regulations and requirements often are significantly more extensive than what’s is available in published resources. It’s often necessary to schedule inperson meetings with approval agencies to clarify submission requirements. Asia’s complexity is daunting. Each country has its own market potential, research obstacles, and regulatory bodies. Companies need to examine all of those factors in the context of their own device value proposition to determine which countries to begin with – and which ones to avoid.