Medical Device Sourcing Trends in Asia

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By Ames Gross, President and Founder of Pacific Bridge Medical

This blog post was also published on MedTech Intelligence.

Ten years ago, sourcing medical devices or device components from Asia usually meant sourcing from China. At the time, Chinese medical device factories could only make Class I products and some Class II products. With the proper local quality controls, such as using your own independent quality assurance manager at the local Chinese factory, a foreign device company could manage the quality issues relatively well. Today, those same Chinese factories are making more sophisticated medical devices, including Class III devices, and the quality has improved significantly. For example, large Chinese companies such as Lepu and Microport are now making drug-eluting stents.

However, prices have simultaneously skyrocketed in China. Despite the recent devaluation of the Chinese yuan and dramatic slowdown in the Chinese economy, prices for medical devices and components still remain relatively high and do not seem to be decreasing. Thus, many Western device manufacturers have started looking for cheaper sources of labor in neighboring Asian countries. If you are looking to source low-tech devices today, some local factories in India, Vietnam, or even Bangladesh may work. In most cases, the product cost from these countries is much lower; however, the quality control needs to be improved dramatically. Yet despite the lower prices in these other Asian countries, there are other issues to keep in mind.

We have recently been helping a Western medical device manufacturer source a complex device component in India. Some of the Indian suppliers claimed that making molds is a costly affair, and they wanted our client to provide the technical support for mold making and help with the overall manufacturing process. In addition, we found that no single Indian manufacturer could produce all the components necessary to make our client’s complex component. Thus, the chosen Indian supplier will need to source some of the components from other suppliers, which makes our client nervous about quality control.

For another client, we are sourcing low-tech finished medical devices in Vietnam. While some Vietnamese device manufacturers can make the products that our client needs, many of these factories are not ISO certified and/or do not have CE mark. In addition, most of the Vietnamese device manufacturers are small and are slow to respond to our inquiries.

Rather than source medical devices in these lower cost markets, a number of foreign device companies have moved their production to cheaper locations in Asia. In 2014, Terumo BCT opened a 91,440 square meter facility near Ho Chi Minh City, Vietnam. This plant will produce whole blood bags and disposables for automated collections. Toshiba Medical built a manufacturing facility in Bayan Lepas, Malaysia that went fully operational in July. This new 8,852 square meter plant will produce diagnostic imaging systems for the Southeast Asian, Middle East, European, and U.S. markets.

In short, medical devices and components are still sourced in China, where the quality of products has been steadily improving. However, some low-tech devices and components can be sourced in the other Asian markets where the cost is lower. In these markets, close monitoring and management of your Asian suppliers is key to ensuring the quality of your products.