Ride the Wave of Opportunity: Tremendous Growth Prospects in $VLD¶V

Minimally Invasive Surgery Market

Minimally Invasive Surgery (MIS) procedure volumes in Asia have been growing at rapid rates in
recent years. Developing economies are aggressively building the capabilities to conduct MIS while
developed economies are investing in their depth of expertise to perform advanced procedures with
cutting edge technology and devices. MIS device manufacturers should pay specific attention to each
region¶s individual needs to ride the wave of growth across Asia Pacific.

The first Laparoscopic Cholecystectomy surgery was conducted in Japan in the late 1980s; since the
LQLWLDO ³WHHWKLQJ´ \HDUV, laparoscopic surgery has finally taken off across Asia. Driven by a need to
provide a better quality of care, lower the total cost of healthcare, and to overcome the perpetual
shortage of hospital beds, hospitals have adopted Minimally Invasive Surgery (MIS) techniques as
one of the key initiatives to achieve these goals.

Table 1: Total laparoscopic procedures by country, 2009

700
583.2
No. of procedures ('000)

600 520.7
500
400 331.1
300
200 157.6 147.2

100 57.5 50.8 30.1

0
China Japan India Vietnam Australia Thailand Philippines Malaysia

The potential is immense - $VLD¶VSRSXODWLRQhas crossed the 3.5 billion mark, representing over 50%
of the global population. Countries across Asia are upgrading their healthcare infrastructure and
increasing the public access to healthcare. From 2009 to 2011, China has earmarked USD124 billion
to upgrade its primary healthcare capabilities and DFFHVVWREDVLFKHDOWKFDUH,QGLD¶VSULYDWHVHFWRU-
driven healthcare industry is aggressively investing in cutting edge technology and introducing state-
of-the-art equipment ,QGLD¶V SULYDWH KRVSLWDO FKDLQV QRZ FRXQW DV WKH WRS KRVSLWDOV LQ $VLD DQG are
expanding their footprint across Asia. Thailand, Malaysia and Singapore have identified medical
tourism as one of the key national strategies to drive growth; the additional foreign revenue in turn
allows the countries to upgrade local healthcare infrastructure and bring better healthcare for their
citizens. While Vietnam is one of the lesser developed economies in Asia, the Vietnamese
government, with substantial NGO support, has also invested heavily in its healthcare infrastructure
and has been increasingly able to provide better healthcare to its population of 86 million.

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Table 2: Lap & open cholecystectomy (basic lap Table 3: Lap & open colectomy (advanced lap surgery)
surgery) by country / region, 2009 by country / region, 2009

A ustralia 46 2 A ustralia 79

So utheast A sia 121 62 So utheast A sia 8 43

India 128 97 India 8 29

Japan 252 32 Japan 21 12

China 251 178 China 43 173

No. of procedures ('000) No. of procedures ('000)

Laparoscopic procedures Open procedures Laparoscopic procedures Open procedures

The differences in capabilities are stark across the Asian countries. Japan, Australia, Singapore, and
South Korea to a lesser extent, boast of the best capabilities in laparoscopic surgery. Almost all
facilities in these countries are well equipped to perform laparoscopic surgery: most facilities are
furnished with endoscopes and are staffed with specialists with a depth of expertise in conducting
advanced gastrointestinal surgeries laparoscopically. In China and India, the largest hospitals in their
7LHUFLWLHVDUHDEOHWRRIIHUDGYDQFHGODSDURVFRSLFVXUJHU\ZKLOHWKHPDMRULW\RIWKHRWKHUKRVSLWDOV¶
operating theatres can only conduct traditional open surgery. In the less developed countries such as
Philippines and Indonesia, fewer than 20 facilities are able to conduct laparoscopic surgery. These
facilities are typically located in the national capitals, and perform more basic laparoscopic surgeries:
the capabilities to perform advanced laparoscopic surgeries such as lap colectomies are still in the
development stage.

The more developed countries such as Japan, Australia and Singapore have greater capabilities to
perform advanced laparoscopic surgeries such as laparoscopic colectomies. Over 50% of
colectomies are performed laparoscopically in these developed countries, compared with under 20%
in the less developed countries. In contrast, basic procedures such as cholecystectomies are
performed laparoscopically in over 90% of the surgeries in developed countries, as opposed to 50-
60% for the less developed countries (see tables 2 and 3)

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The FRXQWULHV¶preferences towards disposable or reusable MIS devices also follow similar patterns to
their MIS capabilities. Countries with a more developed MIS expertise generally prefer single-use
instruments. Single-use brands such as Johnson & Johnson and Covidien are the clear market
leaders in Japan, Australia and South Korea. Single use device brands are also highly adopted in
certain less-developed countries such as China and the Philippines; the reason for their prominence
LQWKHVHFRXQWULHVLVGXHWRWKHKRVSLWDOV¶WLJKWHUEXGJHWV± the hospitals purchase the cheaper single
use devices and reuse them up to 5 times before disposing of them. Brands with a focus on reusable
MIS devices such as Karl Storz and Olympus see higher shares in India and most of Southeast Asia.

The market for Minimally Invasive Surgery devices is expected to grow at annual rates of over 15%.
The benefits to the patient as well as the hospitals will continue to drive the demand for Minimally
Invasive Surgery. With more surgeons trained to perform MIS, younger surgeons can be trained by
their more experienced colleagues in the same hospitals and do not need to be sent overseas for
training, expanding the supply of trained surgeons capable of performing MIS. As hospitals pay more
emphasis on safety and standards, the reuse rates of MIS instruments will fall, driving purchase of
MIS instruments. As expertise increase, advanced lap surgeries will be more commonly performed,
which will drive the utilization of procedure-specific instruments such as linear cutters or circular
staples. MIS device manufacturers should recognize the varied and specific needs of the individual
markets, and tailor their growth strategies to each market while they are still in the developmental
stage. Gaining a strong foothold in these rapidly growing markets will serve to entrench the
companies to enable them to ride the wave of opportunity.

About the author

Mr Wilson Tan is the Director of Database Solutions in Clearstate. He is a healthcare consultant with
over 8 years¶ experience consulting for medtech clients seeking in-depth understanding of the
healthcare sector in Asia. Wilson has recently launched Clearstate¶s Minimally Invasive Surgery
Gateway Database, covering surgery procedure volumes for Laparoscopic Surgery, as well as market
size and share information for MIS instruments across 10 countries in Asia.

About Clearstate
Clearstate, a niche healthcare consultancy, offers strategic advisory and intelligence services to help
medical devices, healthcare services, pharmaceutical and biotechnology firms understand their
current and potential markets, implement pragmatic and innovative strategies to ultimately tap into
new growth opportunities. Our approach to engagements is centered on thorough analysis of fact-
based intelligence and seasoned understanding of markets, practical strategy recommendations and
implementations. We provide accurate, reliable and comprehensive intelligence on medical device
usage and demand across Asia Pacific. We deliver actual and up-to-date placement, usage and
consumption data for devices, equipment and consumables found in healthcare and commercial
settings.

For more information, please visit Clearstate at www.clearstate.com or call +65 63035030.

BRIDGING INTELLIGENCE GAPS IN HEALTHCARE