Health, aged care and medical to Malaysia

Trends and opportunities

The market

In the 2016 budget, the Malaysian Government identified new hospitals, clinics and high tech supplies to public hospitals as priority areas. With more than 350 hospitals in Malaysia, 150 of which are public, there are significant opportunities for Australian services and training providers, as the focus shifts from therapeutic to preventive care.

Malaysia’s increasingly affluent society demands international standards of medical care and services. Healthcare expenditure in Malaysia was estimated at A$16.9 billion in 2015 (Source: Business Monitor International 2016). Malaysians spend more than A$600 annually per capita on healthcare, double the per capita spending ten years ago (Source: World Bank 2016). Malaysia has been moving towards a transformation in healthcare from public health facilities towards private doctors, clinics and hospitals, as well as services for seniors’ living. By 2020, around 40 healthcare projects announced under the Healthcare National Key Economic Area (NKEA) are projected to cater for the rising demand of health services from locals and medical tourists (Source: PEMANDU, Healthcare 2015).

These market trends are creating significant opportunities for Australia across the value chain. Medical service providers are seeking expertise to help with the efficient management of more complex and modern health systems. The shortage in adequately skilled workers is proving to be a major challenge across most countries. Both public and private providers are urgently looking for ways to upskill and grow the number of healthcare professionals. And despite centuries where parents relied on their children to care for them in old age, more Asian families are embracing Western-style elder-care services which offer greater choice and offer better standards of care for people in their senior years.

The healthcare industry in Malaysia is managed by the Ministry of Health (MOH). The MOH operates the country’s network of government hospitals and public clinics, and trains medical personnel. Private healthcare is one of the 12 national key economic areas that were identified by the government in its medium-term spending plan until 2020 (11th Malaysia Plan). Strategic goals include transforming delivery of the healthcare system, increasing quality, capacity, and coverage of healthcare infrastructure, and increasing the quality of human resources for health.

The primary challenges faced by the healthcare industry include: an overburdened public system, an ageing population, increasing financial burden to the state treasury (due to heavy subsidisation), and increasing incidences of lifestyle-related and chronic diseases. Heart disease, diabetes, cancer, hypertension and circulatory problems account for most deaths and cases of hospitalisation in Malaysia. Osteoporosis is also a growing problem.

As the government seeks to upgrade healthcare technology and focus on health workforce skilling, Australia is well placed to meet these needs and address the gaps by providing the roadmap, technical know-how and expertise to move up the value chain. There are opportunities for Australian vocational and training providers, from collaboration with local institutions to the provision of tailored in-market programs to meet specific industry skills requirements.

Areas where Australian capacity to deliver matches a corresponding under-supply in the Malaysian market include:

  • aged care resorts and retirement homes (both construction and architectural design)
  • aged care facility operations (and business models)
  • acute care centres (institutionalised intensive aged care)
  • care givers and facility managers (Vocational Education and Training)
  • medical technology (devices, IT systems and e-health).

Opportunities

Medical devices

Malaysia aims to become the hub for medical devices manufacturing in Asia and currently hosts 190 device manufacturers. The Malaysian medical devices industry includes manufacturers of rubber and latex, textiles, plastics, machinery and engineering support and electronics. Malaysia supplies 80 per cent of the world’s catheters and 60 per cent of the world’s rubber gloves (Source: Malaysian Investment Development Authority 2015).

Malaysia’s medical devices and supplies are still mainly imported, particularly for high-tech medical instruments. The government offers incentives for local manufacturers to produce more advanced medical equipment as imports of medical goods have shown strong growth in recent years. There are opportunities to collaborate with local companies through contract manufacturing, for example.

Pharmaceuticals

The domestic pharmaceutical market is relatively underdeveloped yet has been growing rapidly, producing eight to 10 per cent annual growth over the last ten years (Source: MATRADE 2016). The market is concentrated on a strong generic sector with heavy reliance on imports of high end, branded and patented drugs. The production of generic drugs has high potential due to the expiration of patents for blockbuster drugs over the next decade. Total spending in Malaysia on pharmaceuticals (including over-the counterdrugs and prescription drugs) was estimated at around A$2.67 billion in 2015, with generic drug sales accounting for 39 per cent of the market (Source: BMI Report 2016).

The pharmaceuticals industry, especially in drug manufacturing and clinical trials, will continue to develop as an increasingly attractive option for foreign firms with high levels of government support in the form of tax incentives, Entry Point Projects (EPP), and increased research and development initiatives.

Medical technology and digital health

With increasing private hospitals catering for medical tourism, the private healthcare industry is seeing a rise in the use of technology such as Cloud IT for medical records, robotic surgery, and 3D printing. Australian companies with innovative health solutions are well poised to meet growing demands for advanced healthcare technology in the areas of wearable devices, artificial heart and prosthetics as well as self-monitoring health devices.

The In-Vitro Diagnostic (IVD) and Point-of-Care Testing (POCT) industries are emerging segments with potential in molecular diagnostics. Diagnostic facilities are focused around major hospitals in large cities, while remote areas of Malaysia are still underserved and totally dependent on government-funded 1Malaysia clinics. Demand for advanced diagnostic kits and home-based kits will grow due to increasing aged population in the market.

Large rural community across Malaysia has limited access to health services and this creates a niche market for telemedicine and remote patient monitoring solutions to support the elderly. In fact, the lack of financial incentives and private investors in this industry are some of the major concerns for healthcare penetration in rural areas.

Aged care

The ageing population in Malaysia is likely to create a strong demand in the market for aged care facilities, services and expertise by the general public and private sector. Almost 10 per cent of the population in Malaysia (3.4 million people) are forecasted to be above the age of 60 by 2020 (Source: Frost & Sullivan 2016). By 2035, Malaysia is expected to be considered an ageing society with 15 per cent of the population above the age of 60 (Source: United Nations 2013). Malaysia is also proactively encouraging expats to retire in the country through the government’s MM2H (Malaysia My Second Home) program.

An ageing population is a rising concern in the market as aged care facilities in Malaysia are still very much in the early stages of development. Retirement homes in the country are mostly owned and run by private companies or charitable organisations. Australian capabilities in aged care are well regarded by the Malaysian market. Strong demand, paired with a lack of local expertise and capability in Malaysia, has induced a situation whereby developers, healthcare providers and investors are keen to engage Australian services for new and existing aged care facilities, mainly within the private sector. Providers and real estate developers are capitalising on this opportunity by offering aged care facilities and services through a variety of business and technology innovations.

Medical and biotech research

Malaysian universities are trying to move up the international rankings by undertaking more innovative and collaborative research which the government is helping to fund. Research in tropical medicine is one of the initiatives that offer potential opportunities for collaboration with Australia. Between 2011 and 2015, Australia and Malaysia co-authored 2,436 publications in health and biotech, with a 67 per cent increase of co-authorship across all disciplines (Source: Scopus 2016).

The Malaysian Government has given strong support and commitment to biotechnology in terms of research and development, infrastructure, and human resource development. Apart from commercial incentives, logistics and schemes for technology transfer programs drive growth as well as attract investors into the Malaysian market.

Medical tourism

Malaysia was ranked 5th on the Global Retirement Index 2016 and aspires to be the top destination for health and medical tourism by 2020. The low cost of healthcare services, shorter waiting lists and accessibility of high quality hospital infrastructure offer attractive prospects to medical tourists from around the world. Malaysia has witnessed an overall increase of medical tourists coming to Malaysia from 583,000 in 2011 to 880,000 in 2014 (Source: Malaysia Healthcare Travel Council 2016).

Among the most sought-after treatments are orthopaedic, cardiac care, cosmetic surgery, dermatology and cancer treatments. The country’s healthcare services are in high demand among patients from Indonesia, India, Japan, Britain and the United States.

The Malaysian government provides incentives to private hospitals to upgrade their facilities to meet the growing demands of medical tourism and ensure private hospitals have international best practice standards of healthcare facilities. The industry will need to heavily invest in human resources, training and post-operative medical services. This will provide commercial opportunities for private healthcare, training providers and innovative pharmaceutical companies operating in this space.

Competitive environment

Despite government initiatives to encourage local production of medical products, the country remains heavily reliant on imports for healthcare products such as heath supplements, high tech medical equipment, and training and development in healthcare services. Domestic manufacturers are encouraged to move up the value chain with more advanced products, increased research and development investment and better production capability. The government encourages multinational manufacturers to set up in Malaysia as the country has the potential to be a distribution hub for other ASEAN countries. Although Australia is not the main supplier of medical equipment and supplements to Malaysia, Australian companies have been successful in penetrating the market with their offerings of innovative and niche medical products, supplements and services. Australian health and supplement companies have set up sales offices in Malaysia and there are also Australian contract manufacturers supplying products with local brand names.

Marketing your products and services

Market entry

Channels of entry into the Malaysian health industry include:

  • direct marketing by principal companies
  • sales through local agents or distributor
  • sales through trading houses
  • direct sales to re-sellers (e.g. pharmacies, rehabilitation centres)
  • direct sales to end-users (e.g. hospitals, clinics, medical practitioners).

Malaysian companies are open and receptive to new products and services. If planning to export to Malaysia:

  • be prepared to visit the Malaysian healthcare sector regularly (at least two to three times a year)
  • follow up on previous visits (through telephone, email or faxes)
  • learn about cultural sensitivities in Malaysia
  • prepare information packs about your company, products and services offered.

Distribution channels

Direct export is the most common entry strategy in the provision of services and includes management, consultancy and training programs. These export transactions are concluded through direct negotiations with end customers.

For indirect exports, establishing a local presence is important. The various ways to do this include:

  • appointing an agent or distributor
  • forming a joint venture partnership
  • forming a short-term partnership (e.g. one or two year contract with opportunity to review the partnership at the end of each term)
  • forming ‘ad-hoc’ partnerships (different partners for different projects)
  • setting up a local office.

Major private healthcare players in Malaysia

Most private healthcare providers are planning to expand beyond major cities, eyeing to increase their penetration rate and reach patients over a wider geographical area. IHH is the healthcare arm of Malaysia's state investor, Khazanah Nasional Bhd. Its assets include Turkish Hospital Group Acibadem AS, Singapore's Parkway Holdings, India's Apollo Hospitals Enterprise Ltd, Malaysia-based Pantai Hospitals and International Medical University (IMU). This signifies Malaysia as a major participant in the global healthcare industry. Other leading private healthcare providers include KPJ Healthcare, Sime Darby Healthcare, HSC Medical Centre, Prince Court Medical Centre and Sunway Medical Centre.

Major local and multinational pharmaceutical companies in Malaysia include Pharmaniaga, Chemical Company Malaysia, Prime Pharmaceutical and Hovid Pharmaceutical GlaxoSmithKline, Pfizer, Merck & Co, Sanofi and Novartis.

Tariffs, regulations and customs

Malaysian authorities are very strict with registration of supplement products, especially that with variety of active ingredients. All herbal, health and dietary supplements, and traditional medicines are classified as non-poison, over-the-counter (OTC) or traditional products in Malaysia and are regulated by the National Pharmaceutical Control Bureau (NPCB) under the Ministry of Health.

All manufacturers, importers and wholesalers of all herbal, health and dietary supplements, and traditional medicines are required to register with the Drug Control Authority of the NPCB.

The Malaysian Medical Device Act 2012 (Act 737) was fully enforced in the country since 1 July 2013. The regulation of medical devices in Malaysia is carried out by the regulatory authority called Medical Devices Bureau (MDB), Ministry of Health. All medical device players in Malaysia need to comply with the regulation to register their medical devices with the Malaysian Medical Device Authority (MDA).

Links and industry contacts

Aged care-related resources

Association of Private Hospitals, Malaysia
Australia Malaysia Business Council
Bursa Malaysia (Stock Exchange)
Central Bank of Malaysia (Bank Negara)
Department of Statistics Malaysia
Economic Planning Unit (EPU)
Malaysia Australia Business Council
Malaysian External Trade Development Corporation (MATRADE)
Malaysian Government Official Portal
Malaysian Investment Development Authority (MIDA)
Malaysian Medical Association
Medical Device Control Division
Ministry of Foreign Affairs, Malaysia
Ministry of Health Malaysia
Ministry of International Trade and Industry (MITI)
National Pharmaceutical Control Bureau
Royal Malaysian Customs Department

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