Medical Devices Market Overview and Degree 36 First Impression
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The document provides an overview of Vietnam's healthcare infrastructure, medical device market, and Decree 36 which regulates medical devices. It notes that Vietnam has a growing medical device market projected to reach $977.8 million by 2019, with consumables and diagnostic imaging making up nearly half. Most devices are imported, with over 95% coming from overseas. It also summarizes the key points of Decree 36 which establishes a new regulatory framework for medical device management in Vietnam and certification requirements that will impact market entry.
Medical Devices Market Overview and Degree 36 First Impression
- 1. Build · Compete · Grow MEDICAL DEVICES MARKET OVERVIEW AND DECREE 36 FIRST IMPRESSION June 2017
- 2. Build · Compete · Grow Contents Contents: 1. Healthcare infrastructure 2. Medical device market 3. Decree 36 and its influences 4. Market entry
- 3. Build · Compete · Grow3 [email protected] € 200 Billion in GDP 10'11'12'13'14'15' 20' € 2,100 in GDP per capita ASEAN’s 6th largest € 94+ Million people 14th largest population Golden Demographic 70% of population aged in working age category (15-64) Male Female € 10.6 Billion EUR of GDP spent on healthcare 25 Hospital beds/ 10,000 habitants6.1% 33.6% Urban population in Vietnam Hanoi HCM
- 4. Build · Compete · Grow Vietnam’s Healthcare Infrastructure
- 5. Build · Compete · Grow5 [email protected] Health Establishments by Type The level of facility investment, professional capacity, and complexity of treatment are the differentiating factors for each healthcare facilities Source: Statistical MoH report Small Private Polyclinics (SPriPC) Medium Private Polyclinics (MPriPC) Private Specialized Clinics (PriSC) District Polyhospitals (DPH) Health Stations (HS) Private Polyhospitals (PriPH) Specialized Hospitals (SH) Provincial Polyhospitals (ProPH) Private Specialized Hospitals (PriSH) Specific health problems. Public facility More popular in big cities. SPH is operated by a number of professionals including doctors and specialists assigned by MoH, with very high level of investment in modern technologies Specific health problems. Private facility Privately owned by one or a group of doctors or a medical group/corporation. SPH has specialized equipment that can cure serious cases and perform complex surgeries Various health problems. Private facility Privately owned by one or a group of doctors or a medical group/corporation. Some PHs are perceived as better than public hospitals but more expensive and mostly not public insurance applicable Various health problems. Public facility Present in every provincial unit with large number of beds and constructed in populous area. PH welcomes hundred patient visits everyday, providing a broad range of treatment Various health problems. Public facility Well-equipped state-owned facility with moderate to high capacity and public insurance applicability that provides healthcare service to a large portion of community within an area The presence is deemed important as it helps to ease overcrowding of central / provincial hospitals Specific health problems. Private facility Facility that is specialized in one field (otorhinolaryngology, obstetric, cardiology, etc) with modern equipment (ultrasound device, X-ray device, etc) to perform complex diagnosis and treatment Private facility. Able to treat in-patients MPP is moderately invested with equipment to perform higher diagnosis, treatment and minor surgeries A few health problems. Private facility Simply equipped with 1 or 2 doctors in charge of treating patients with minor health problems such as flu, coughing, stomachache, etc. SPP has flexible working hours and is convenient for quick health check-up A few minor health problems. Public facility State-owned and present in every commune or ward. Physicians take main charge of diagnosing and prescribing simple health problems Public sector Private sector ~65 facilities ~51 ~119 ~629 ~492 ~11,743 ~10,000 ~10,000 ~10,000 ~43,099 facilities
- 6. Build · Compete · Grow6 [email protected] 2,787 2,970 3,280 859 1,031 1,858 686 687 531 379 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Red River Delta Northern midlands and mountain areas Northern Central area and Central coastal area Central Highlands South East Mekong River Delta Hanoi Thanh Hoa Nghe An Ho Chi Minh City Region Key cities No.ofhealthestablishments Number of health establishments by regions and by key cities in 2014 (*) • Hanoi, the capital, is expected to receive the largest share of the central funding for purchasing new and advanced medical devices, given its preferential budget allocation from the MoH. 71% of healthcare establishments are situated in Northern Vietnam (*) excluding private health establishments Source: GSO Healthcare Facilities by Regions and Cities
- 7. Build · Compete · Grow7 [email protected] Inadequate number of public hospital to serve rising demand in healthcare needs, coupled with government encouragement are driving the growth of private hospital • Public and Private hospitals are not sharing the patients burden: • 40% capacities/facilities are under-utilized • Public facilities are under constant overloaded • Public hospitals’ overcapacity due to: • Affordable prices • Accessibility • Lack of well-trained and experienced staff with the private sector Source: MoH Report (2011-2015), GSO and Ipsos Analysis 7 Private hospitals 7% Public hospitals 93% Patient Visits by Public vs. Private Hospitals 2015 Total patients visit = over 146 Mn 91% 88% 88% 88% 86% 9% 12% 12% 13% 14% Private Public Vietnam Hospital Classification & Growth, 2011 – 2015 1,224 1,232 CAGR 13.6% 1,142 1,197 0.7% 1,241 Hospital Infrastructure vs. Demand
- 8. Build · Compete · Grow Vietnam’s Medical Device Market
- 9. Build · Compete · Grow9 [email protected] IPS OS KN OW LED GE AN D EXP ERTI SE Source: BMI [email protected] 459.0 668.7 698.0 747.1 815.8 892.3 977.8 0 200 400 600 800 1,000 1,200 2010 2014 2015e 2016f 2017f 2018f 2019f EURmn Medical equipment market value, 2010-19f 85.1 43.5 14.2 7.2 2.6 2.1 0 20 40 60 80 100 Singapore Malaysia Thailand Vietnam Philippines Indonesia EUR Medical equipment market value per capita, 2015 Vietnam’s medical devices market has observed a stable growth to estimated €977.8 million in 2019 with CAGR projected around 7%, which is considered one of the fastest growing markets in Asia Medical Equipment Market Value, 2010 – 2019
- 10. Build · Compete · Grow10 [email protected] Vietnam’s Medical Equipment by Segments, 2014 – 2019 • Consumables and diagnostic imaging segments are accounted for near half of the market. • Dominated by imported goods with nearly 95% of the medical devices are from overseas, especially in high- end segments such as diagnostic imaging products. Local manufacturers can only meet the market demand for basic equipment such as hospital beds, rubber health products and disposable supplies. 23% 22% 5%5% 15% 30% 2014 25% 23% 5% 6% 15% 26% 2019 Consumables Diagnostic Imaging Dental Products Orthopaedics & Prosthetics Patient Aids Other Medical Devices €668.7mn €977.8mn Medical equipment market structure, 2014-19f Source: BMI Vietnam’s medical equipment sector is expected to record a 46% increase to reach nearly €1 bn in 2019 with nearly 95% of devices are imported
- 11. Build · Compete · Grow11 [email protected] Medical equipment imports reached €631 million in 2014 with Diagnostic Imaging and Consumables segments account for over 45% of the total export value. Singapore and Japan were the top two suppliers of medical equipment to Vietnam in 2014 14% 27% 5%5%13% 36% 2010 23% 23% 5%5% 14% 30% 2014 Consumables Diagnostic Imaging Dental Products Orthopaedics & Prosthetics Patient Aids Other Medical Devices €437.8mn €631.3mn Medical equipment’s import structure, 2010-2014 Source: BMI 24.0% 19.2% 12.8% 10.8% 10.6% 8.9% 7.0% 3.1% 2.8% 2.8% 2.5% 2.5% 17.0% 0% 5% 10% 15% 20% 25% 30% Vietnam’s medical equipment import by main countries, 2015 Total import value = €631.3mn Vietnam’s Medical Equipment Import Structure (2014 – 2019)
- 12. Build · Compete · Grow12 [email protected] Experiment with the latest and most innovative technologies and systems. These end-users can be considered potential partners for EU investors to strategically market their products in Vietnam. Major buyers but tend to purchase equipment from their country of origin. Government- funded hospitals, clinics and healthcare centres Foreign- owned and joint-venture hospitals, clinics, and healthcare centres Local private hospitals Medical education and research institutions Purchase the largest quantity of medical equipment (70% of the market). Funded by the Government, this group of buyers often look for advanced and brand name medical devices made in G-8 countries Expected to show the strongest growth as a result of the development of private healthcare in Vietnam in order to compete with public and foreign-owned healthcare centres. Profile of End Consumers Government-funded healthcare centers (hospitals, clinics and others) are considered the biggest purchaser of medical equipment
- 13. Build · Compete · Grow Decree 36 and Its Influences
- 14. Build · Compete · Grow14 [email protected] Decree 36: New Regulation For Medical Device Management 01/07/2016 01/01/2017 Effective date of Decree 36 •Complete announcement to eligible organizations to trade medical devices •Receive the declarations of applicable standards for type A medical devices 01/07/2017 •Complete the declaration of eligibility to produce medical devices •Complete submission of application for declaration of eligibility to provide technical advisory services and to conduct the inspection/calibration •Effective date of receipt notes for applicable standards of type A medical devices •Receive application for registration of free sale of Type B, C or D medical devices 01/01/2018 • Effective date of registration number of free sale of type B, C and D medical devices • Medical device manufacturers complete application of the ISO 9001 quality control system 01/01/2020 • Medical device manufacturers complete application of the ISO 13485 quality control system Timeline: Management System Pre Decree 36 Post Decree 36 Medical devices market was managed under two separate legislation systems: Local products: are required to be registered for Marketing Authorization (MA) licenses for circulation in Vietnam Foreign products: are required to obtain import licenses for circulation in Vietnam. In fact, only 49 out of 10,500 medical devices were required to get import licenses, whereas the remaining products can be imported under the general consumer goods and other categories. No clear responsibilities of stakeholders, especially ones of suppliers. Medical devices market was managed under an uniform legislation systems: Both local and foreign products are required to registered for MA licenses to be circulated in Vietnam Rights and responsibilities of stakeholders are regulated clearly. Suppliers must provide their products’ information and take responsibilities for whole products’ life cycle from supplying to after sale services. Decree 36 on medical devices management will bring the medical devices market under an uniform legislation system and enhance the market transparency with existence of qualified suppliers and products Source: Ipsos’ Research and Analysis, MoH
- 15. Build · Compete · Grow15 [email protected] Impact LevelStakeholders Impacts Suppliers in High-end segment Low • With valid MA licenses, importation activities will be simplified without requirement of import license or import quota for each shipment • Exemption from certain certificates (for example, certificates of quality control standards, summary of clinically testing data and others) for companies having the certificate for free sale (CFS) from countries or organizations such as: EU, Japan, Canada, TGA of Australia, FDA of USA, which will simplify the registration procedure and reduce the workload for the suppliers. • More administrative tasks for suppliers to conform with the new regulations, especially the MA license requirement. Suppliers in Mid-end and Low- end segments High • With the valid MA licenses, importation activities will be simplified without requirement of import license or import quota for each shipment. • Qualified suppliers can be benefited from tighter control and governance when disqualified suppliers are eliminated leaving room for growth for this current oversupplied market segment. • More administrative tasks for suppliers to conform with the new regulations, especially the MA license requirement. • Existing companies without the CFS who provide unqualified or substandard products will face a new barrier with new certificate requirements (e.g. certificates of quality control standards, summary of clinically testing data, importation, manufacturing, circulation and trading activities). • New and existing unqualified product suppliers will also face difficulties with additional human resources and infrastructure (storage facilities, logistic requirement, employee’s technical qualification in medical device technology) to operate. Positive impact Negative impact Source: Ipsos’ Research and Analysis via secondary research, primary research Decree 36: Influences to Stakeholders
- 16. Build · Compete · Grow16 [email protected] Impact LevelStakeholders Impacts Healthcare practitioners Low • Removal of substandard products and unqualified suppliers will give healthcare practitioners more chances to procure high quality products from qualified suppliers • They have more rights to request for suppliers’ responsibilities for their products’ life cycle, from supply to after-sale services • The procurement bidding results must be published online as part of the new transparency initiative; hence, healthcare practitioners will be able to select the best fit suppliers • The more stringent control of unqualified/substandard medical devices will lead to fewer choices of cheaper products which will put new strain to the current financial budget for medical devices Positive impact Negative impact • Removal of substandard products and unqualified suppliers will give patients more chances to use high quality products from qualified suppliers • Patients’ out of pocket payment may increase to cover the rise in payment for higher quality medical devices. • Challenges in finding additional sources of finance to cover the rise in payment for medical devices as well as sufficient resources to implement and maintain the new Decree 36 effectively and accurately. • More workload, administrative and management jobs as well as challenges in the implementation process to ensure the timeline, effectiveness and compliances of stakeholders. • Top-down approach with clear responsibility and governance from the government and all relevant authorities to control products quality throughout their lifecycle and ensure market transparency Patients Low GO and Other Organizations High Source: Ipsos’ Research and Analysis via secondary research, primary research Decree 36: Influences to Stakeholders
- 17. Build · Compete · Grow17 [email protected] Key Growth Drivers of Vietnam’s Medical Equipment Sector Key Drivers Increasing population and life expectancy Modernizing public healthcare facilities Encouraging International initiatives A significant expected surge of the 60-79 age group, exposes the healthcare infrastructure to higher demands and potentially also leads to increased investments to meet these needs. Furthermore, the rapid urbanisation also facilitates the emergence of hospitals, reducing the access to healthcare service in economical-disadvantaged areas. To achieve this objective, it is estimated that the Government will need to spend approximately €1.06 billion per year. In addition, the expansion of the private healthcare sector in Vietnam has been facilitated by the lifting of the ban on private practice in 1989. More than 200 private facilities are in operation across the country to cater to the increasing demands of the emerging middle class. Some international initiatives have been launched to support Vietnam’s plans in the healthcare sectors. For example, the 2nd phase of the EU Health Sector Policy Support Programme (EU-HSPSP-2) or the bilateral agreements with South Korea, Japan and the EU. This creates a momentum for the increase of import and export of medical equipment, while also opening new avenues for domestic manufacturers.
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