Emerging markets for medical devices
Owen Mumford’s Jarl Severn and Lewis Owens, discuss their experience of investing in emerging markets as a medical device manufacturer. They look at working with new customers and partners, exceeding expectations and ultimately improving patients’ quality of life across the globe
The market for innovative medical devices is growing at an exponential rate, opening new opportunities for life-changing products. The emerging pharmaceutical markets of Asia are expected, with a few exceptions, to grow this year and beyond, most providing attractive platforms for investments in the local industries, according to a series of analyses.
Thailand looks to have one of the best outlooks due to its position as an entry point to the more remote countries of Southeast Asia. (1) And, in Malaysia, the industry has high growth potential, both in the domestic and export markets, in view of its present strength in the production of generic drugs. Over the last decade, the Malaysian pharmaceuticals market grew at between 8-10% annually. The market is based on a strong domestic generic sector and imports of branded and patented medicines.
Malaysian opportunity
Speaking more specifically, the Malaysian pharmaceutical industry has invested substantially to upgrade itself to meet the latest Good Manufacturing Practices (GMP) requirements, in accordance with the domestic as well as international Guidance.(2)
Malaysia is a member of Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co-operation Scheme (PIC/S), which indicates that the local industry has established high pharmaceutical manufacturing standards, becoming a core region for many pharmaceutical companies.(2)
Looking to provide additional resources to better serve its customers worldwide, Owen Mumford recently opened a new regional hub in Malaysia. Severn discusses the opportunities within the market further.
“The Asia Pacific region is home to 61% of the world’s population5, whilst in 2014, Asia Pacific countries accounted for less than 10% of Owen Mumford’s total turnover. As the region has seen economic growth, governments have increased their per capita investment in healthcare provision6, with APAC countries also reporting a high prevalence of diabetes Owen Mumford identified the need to make a difference within the region.7”
“Continued success by the market development team in winning business with customers in Australia, the Philippines, Malaysia, Singapore and Thailand further highlighted the need for a local regional facility to act as a hub to increase our speed and flexibility when supporting potential and existing business within the region.”
Severn continued, “Several locations in the region were considered before Malaysia was identified as the optimal location. Malaysia was selected as the preferred option due to its relatively stable political environment with a good economy and positive business friendly approach.”
“A local company, Owen Mumford Sdn Bhd was set up in 2014, and in early 2015 a location was identified for our regional hub in Nusajaya. The facility was completed at the end of May this year, and we are actively working to deliver the vision for Owen Mumford Malaysia: developing our presence in the region by growing our business out of this new regional hub.”
“Initially the Malaysia hub will bring in-house services currently outsourced in the region, allowing us to respond more quickly to customer demands, create bespoke product presentations for private label opportunities and shorten the response time for products to the existing customer base. The long-term vision is to use the Malaysia facility to complement the Owen Mumford global resource footprint and enhance our service levels worldwide.”
Looking ahead
Another market Owen Mumford has looked to expand into is Latin America. Latin America and Asia stand out as the principal growth regions, each having expanded an average of 14% per year between 2008 and 2012 and are expected to maintain an average pace of 12% per year through 2017. (3)
More specifically, local producers of generic drugs are becoming the driving force of the pharmaceutical market, manufacturing branded products as well as private labels for pharmacy chains. A study conducted by Nadro, a Mexican medical wholesaler, indicates that pharmacy chains and supermarkets went from controlling 69% of Mexican pharmaceutical sales in 2007 to 88% in 2014, reducing the participation of independent owners. (4) With the appointment of a new country manager in Mexico, Owen Mumford is keen to build and develop a strategy within Latin America.
Owens adds: “We have a well-defined strategy to focus on government tender business in order to be successful in this market. This includes partnering with pharmaceutical companies and with the right national / regional distributors to reach the private hospital sector. It’s also important to identify retailers’ unmet needs and offer product and services according to current and future market needs.”
Looking to Mexico
“Owen Mumford’s primary focus is the initial growth and establishment of the Mexican market, followed by a staged growth using the Mexico footprint as the gateway for the rest of the LatAm market. Mexico has a beneficial strategic geographical location, since it's situated between the Atlantic and the Pacific Oceans. This forms a connection with the North and South of America, this making Trade agreements and common language (Spanish) enhances product transfer across country borders,” says Owens.
“Mexico has an open trading relationship with the world and the most Free Trade arrangements, making doing business in and with Mexico highly beneficial. More importantly is Mexico’s economic growth and rising healthcare focus, as the burgeoning middle classes look for higher quality products and better services. As an employer, Mexico also has a hotbed of well-educated talent that is now on par with China in terms of capability, resourcefulness and value.
“Owen Mumford has invested significant time and resources understanding the key issues and drivers for the Mexico and wider LatAm markets. Mexico’s future is bright and we want to do our part to make Mexico a vibrant, colourful and productive leader in LatAm.”
Ultimately for pharmaceutical companies, Latin America is a strong bet for future growth. A few markets stand out within the region: Brazil will continue to be the primary driver of healthcare expenditure in the region, accounting for 43% of the region’s pharmaceutical sales between 2013-2017, followed by Mexico as the region’s second largest market with 17% of the region’s sales. Brazil is expected to become the world’s fifth largest pharmaceutical market by 2016. With Brazil and Mexico seen as the regions’ pillars, Columbia and Peru also show promise, with strong growth prospects.(3)
Severn adds: “We have a long history of innovation and our mission is to provide solutions that will exceed expectations, encourage compliance and improve quality of life. We export over 85% of our products and as such have many years’ experience in trading overseas. We are delivering against our strategy to grow our sales and presence in new market geographies whilst continuing to expand our market share in our established territories. With our investment in Mexico and Malaysia, this will further support future business generated from the Latin American and Asia Pacific regions. By entering new markets and introducing new products to our existing customers, I am confident our growing product portfolio and commitment to innovation will help us deliver on our long term growth plans.”
References:
1. http://www.fiercepharma.com/story/emerging-asian-pharma-markets-poised-show-solid-growth-2015-report/2015-01-28
2. http://www.matrade.gov.my/en/foriegn-buyers-section/69-industry-write-up--products/520-pharmaceutical
3. http://americasmi.com/en/expertise/articles-trends/page/latin-america-pharmaceutical-sales-to-grow-12-per-year-through-2017
4. http://americasmi.com/en_US/expertise/articles-trends/page/latin-american-pharmacies--right-for-the-picking
5. http://www.unescap.org/stat/data/syb2011/I-People/Population.asp
6. CIA Fact Book
7. IDF Diabetes Atlas 2014