Markets Show Growth Opportunities

Markets Show Growth Opportunities

Ames Gross

According to the World HealthOrganization, more than 17 million people die from cardiovascular disease each year. More than 60 percent of these deaths occur in Asia, but the disease also is prevalent in India, China and Southeast Asia. As incomes grow in most parts of the Asia-Pacific region, the Asian lifestyle is getting increasingly unhealthy. Many Asians are eating more Western fast foods, smoking more and exercising less, which is giving rise to increased cardiovascular disease.

Currently, increased focus on the prevention, diagnosis and treatment of cardiovascular disease in Asia is fueling high demand for cardiovascular medical devices. The market for cardiovascular medical devices in Asia is worth about $12 billion and is projected to grow 10-12 percent a year for the foreseeable future. Asia’s share of the cardiovascular device market comprises about 30 percent of the global market value. However, this percentage likely will grow to 35 percent throughout the next decade.

Cardiovascular devices in Asia generally are grouped as (1) cardiac rhythm management, or (2) cardiovascular monitoring and diagnostic equipment.

Cardiac rhythm management devices, which include pacemakers and implantable cardioverter defibrillators (ICDs), account for about a third of the total cardiovascular device market in Asia. A large percentage of high-tech cardiovascular devices in Asia are imported from the United States and Europe. Large U.S. cardiovascular device companies such as Medtronic Inc., Boston Scientific Corp. and St. Jude Medical have a strong presence in Asia for ICDs.

Demand for cardiovascular devices in Asia is growing strongly in largely populated countries such as China and India. With 1.3 billion people, China has a gradually aging population that is experiencing higher incidences of cardiac arrhythmias and heart failures.China has more than 20 million patients afflicted with coronary artery disease. A growing trend in China is the use of high-end interventional cardiovascular devices in lieu of complicated heart surgeries for serious cardiac ailments.This will lead to higher demand for interventional cardiology surgery equipment and devices such as coronary stents. International companies with strong brands dominate the market for sophisticated cardiovascular medical devices in China, with an 80 percent share.

Large foreign medical device companies such as St. Jude Medical have been in the Chinese market since the 1990s. Currently, there also is a growing number of research and development (R&D) and technology centers established by foreign companies. Recently, St. Jude inaugurated its Technology Center for Physicians in Beijing. This facility provides education and training to local Chinese physicians on the use of the company’s products in cardiology, cardiac surgery and arrhythmia management. There also are some local Chinese medical device companies that now are making Class III cardiology products. A few local companies have started their own R&D and have technological joint ventures with their Western counterparts.Notable local Chinese cardiovascular device companies are Shanghai-based MicroPort Scientific and Beijing-based Lepu Medical Technology.

The market for cardiovascular devices in India is smaller than that in China. This primarily is due to India’s lower healthcare standards and inadequate government facilities to treat cardiovascular diseases. While Indian government healthcare spending is low, cardiovascular device companies can look to the large private sector for growth. Driven by the private healthcare sector, the total market for medical devices in India is worth about $3

billion, and cardiovascular devices account for approximately one-third of this value.

Demand for cardiovascular devices in India’s private healthcare market is driven by recent advancements toward more sophisticated cardiovascular monitoring and treatment systems in private hospitals. There is good potential for sales of medical devices used in diagnosing and treating coronary artery disease, rheumatic heart disease and congenital heart disease among infants.

In a rapidly aging population such as Japan, cardiovascular disease is more prevalent among the elderly. However, there also is a growing number of younger smokers and diabetic patients in Japan who are afflicted with cardiovascular disease. High healthcare standards and the availability of government healthcare funding for retirees currently are driving the demand for interventional cardiology devices in the land of the rising sun. More elderly people in Japan also are opting for diagnostic angiography procedures, leading to growth of diagnostic catheters in the country.

Regulation of Cardiovascular Devices in Asia

The regulations governing cardiovascular devices in Asia differ from country to country. There also are different risk classifications for different types of cardiovascular devices, depending on the risk levels posed to patients. China, for example, has three risk classes for medical devices—Class I (low risk) to Class III (high risk). Class III medical devices are those which are “implanted into the human body, or used for life support or sustenance.” Examples of Class III cardiovascular devices in China are implantable cardiac pacemakers and devices for cardiovascular endoscopy.

Although Hong Kong now officially is part of China, its medical device regulations are different from China. Cardiovascular devices need to be registered with Hong Kong’s Department of Health through the Medical Device Control Office before they can be sold in the Hong Kong market. Unlike China, Hong Kong has four different risk classes: Class I (lowest risk) to Class IV (highest risk). Implantable cardiac pacemakers are classified under Class IV. Cardiovascular stents also are classified under Class IV if these devices involve “direct contact with the heart or central circulatory system” of the patient.

On the other hand, developing countries such as India are just beginning to implement more comprehensive guidelines for medical devices. To date, India has not developed specific definitions for various medical devices. However, a new medical device regulation bill is expected to be in place in India soon. Currently, cardiovascular devices such as cardiac stents and heart valves as well as cardiac patches and occluders used in interventional cardiology procedures are considered drugs under the Drugs and Cosmetics Act of India.

Asia’s market for cardiovascular devices is growing quickly. Many Asian governments increasingly are adopting national healthcare programs targeted at improving cardiovascular health. Seeing this market potential, some international cardiovascular companies also have established local manufacturing facilities in Asia for cost effectiveness. There also are certain Asian governments that provide foreign companies with investment incentives and tax breaks in high-tech medical sectors.

A good example is Singapore, where the small city-state’s well-equipped infrastructure and skilled labor have encouraged foreign investments in high-end cardiology equipment manufacturing. Recently, Medtronic established a new manufacturing facility in Singapore for cardiac devices. Medtronic’s Singapore facility started operations in January and also serves as the Asia headquarters and regional distribution hub for its Cardiac Rhythm Diseases Management business. Elsewhere, medical device companies such as Sandvik AB of Sweden have established device manufacturing facilities in India to take advantage of low production costs. Some of the cardiovasculardevices manufactured by Sandvik in India include pacemaker lead wires.

For companies looking for international growth, understanding the various nuances of the Asian cardiovascular market can lead to a plethora of potentially lucrative sales and manufacturing opportunities.

Ames Gross is president and founder of Pacific Bridge Medical, a Bethesda, Md.-based

consultant firm that helps companies doing business in the Asia market. A recognized

national and international leader in the Asian medical markets, he founded Pacific Bridge Medical in 1988. PBM has helped hundreds of medical companies with business development and regulatory issues in Asia.