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6 Oct 2020

Econ Digest

The medical equipment and device industry will become a sunrise industry despite the improving COVID-19 situation


  The total market value of Thailand’s medical equipment and device industry in 2019 exceeded THB90 billion. Medical equipment and devices are divided into: 1. Disposable medical supplies such as medical gloves, syringes and catheters; 2. Durable medical supplies such as hospital beds and wheelchairs; and 3. Reagents and diagnostic kits such as nephropathy reagent, diabetes reagent and blood-type reagent. The industry has tended to grow continuously, especially after the outbreak of coronavirus (COVID-19) which has driven the demand for medical equipment and devices in Thailand, reflected by a 64%YoY increase in the importation of reagents and diagnostic kits during the first half of 2020. Additionally, the government policy to promote medical hubs, coupled with public awareness of preventive health care and the expectation that Thailand will become a fully aged society in the next two years (the number of elderly people that are vulnerable to diseases, especially chronic non-communicable diseases such as diabetes, heart disease and stroke, will grow to more than 14 million), will also boost the demand for medical equipment and devices.       


                However, it is worth noting that although Thailand’s medical equipment and device industry may see substantial growth due to the aforesaid factors, imported medical equipment and devices account for more than 80% of the total market value of Thailand’s medical equipment and device industry. Most of them are X-ray machines, electrocardiographs, ultrasound machines, electroencephalographs and ophthalmic products, while the remaining 20% are produced by domestic producers. The products manufactured in Thailand mainly are medical gloves, eyeglass lenses, catheters, syringes, injection needles, and wound dressing devices. One of the main obstacles that cause Thai products to account for a limited market share is that Thailand is still unable to produce high-technology medical equipment and devices, almost 100% of which rely on importation. In addition, medical equipment and devices produced in Thailand mainly are low-value disposable medical supplies, while some durable medical supplies such as hospital beds and wheelchairs are facing fierce competition from China in terms of price and from Japan in terms of quality. As a result, medical equipment produced by Thai producers is not recognized much in the market and accounts for a small market share. KResearch expects that the medical equipment and device industry in Thailand still has room to grow substantially in the future along with the growth of the healthcare service industry, especially within hospital businesses and nursing home businesses, and with the rising demand for basic medical devices in consumers’ daily life, such as blood pressure monitors, blood glucose monitors and thermometers. However, the increased business opportunities seem to be in the hands of foreign producers.  


  KResearch believes that if Thailand intends to reduce the proportion of imports and substitute them with domestically produced medical equipment and devices, all related parties must cooperate and support the entire supply chain. This includes maintaining and improving the quality and standards of production materials and production processes to meet customer needs, as well as marketing activities carried out through various online and offline channels, starting with a range of equipments that use intermediate or uncomplicated technology such as hospital beds, wheelchairs, various disposable medical supplies (medical gloves, medical masks, reagents and diagnostic kits), because the demand for these products is expected to increase. However, it is undeniable that high-technology or complex medical equipment and devices still rely on imports, because domestic producers still lack production capabilities. KResearch views that if Thailand can eliminate various obstacles in the entire supply chain, the total value of the domestic medical equipment and device market will expand by an average of 7.8% per year (compound annual growth rate (CAGR) in 2019-2022), reaching a value of over THB120,000 million in 2022, while the proportion of imports will be reduced to 77% of the total market value and the proportion of domestic production will increase to 23%. If Thailand can maintain its quality and standard of production consistently and can continue to support research and development in order to expand or enhance Thailand’s medical equipment production, whether by public and private sectors or by new generation start-ups who introduce more technology into their production, there will be more room for growth in Thailand’s exportation of medical equipment and devices in the future.   

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