This article was also published on Medical Device Daily
With more than 600 billion people and a combined GDP of $2.3 trillion, the ten nations that make up the Association of Southeast Asian Nations (ASEAN) are already experiencing dramatic economic growth. This is especially true of the medical device market, which in 2012 was worth more than $4 billion — about one half the size of China’s market. Roughly 65 percent of the $4 billion comes from Asia’s new tigers: Malaysia, Indonesia and Thailand.
As Malaysia’s population of 29 million gets richer, the country is witnessing a flourishing demand for better healthcare and more medical devices. Its medical device market of $1 billion is expected to grow about 15 percent per year for the next five years.
Malaysia’s medical device market is driven by imports, especially for high end products. But recently, the government has encouraged domestic manufacturers to move into the high end market and away from low end products. For the next five years, most demand will still be met by foreign medical device imports. After that, domestic producers may provide more competition for some foreign medical device manufacturers.
The Medical Device Act
Up until several years ago, medical devices did not require registration in Malaysia. However, device registration could still be done through a voluntary electronic registration system called MeDVER.
New legislation mandating the registration of all medical devices was passed by Malaysia’s Ministry of Health (MOH) in February 2012. The Medical Device Act 2012 requires all imported devices to be registered by July 2013. Medical devices are classified according to risk level, with the least risky devices falling into Class A, and the most risky devices falling into Class D.
Devices currently listed on MeDVER are not guaranteed approval under the new system. Medical device companies have two years to transition to the new system. Those that fail to do so by November 2014 will face penalties including fines and jail time.
The Medical Device Act 2012 also calls for the licensure of all medical device establishments, including manufacturers, importers, distributors, exporters, conformity assessment bodies and local authorized representatives. Medical device establishments that satisfy registration requirements must have good manufacturing and design standards as well as proper procedures for recalls. In addition, they should conform to safety and quality assessment standards.
The Medical Device Authority Act
Malaysia’s MOH has also created an organization to take charge of medical device and establishment registration — the Medical Device Authority. This new body was authorized under the Medical Device Authority Act in February 2012, and it will be responsible for enforcing new regulations and promoting the medical device industry in Malaysia.
With a population of almost 250 million, Indonesia has more people than any country except China, India and the United States. Indonesia’s medical device market was worth US $780 million in 2012, and is growing about 15 percent per year. Close to 95 percent of total value came through imports, and foreign manufacturers accounted for 90 percent of all medical device registrations in 2012.
Despite a large population with growing healthcare needs, the country has only six hospital beds and fewer than three physicians per 10,000 people. By comparison, the US has 34 beds and 27 physicians per 10,000 people.
But things may be changing. In late 2011, Indonesia’s MOH announced a plan — the Social Security Providers Law (BPJS) — to offer universal health care to all Indonesian citizens by 2014. Under the current system, just over 150 million Indonesians have health insurance. Contributions to the BPJS will come from workers, employees and the government. Wealthy citizens can buy additional private insurance, but they will still have to contribute to the new public insurance system.
To prepare for BPJS implementation, both the government and the private sector have been working to increase healthcare capacity in Indonesia. The MOH is spending $3.27 billion to improve its primary healthcare system in 2013. This expansion and other initiatives should double the value of Indonesia’s healthcare industry from $25 billion to an estimated $50 billion by 2020.
Development has already begun, primarily in the private sector. Private hospitals that used to cater to the urban rich are now being built in many of Indonesia’s poorer and rural districts. But to further grow the local healthcare industry, Indonesia will have to add thousands of new doctors and hospital beds. It will also have to spend millions on medical devices, hospital equipment and pharmaceuticals.
Online registration system
In order to ease the registration process, Indonesia has created a new electronic registration system for medical devices. Through a new e-registration portal, medical device companies can apply for product registration, production licenses and distribution licenses online.
The medical device market in Thailand had a value of nearly $900 million in 2012, and it is poised to expand at more than 8 percent per year through 2015. Thailand’s population of 69 million will — like Malaysia’s and Indonesia’s — continue to demand better healthcare goods and services as it becomes wealthier.
Meanwhile, the Thai government has continued to increase funding for its universal healthcare system. Per capita healthcare expenditure went from roughly $70 in 2009 to just over $90 in 2012. Thailand’s total healthcare expenditure was just under 5 percent of GDP in 2012.
Thailand’s most comprehensive legislation regulating medical devices was passed almost five years ago, in 2008. Medical Device Act B.E. 2551 supplemented and replaced parts of the old Medical Device Act, which has governed the safety, quality and efficacy of medical devices in Thailand since 1988. Thailand’s Medical Device Control Division, under the country’s Food and Drug Administration (FDA) is responsible for administering the Act.
Foreign medical device companies selling their products in Thailand must first register them according to a risk-based classification system. Unlike the US system, in Thailand Class I devices have the highest risk classification, followed by Class II (medium risk) and Class III (lowest risk).
Countries like Indonesia, Malaysia and Thailand are increasing their healthcare capacity and tightening medical device regulations as they continue to grow. Increasing healthcare capacity makes them attractive markets for international companies looking to sell their medical devices overseas. On the other hand, as the ASEAN member states develop, medical device manufacturers can expect further regulation.