A look at Singapore's growing medical technology industry: the author makes the case for Singapore's stronger offerings available to medical device manufacturers.The medical technology sector is an important part of Singapore's fast-growing biomedical sciences (BMS) industry. In 2007, this sector contributed $1.8 billion (S $2.6 billion) to Singapore's BMS manufacturing output and more than 7,300 jobs.To date, Singapore has attracted various large medtech companies to establish commercial operations, research and development centers as well as manufacturing facilities in this southeast Asian territory. Companies include Applied Biosystems, Affymetrix, Baxter International, Becton Dickinson, Bio-Rad, Biosensors International, Ciba Vision, Thermo Fisher Scientific, Hoya Healthcare, Hill-Rom, Qiagen, Japan Medical Supply and Siemens Medical Instruments. These companies develop and manufacture a wide range of medical products--such as contact lenses, research instruments, scientific analytical equipment, implantables, syringes, catheters and hearing aids--in Singapore.
As global competition escalates and challenges persist with staying cost effective while not compromising on the need for quality products, an increasing number of international medtech companies are actively exploring outsourcing options in Singapore. Following is a look at some of the reason why.
Strong and Reliable Supplier Base
During the past 30 years, contract manufacturers in Singapore have built up capabilities in electronics, precision engineering and materials science. This is critical for medtech companies that engage in both product development and manufacturing. As the needs of the medical device sector are diverse, the supporting industries span many sectors, including electronic manufacturing services (EMS); plastic components; metal forming and casting; ceramics; surface treatment and cleansing; packaging; and sterilization.
In particular, EMS providers have grown with Singapore's development into an international electronics hub. Today, four of the top EMS companies in the world--Sanmina, Flextronics, Celestica and Jabil--have established manufacturing operations in Singapore. They offer manufacturing services to an increasing number of medtech players. EMS companies here have moved up the value chain and today provide a comprehensive array of services ranging from product conception and design to full manufacturing and supply chain management. Many EMS and OEM players choose to site high-value-added manufacturing operations in Singapore because of the country's strong intellectual property rights protection and the workforce's ability to meet the demanding quality and reliability standards required for sophisticated manufacturing and engineering services. In addition to the thriving electronics industry, Singapore also has built strengths in precision engineering as well as in the handling of plastics and metals. Within the medical device cluster, plastic component manufacturers supply disposable and non-disposable plastic components for a range of products, including optical lenses and diagnostic devices. Many plastic component manufacturers are able to provide a full suite of services--including product design and development, prototyping, precision plastic engineering, plastic molding, volume manufacturing and assembly--thereby providing their customers with a full" turnkey "manufacturing solution. Companies with niche tooling and equipment expertise also supply critical services to Singapore's medtech industry. These companies' offerings include tooling fabrication, metal stamping, mass production and assembly. Some companies, such as Forefront Medical Technology, provide dedicated contract manufacturing services including product and process redesign.
Medical products are subject to stringent regulations given the need to protect public health and safety. Therefore, a key consideration for medical device companies in evaluating potential suppliers is whether the supplier meets the quality standards and requirements of healthcare regulators such as the US FDA and the European Medicines Agency. With a strong track record of compliance and quality, Singapore-based companies and employees have won the confidence of their global medtech customers--in fact, more than 15 companies in Singapore are certified to ISO 13485 (the international certification pertaining to quality in the manufacture of medical devices).
Access to Talent and Ideas
The success of the supplier base in Singapore has a lot to do with the country's large pool of well-educated workers. The Singapore government has invested heavily in education, including the expenditure of more than 3% of Singapore's GDP and successful promotion efforts that led top global universities to set up schools in the region. In addition, Singapore's educational curriculum focuses on business needs and skill sets that meet future industry requirements. With the manufacturing sector contributing to 28% of Singapore's GDP, it is not surprising that the city-state produces more than 15,000 engineers and engineering-sciences graduates annually. This comprises approximately 40% of the graduating cohort of students. The number of engineers produced per year as a percentage of total nationwide enrolment is equivalent, if not higher, than some of the first world's industrialized nations. In terms of quality, Singapore's universities and academic institutions rank among the best in the world. In addition to universities, vocational institutions in Singapore also offer medtech-specific
training to nurture a pool of skilled operators in medical device manufacturing facilities.
At the industry level, the Singapore Economic Development Board's (EDB) Biomedical Sciences Group offers financial incentives to share the cost of training programs in support of medtech companies setting up research and development or manufacturing facilities in Singapore.
The EDB and Singapore Nanyang Polytechnic also jointly launched Medtech Concept, an initiative that provides a platform for clinicians and researchers to establish proof-of-concept stage projects in partnership with industry players. In addition to funding and infrastructure support, the workshops offer an ideal forum for the exchange of ideas between industry players, clinicians and research communities.
Connectivity and Market Access
Medtech companies can effectively supply global markets from Singapore by leveraging its world-class logistics network. Singapore is the world's busiest container port and Asia's fifth-largest cargo airport. The region is linked by more than 200 shipping lines to 600 ports in 123 countries, and its airport is served by 78 airlines with more than 4,000 flights connecting to more than 180 cities in 59 countries. Today, one out of every 10 containers moved around the world is handled by Singapore ports. In Singapore's Changi Airport, one plane departs or arrives every two minutes.
Furthermore, Singapore's network of Free Trade Agreements (FTAs) provides access to key markets at preferential tariff rates for companies with manufacturing operations in Singapore. Today, Singapore has concluded 13 FTAs with key markets that make up 60% of the world's GDP. These markets include the United States, Japan, Australia, New Zealand, South Korea, India, China and Jordan. FTAs that will benefit the device sector include the Close Economic Cooperation Agreement with India that will eliminate tariffs for a variety of medical devices (eg, contact lenses, electrocardiogram/ultrasound/magnetic resonance imaging equipment and heart valves) by 2009. In addition, the ASEAN-China FTA likewise will remove tariffs for exports to China by 2009. Singapore's global logistics capabilities and connectivity make it a natural choice for medtech firms looking for a base of operations to access the rapidly growing Asian market.
In addition to connectivity, medtech companies also need an effective supply chain to ensure that the quality of their medical and diagnostic products is not compromised, while achieving timely delivery to target markets. Third-party logistics providers in Singapore have responded to this demand with customized cold-chain solutions that offer this assurance. For example, transportation and delivery service companies DHL and TNT have opened dedicated facilities that offer solutions tailored to the life-sciences sector including temperature control throughout the supply chain, delivery to major cities in Asia within 24 hours, as well as complete documentation and swift customs clearance, which are in full compliance with strict regulations guarding against bio-terrorism.
Competitive Tax Environment
The competitive tax environment plays an important role attracting companies to manufacture high-value products in Singapore. The current headline corporate tax rate in Singapore is 18%, far lower than what many companies face in the United States and many European countries. In addition, companies with substantial operations in Singapore may enjoy tax and fiscal incentives, depending on the scope and scale of their investments.
Strong Demand for Medtech
Singapore has established a strong base in the biomedical sciences cluster with leading biopharmaceutical companies, academic luminaries and established private-public research collaboration and technology transfer practices.
This biomedical sciences cluster presents a rapidly expanding customer base for medtech companies. Industry leaders such as Affymetrix and Bio-Rad are taking advantage of this opportunity to set up manufacturing operations to meet the increased demand for scientific instruments. Qiagen and Hill-Rom also have leveraged the strong research resources in Singapore to set up research-and-development centers to develop molecular diagnostics and healthcare products for patient care.
Singapore's vision is to be the Biopolis of Asia--an international biomedical sciences cluster advancing human health. It has put in place the key building blocks by establishing core capabilities in biomedical research and introducing important human capital and industrial capital development initiatives. For the next BMS phase (2006-2010), Singapore will build on this foundation and strengthen its capabilities in translational and clinical research to bring discoveries from the bench to the bedside and the marketplace--and ultimately improve human healthcare.
Singapore continues its focused effort to grow the medtech sector in the areas of cardiovascular, eye care, diagnostic, imaging, research tools, scientific instruments and orthopedics by building up the necessary capabilities and providing strong, quality support for outsourcing options and exploiting synergies with the BMS research cluster.
Medtech companies may rest assured that Singapore may be an important choice for key business functions, such as research and development, manufacturing as well as headquarters and shared services that span the entire value chain.
Keat Chuan Yeoh is executive director, Biomedical Sciences Group, of the Singapore Economic Development Board. The EDB's mission is to promote and build a knowledge-driven economy spurred by innovation and enterprise and to develop Singapore as a global hub for business and investment. US offices includeNewYork, Boston, Chicago, Dallas, Los Angeles, San Francisco and Washington, DC. For more information, visit www.sedb.com.
Keat Chuan Yeoh, Singapore Economic Development Board