Selangor has become a role model
of modern Malaysia with advanced infrastructure, job opportunities and a high
standard of living. From this successful policy-background of urbanization and thereby
population growth, new key challenges arise and often require new technologies
from abroad. Healthcare, including in a wider sense related industries from
pharmaceuticals to medical devices, is probably the most formidable of those
challenges.
With 5.6 million citizens living directly in Selangor and being in
close proximity of the Federal Territories of Kuala Lumpur (1.7 million) and
Putrajaya (0.1 million), the healthcare sector in Selangor caters to the
highest population-density of Malaysia in the most populated state. In this
environment of dynamic growth, the society is aging fast and catching up with
the western world, which will result in about 10% of the population being 60
and above in 2020. Related healthcare challenges are surging. Based on an
improving standard of living the likeliness of lifestyle diseases such as morbidity,
diabetes, heart or liver diseases, has been rising ever since. Especially the
generation 60+ is prone to overweight according to a recent survey, which found
23.2% of people between 60 and 69 to suffer from this condition. Facing a population
growth of at least 1.6% in Selangor, more pharmaceuticals, medical devices and healthcare
services are needed. How does Malaysia cope with this demand? Most sophisticated
devices and supplies are imported from overseas until today, which offers a
huge potential for German manufacturers.
The Malaysian government started to promote Healthcare Tourism
already in 2005. The initiative targeted affluent foreigners with a more
affordable and in regional perspective a more advanced healthcare system. In
2009, this effort led to the foundation of the Malaysian Healthcare Travel
Council (MHTC) to professionalize promotion and marketing. The council
currently promotes 69 private panel hospitals, of which 18 are located in
Selangor and 22 in Kuala Lumpur. With some top medical device companies such as
Siemens Healthcare located in Malaysia, especially privately operated Malaysian
hospitals are well equipped for foreign patients. It is not surprising that
under these circumstances, the Klang Valley (Selangor and Kuala Lumpur) boasts
an occupancy rate of more than 70% in all hospitals. This is close to the
maximum, since at least 10% have to be reserved for emergencies.
Table 1:
Investment Projects – Healthcare in Selangor (2012)
Operator
|
Project
|
Beds
|
Operational
|
KPJ
Healthcare
|
KPJ Klang Specialist Hospital
|
200
|
2012
|
Sime Darby Healthcare
|
SDMC Ara Damansara
|
220
|
2012
|
Sime
Darby Healthcare
|
SDMC ParkCity
|
300
|
2013
|
Others
|
Columbia Asia Hospital Petaling Jaya
|
90+
|
2014
|
Sources: KPJ Healthcare, Sime Darby Healthcare, The Star 2011/2012
While medical doctors and experts in many fields are needed
urgently, private healthcare providers continue to expand with modern hospitals
trying to meet the rising demand. The largest private operator KPJ-Healthcare
Group, but also other players such as Pantai-Parkway or Sime Darby Healthcare
are entering the market with several modern and specialist hospitals in
Selangor. Table 1 is giving an idea of already announced or started projects. It
is also worth mentioning that the thriving private healthcare sector is
outmatched in numbers by a rather complacent public hospital sector. Public
healthcare is cheap in Malaysia, but does often not meet the highest
international standards. Modern equipment is rare and the replacement rate low..
Nevertheless, the sheer number of publicly operated hospitals is significant
enough to create market potentials for foreign and domestic suppliers.
Until today, the vast amount of medical equipment is still acquired
abroad or procured from multinational corporations invested in Malaysia. With a
growth rate of about 10%, the medical device sector has become an interesting
potential for German suppliers of advanced healthcare equipment. Many products
have still to be imported, but some homegrown Malaysian businesses are now
global market leaders. In Selangor especially the rubber glove industry is
acknowledged for its globally leading brands such as Top Glove or Hartalega
Holdings. Top Glove is said to maintain a global market share of 25% and plans to
expand this share to 30 % during the next years. Being the world’s largest rubber
glove manufacturer, the company plans to invest RM 3 billion in several
facilities worldwide, which includes plants in Selangor. Top Glove has shown
great interest in German process technology and machinery to reduce the
dependency on manpower. This trend extends into many sectors due to a recently
introduced minimum wage policy in Malaysia. Another trend is also playing into
the hands of machinery manufactuerers. Globally, rubber gloves are replaced by
more hygienic synthetic products. Consequently, Top Glove expands its
activities in the product line of synthetic rubber gloves, which will require
new equipment and machinery. The global trend to reduce natural rubber gloves
and replace them with synthetics starts to put pressure on many manufacturers.
Since Top Glove follows a quite aggressive expansion strategy,
Hartalega Holdings also announced a new and fully integrated high-tech factory,
which includes a 58-MW-Biomass power plant, research and recreation facilities
on 100 acres of land. The project is valued at RM 1.5 billion and will
certainly be located in Selangor. With an estimated workforce of 4.600
employees, the facility marks a significant step forward and will require
substantial automation technology to achieve an output of 24.5billion units per
annum. Besides, Hartalega has to respond to the same trend for synthetic gloves
as Top Glove.
Table 2:
Top Pharmaceutical Companies in Malaysia 2011/12
Position
|
Company
|
Market Share (%)
|
Growth (%)
|
1
|
Merck, Sharp & Dohme
|
8.5
|
14.0
|
2
|
Pfizer PH
|
7.7
|
5.1
|
3
|
Glaxosmithkline PH
|
6.6
|
-11.6
|
4
|
Sanofi-Aventis
|
5.2
|
8.4
|
5
|
Novartis
|
4.7
|
12.6
|
6
|
Roche Pharma
|
4.7
|
5.1
|
7
|
Astrazeneca
|
4.1
|
5.0
|
8
|
Pharmaniaga
|
3.1
|
2.8
|
9
|
Abbott Pharma
|
3.1
|
13.2
|
10
|
Janssen Cilag
|
2.4
|
1.7
|
11
|
Idaman Pharma
|
2.1
|
12.4
|
12
|
Boehringer Ingelheim
|
2.1
|
13.4
|
Source: IMS Health 2011
The rubber glove industry demonstrates the innovative energies and
talents in Selangor’s industries, since rubber has a long history in Malaysia.
Pharmaceuticals again is a rather new industry with less historical baggage,
but also rather in an early stage of development. In ther words, most
pharmaceuticals still have to be imported from the developed world, but domestic
manufacturers are catching up. The large generic drug market from India starts
to create spillover effects into Selangor, which might increase based on a
recent Investment and Trade agreement. In addition, international corporations such
as Bayer Schering PH, Boehringer Ingelheim and Merck Sharp & Dohme are
active in Malaysia, but often do not produce in the market. This is surprising
in so far, since Malaysia offers a far better legal framework and a stronger
protection of intellectual property. Accordingly, registering devices or
pharmaceuticals in Malaysia also opens doors within other members of the
Association of Southeast Asian Nations (ASEAN), which will become more
significant with further economic integration in the next few years. Back in
Malaysia local manufacturers Idaman Pharma and Pharmaniaga command a market
share of 2.1 % and 3.1% respectively, compared to 8.5% of market leader Merck
Sharp & Dohme. Both Malaysian players are located in the Klang Valley and
manufacture in Selangor. In addition, large multinationals such as
GlaxoSmithKline or the local Chemical Company of Malaysia established manufacturing
operations in the state. While northern Malaysia also hosts some pharmaceutical
companies, most sales and representative offices are located in Selangor’s
pulsating commercial hub of Petaling Jaya. Selangor can be considered to be the
heart of healthcare and especially the related manufacturing sector.
Looking at the trends of healthcare and related industries, Selangor
and its facilities provide an excellent springboard for further business activities
into Malaysia and ASEAN. With excellent logistics facilities, a Top 13 World
Container port and two airports, Selangor is a powerhouse of connectivity. As
soon as the ASEAN Economic Community is implemented, the region will become
even more attractive due to lower trade barriers and mutual recognition of
product registration in a market of more than 600 million people. In this
context, new projects have already been confirmed in the pharmaceuticals
sector, which will clearly increase the manufacturing capacities of the state
tapping future potentials. Furthermore, Chinese medical device manufacturers
have been evaluating Selangor as a potential investment destination in 2012. Indian
and Chinese corporations are set to be the next generation of industry movers
and shakers, but US, Japanese and European corporations still dominate the
market.
This article has been published in the AHK Malaysia Magazine " MGCC Perspectives" May/June 2013.