“APAC is the big­gest driver of global growth in medtech”

BioSpectrum (Asia) - - Content - Aish­warya Venkatesh aish­warya.venkatesh@mmac­tiv.com

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.

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