Local and Regional Demand Thailand’s medical devices sector is one of the most well-known and well-established sectors in ASEAN countries. To better illustrate, the trade value for this industry is 19.93 billion US dollars. In terms of export and import, Thailand is ranked in the first and second ranks compared to ASEAN countries. For domestic consumption, Thailand also consumes lots of medical device items. This is because of the expansion of medical services. For example, medical devices produced in Thailand, particularly those of single-use type are more produced each year. However, other advanced ones such as ophthalmic or optical devices are imported. This is because of unavailability in domestic production.
Persistent Hike of Demand for Medical Devices Due to COVID-19 Because of the Covid-19 pandemic, the medical devices sector was contracting at 10.2 percent in 2020. However, the prediction from Krungsri Research Center1 shows that the industry will be grown steadily at 6.5 percent per year in 2022-2023. This hike in demand, especially in the long-term, corresponds to the main 5 factors, which are: The rising incidences of both communicable and non-communicable diseases (NCDs) among Thai population. The increasing size of the geriatric market is due to Thailand’s aging population. The rebound of foreign patients seeking treatment in Thai hospitals once the vaccine has been injected. The need for new devices from the expansion of new buildings from many private hospitals. The support from the government to promote Medical Tourism. Supply-Side Supporting Factor Thailand has an abundance of raw materials used for medical devices production, especially for single-use item types, such as rubber and plastic. Moreover, some institutions and regulations supported, from the R&D process to intellectual protection, ensure that the producer can be commercialized their items. Government and BOI Support The Thailand Board of Investment offers many highly attractive investment incentives, which, among others, include exemption of import duties on machinery, exemption of import duties on raw materials used in production for export, and other non-tax incentives such as BOI business facilitation services. Moreover, the incentives are highly competitive compared to the rest of ASEAN, especially the necessary items to include R&D and innovation to develop the products. In order to incentivize these kinds of things, some measures such as corporate income tax exemption can be applied for a maximum of 8 years.
The medical devices industry is one of the most well-known and high-potential sectors in Thailand. In 2019, this sector accounted for 4.47 percent of the national GDP. Moreover, Thailand has long been the most significant medical device market In ASEAN countries. In 2020, the trade value is 19.93 billion US dollars, followed by Singapore, Malaysia, and Indonesia, respectively. In terms of export, Thailand is ASEAN’s largest exporter of medical devices according to Thailand’s Medical Device Intelligence Unit.
The medical devices sector is expected to grow steadily at 6.5 percent per year in 2022-2023. This signifies the growth comes from the following reasons.
- Lucrative market size as an ASEAN medical hub. Thailand’s demand for medical devices increases rapidly once the government strategizes itself as a medical hub in ASEAN. To understand the characteristics and needs of end-users in high-growth ASEAN emerging markets, it is worth for investors to relocate medical device production into Thailand.
- Enormous investment incentive in Thailand for the medical device sector. The government of Thailand offers huge support for this sector via the BOI channel. The measurements are extremely high, especially in medical device production which necessarily needs research and development before inventing the products. The incentive for these items such as corporate income tax exemption will be implemented to the business for 8 years.
- Utmost potential production base in the ASEAN market. Thailand also established the infrastructure, such as industrial parks, utilities, and logistics systems, which will be supported by investors from Research and development the items to export-oriented activities. In addition, Thailand has a pool of trained workforce from the electrical and electronic industry. This group of high-skill laborers is ready to move forward to produce semi-hi tech and hi-tech medical instruments.
Moreover, Thailand tends to have a high growth rate of the market in the medical devices sector in the long term. The reason comes from the main 5 factors which will be described by the following.
- Rising incidences of cases in both communicable and non-communicable diseases (NCDs). The most common diseases are diarrhea, pneumonia, hypertension, diabetes, a chronic obstructive pulmonary disorder, and coronary heart disease. Moreover, the number of patients has been forecasted to rise around 1.5 times in 2030. These would increase demand for modern, hi-tech medical equipment, especially for diagnostic purposes.
- The increase of Thailand’s aging population. The Office of the National Economic and Social Development Council forecasts the population over 60 years old in Thailand will increase from 11.2 million in 2018 to 13.5 million by 2023. Moreover, healthcare costs for these people will increase to 230 billion Thai baht (2.8% of GDP) in 2022.
- The rebound of foreign patients seeking treatment in Thai hospitals once the vaccine has been vaccinated. The main reason is Thailand can offer high-quality care and services at its hospitals. Domestic care facilities for the elderly are also competitive in terms of spending. Using the health care services in Thailand is cheaper than its neighbors, such as Singapore and Malaysia. These two factors support Thailand to be one of the preferred destinations for medical tourism.
- The increase of new buildings from many private hospitals. Many private hospitals plan to construct the new building to serve the rise in demand from Thai and foreign patients. To better illustrate, Bangkok hospital plans to increase its network from 49 sites to 50 by 2023 and expand its capacity by 172 beds. In sum, the construction’s overall supply is projected to increase at least 2,000 beds by 2022. These construction buildings will undoubtedly increase demand for medical device products and equipment.
- The support from the government to promote Medical Tourism. Medical tourism is considered a potential sector to generate income for the country. The medical industry’s quality in Thailand attracts many foreign patients worldwide, with steady growth over time from 1.2 million foreign patients in 2014 to a forecasted 2.11 million foreign patients in 2021. Also, the reputation ranked as the fifth-largest medical tourism market. The majority of foreign patients in Thailand are from East Asia, Europe, and the Middle East. This group of patients often has high purchasing power.
For these reasons, Thailand continues to welcome new production of medical devices in all categories.
TECHNOLOGY AND BUSINESS OPPORTUNITIES.
For domestic production, most Thai manufacturers are small enterprises. Also, most medical devices produced in Thailand are using low and middle technology and innovation. The statistics from the previous session show that Thailand has single-use devices as the most significant portion. Moreover, most domestic production is exported. On the other hand, Thailand heavily imports high technology and innovation products for domestic consumption. This means that the country has a high demand for high technology and innovative medical device items. Thus, the government welcomes all investments for supporting our demand. By implementing this idea, firstly, the Medical devices sector has been prioritized to be supported due to the National Strategy and National Reform Plan. Moreover, to attract medical devices’ production using advanced technology and innovation, the government uses measurements to aim this goal, such as tax exemption incentives via the BOI channel.
GOVERNMENT AND BOI SUPPORT
Thailand welcomes all medical-related investments. However, there are some areas of focus that provide an extra incentive in the medical devices sector in the following.
- Thermoscaner and thermometer
- Personal protective equipment, such as the N95 mask
- Ventilator, respirators, or negative pressure units
- Testing apparatus, such as mobile lab testing equipment or COVID-19 kit test
- Devices for the aging society, such as hearing aid, prosthetics, and Orthopedic Devices
- Other single-use devices
There are many institutions and research centers where medical technological breakthroughs and development are adequately supported. Moreover, the support from these agencies is covered from the R&D process to Manufacturing. The lists of supporting institutions are as followed.
R&D Center / Facilitation
- National Science and Technology Development Agency (NSTDA)
- The National Center for Genetic Engineering and Biotechnology (BIOTEC)
- Thailand Center of Excellence for Life Sciences (TCELS)
- Thailand Institute of Scientific and Technological Research (TISTR)
- Thailand Science Park (TSP)
- Science Park Promotion Agency (SPA)
- Thailand Food and Drug Administration (FDA Thailand)
Policy and Knowledge Support
- Health Systems Research Institute (HSRI)
- Funding and Acceleration National Innovation Agency (NIA)
Industrial Support & Promotion
- Thailand Board of Investment (BOI)
- Office of Industrial Economics (OIE)
MEDICAL DEVICE-SPECIFIC REGULATORY PROCESS
The most important aspect of which is the approval process for production and importing of medical devices which will be shown following.
Source: Industry Outlook 2020-22: Medical Devices, Krungsri Research Center, Thailand Board of Investment