The medical device industry in Malaysia is still in the initial stages of development. Although a baseline growth rate of eight percent is expected in the future, the fact that there are 180 companies and that exports are largely composed of rubber-based consumables (for example catheters, examination gloves) make a growth strategy for non-consumables challenging.
We believe however that Malaysia's contract manufacturing heritage and experience with rubber-based products as well as the more sophisticated electrical and electronic industry creates a unique niche opportunity for the country that should be explored further. An example of the products that could be further developed includes orthopaedic replacement devices, in-vitro diagnostic kits and dental surgical products.
Med Tech will be closely tied to the pharmaceuticals EPPs (generics and clinical research) and should beneft from the growth and innovation in this industry.
One example of a med tech opportunity is the manufacturing of in-vitro diagnostic kits and equipment. We estimate the global IVD market to be RM94 billion and believe that with our high prevalence of tropical diseases such as malaria as well as tuberculosis and H1N1, Malaysia is well positioned to win in this sub- segment. We already have a small base of high-quality research and production in this sub-segment and with the right incentives (soft loans, MNC alliances, R&D investment), it could scale rapidly and attract global companies to manufacture equipment in Malaysia. Developing IVD manufacturing could potentially lead to a RM72 million GNI impact and creation of 1,200 jobs.
To create a truly world-class med tech industry it is frst important to attract anchor MNCs that will work with local companies to manufacture medical devices that can be consumed in the local market and exported abroad. Second, SME grants and enforcement of international certifcation such as ISO 13485 can enable small local companies in niche medical device sub-sectors to grow into regional and global companies. Lastly, it is important that med tech manufacturing become a priority, both for the domestic healthcare agenda as well for bilateral trade agreements.
An estimated RM518 million for the establishment of new manufacturing facilities for contract manufacturing will be required. This funding is expected to come from the private sector, mostly from foreign direct investments.
The number of Malaysians aged 60 years and older is projected to increase to 3.4 million in the year 2020 (9.9 percent of total population). Few elderly people can escape the accumulation of chronic pathologies due to physiological changes such as ageing kidneys, memory defcit, altered dietary habits and dependence on multiple drugs. This growing segment of consumers is likely to create a need for outpatient care such as seniors living facilities. Seniors living care resides in the middle of the outpatient care continuum between post operative check-ins on one end and acute care nursing homes on the other.
The long-term goal is to create a number of centres offering assistance to people who need help with activities of daily living, but wish to live as independently as possible, for as long as possible. Unlike nursing homes which focus on fnal stages of care, seniors living promotes active ageing and productive living.
Key services offered under the umbrella of seniors living would be integrated personal assistance, domiciliary, personal and medical care. To address the physical location needs, existing infrastructure would be refurbished in order to develop barrier-free housing, ftted with disabled-friendly features. Other facilities would include wellness, primary and secondary healthcare options.
Though still in the early stages of development we expect the seniors living to deliver 11,400 new jobs and RM1.0 billion in incremental GNI by 2020. The target market is primarily local Malaysians and potentially a small portion of the Malaysia My 2nd Home applicants who come for healthcare purposes.
For Seniors Living to be successful Malaysians should be able to tap into their Employee Provident Fund or other retirement savings to fund a seniors living lease; or that insurance reform occurs to permit coverage of seniors living support. The second initiative is to get support from property developers to view a build- operate-transfer model as an attractive value proposition instead of the current build-and-sell model. We propose that property developers not only build, but work through third parties to manage the properties. Finally, there is a need to manage the cultural shift that will be required for Malaysians and foreigners to outsource care for the elderly to third parties.
Examples in Hong Kong and India validate our hypothesis. As our society develops and ages, there will be a growing demand for seniors living, current efforts in the Iskandar region and moves by private property developers on a small scale show the beginnings of organic growth of such a sub-sector. However we also believe that seniors living represent a much longer-term investment opportunity.
An estimated RM4.8 billion will be required over the period of 2010 to 2020 to develop elderly-friendly property developments that will offer a range of medical and personal services for assisted living.