The Chance for European SMEs MedTech Companies in Asian Market
There are almost 25,000 medical technology companies in Europe. Most of them are based in Germany, followed by the UK, Italy, Switzerland, Spain and France. Small and medium-sized companies (SMEs*) make up almost 95% of the medical technology industry, the majority of which employ less than 50 people (small and micro-sized). The industry itself belongs to the most innovative industry and has the highest start-up rate among all industries.
Typically, SME’s concentrate their sales efforts at the beginning in the home market and neighbor countries. In Europe, an average of 10.4% of gross domestic product is spent on healthcare. Of this figure, around 7.5% is attributed to medical technologies. Given that spending behavior it comes with no surprise that 75% of MedTech export destinations are within Europe and America.
Chance Asia
The Asian health sector shows to be a severely underserved market at current stage. Public and private health care providers are aware of this lack and have pledged to expand and upgrade health services across the country with implications on the respective medical technology and equipment. An aging population, greater awareness of health care, bigger number of hospitals & health care clinics build the base for Asian countries to be the next most interesting emerging medical devices market in the world.
The size of the middle class is expanding rapidly in the Asian countries. Reports by Asian Development Bank revealed that this group is expected to grow from 24% of the total population in 2010 to 65% in 2030. Current healthcare spending’s average 4.1% of GDP, which is less than half of Europe and underlines the potential in the future.
A raft of health care Private Equity (PE) activities is demonstrating the increasing attractiveness of the SEA health care sector, with Singapore, Malaysia, Vietnam and Thailand top geographies for recent deals. Hospital-based businesses (general medical and surgical facilities) were the main focus of deal activity, accounting for 60 percent of transactions in past ten years.
An advantage for European MedTech companies to enter Asian market is that there is lack of domestic competition in the region. Healthcare systems of some of the Asian countries like Indonesia, Myanmar and Vietnam are relatively underdeveloped making significant room for MedTech companies to expand into these markets.
European products are very welcomed by doctors and consumers alike, as the brand image represents cutting edge technology on highest quality standards. It offers European MedTech companies the chance of additional growth potential for their business, whilst keeping the foodhold in the established markets.
About the Author:
Urs Eller, Co-Founder and President of ETAC Consulting. A company run by professional experts, providing management consulting and financial services. The company is based in Switzerland and with local presence in Singapore and Shanghai.
