Malaysia-Made Medical Devices Poised For Double Digit Export Growth In 2015

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Malaysia is well positioned to be the hub of medical device manufacturing in ASEAN.

Employees at a healthcare unit production facility work to assemble medical X-ray devices. Photographer: Nelson Ching/Bloomberg

According to estimates by the Association of Malaysian Medical Industries (AMMI) Medical Device Industry Outlook Report 2015, Malaysia’s export of medical devices is expected to hit RM15.11 billion this year, a 12% growth from 2014.

In 2014 alone, the export of Malaysia’s medical devices soared as much as 13% to RM13.5 billion from RM11.9 billion the previous year. Of the total exports, more than 50% or RM6.95 billion were derived from members of AMMI. Collectively, the 41 AMMI members surveyed generated revenue of RM7.60 billion, hence the export value made up more than 90% of their total sales.

The main export markets are Asia Pacific, North America and Europe. In comparison to 2013’s export revenue of RM6.24 billion, AMMI members enjoyed double digit growth rate of 11% for 2014 export.

“In line with the Malaysian Investment Development Authority’s (MIDA) policy of promoting high value manufacturing, AMMI members achieved 52% of value-added ratio based on simple calculation of total sales versus cost of raw materials,” AMMI chairman Hitendra Joshi pointed out in a media statement. “This favorable high percentage of value-added and local content also facilitates more timely and convenient supply chain management while minimizing the impact of import and foreign exchange loss.”

In view of the gradual shift towards higher-value and higher-order medical devices, AMMI member companies spent a total of RM54.83 million on research & development (R&D) activities, according to Joshi.

The cumulative investments of the AMMI members amounted to RM4.27 billion as compared to RM3.43 billion in the preceding year. “An increase in investment of RM843 million in 2014 reflects AMMI members’ confidence in Malaysia,” enthused Joshi.

In tandem with this optimistic outlook, AMMI members are looking forward to add additional 2,000 headcounts in 2015 in addition to its current pool of 26,600 skilled workforce.

To date, Malaysia hosts more than 190 medical devices manufacturers with investments worth RM13.2 billion. Ansell, Ambu, Bard, B. Braun, Haemonetics and St. Jude Medical are among the foreign multinationals that have set their manufacturing base in the country.

They are joined by local companies in the likes of ABio Orthopaedics, Straits Orthopaedics, Dispo-Med, Vigilenz Medical Devices, Allen Healthcare, UWC Healthcare and Top Glove that have also successfully carved a name for themselves in the international arena.

Meanwhile, MIDA Chief Executive Officer Datuk Azman Mahmud revealed that robust growth was recorded in the first four months of 2015 with exports of medical devices totaling RM4.8 billion vis-à-vis RM4.2 billion of the corresponding period in 2014.

“I would, therefore, encourage our new as well as existing investors to use Malaysia as their outsourcing destination and medical device manufacturing hub to penetrate the ASEAN and beyond,” urged Azman.

German medical device manufacturer B. Braun, for example, has invested as much as RM2 billion in its Penang manufacturing facility, the Group’s largest production site worldwide. Products manufactured at this site have generated revenue in excess of RM1.5 billion with 95% of them exported to Europe, the United States and Asia.

“The spillover effects from this project is also being enjoyed by local business community,” explained Azman. “A total of 70 Malaysian vendors with total contribution of RM392 million support B. Braun’s operation locally by providing medical packaging, machinery and engineering support as well as logistics  services.”

In 2014, MIDA approved a total of 42 projects in the medical device industry with investments of RM2.2 billion and employment of 7,300 positions. About 54% or RM1.2 billion of these investments were from domestics sources while the balance came from foreign sources.

For the first quarter of 2015, the total investments approved in the medical device industry amountd to RM464.6 million with more than 82% of them being domestic investments. Total employment created was 1,633.

The medical device industry has been identified under the 11th Malaysia Plan as one of the high potential growth industries alongside with aerospace and three other catalytic subsectors, namely chemical, electrical & electronics (E&E) and machinery & equipment to re-energize the country’s manufacturing sector

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