Medical Devices Market Overview and Degree 36 First Impression

Build · Compete · Grow
MEDICAL DEVICES
MARKET OVERVIEW
AND DECREE 36 FIRST
IMPRESSION
June 2017

Contents
Contents:
1. Healthcare infrastructure
2. Medical device market
3. Decree 36 and its influences
4. Market entry

Build · Compete · Grow3 consulting.bc@ipsos.com
€ 200
Billion in GDP
10'11'12'13'14'15' 20'
€ 2,100
in GDP per capita
ASEAN’s 6th largest
€
94+
Million people
14th largest population
Golden Demographic
70% of population aged in
working age category (15-64)
Male Female
€ 10.6
Billion EUR of GDP
spent on healthcare 25
Hospital beds/ 10,000
habitants6.1%
33.6%
Urban population in
Vietnam
Hanoi
HCM

Vietnam’s Healthcare Infrastructure

Health Establishments by Type
The level of facility investment, professional capacity, and complexity of treatment are the differentiating factors
for each healthcare facilities
Source: Statistical MoH report
Small Private Polyclinics
(SPriPC)
Medium Private
Polyclinics (MPriPC)
Private Specialized Clinics
(PriSC)
District Polyhospitals
(DPH)
Health Stations (HS)
Private Polyhospitals
(PriPH)
Specialized Hospitals
(SH)
Provincial Polyhospitals
(ProPH)
Private Specialized
Hospitals (PriSH)
 Specific health problems. Public facility
 More popular in big cities. SPH is operated by a number of professionals including doctors and specialists
assigned by MoH, with very high level of investment in modern technologies
 Specific health problems. Private facility
 Privately owned by one or a group of doctors or a medical group/corporation. SPH has specialized equipment
that can cure serious cases and perform complex surgeries
 Various health problems. Private facility
 Privately owned by one or a group of doctors or a medical group/corporation. Some PHs are perceived as
better than public hospitals but more expensive and mostly not public insurance applicable
 Various health problems. Public facility
 Present in every provincial unit with large number of beds and constructed in populous area. PH welcomes
hundred patient visits everyday, providing a broad range of treatment
 Various health problems. Public facility
 Well-equipped state-owned facility with moderate to high capacity and public insurance applicability that
provides healthcare service to a large portion of community within an area
 The presence is deemed important as it helps to ease overcrowding of central / provincial hospitals
 Specific health problems. Private facility
 Facility that is specialized in one field (otorhinolaryngology, obstetric, cardiology, etc) with modern equipment
(ultrasound device, X-ray device, etc) to perform complex diagnosis and treatment
 Private facility. Able to treat in-patients
 MPP is moderately invested with equipment to perform higher diagnosis, treatment and minor surgeries
 A few health problems. Private facility
 Simply equipped with 1 or 2 doctors in charge of treating patients with minor health problems such as flu,
coughing, stomachache, etc. SPP has flexible working hours and is convenient for quick health check-up
 A few minor health problems. Public facility
 State-owned and present in every commune or ward. Physicians take main charge of diagnosing and
prescribing simple health problems
Public sector Private sector
~65 facilities
~51
~119
~629
~492
~11,743
~10,000
~10,000
~10,000
~43,099 facilities

2,787
2,970
3,280
859
1,031
1,858
686 687 531 379
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Red River
Delta
Northern
midlands
and
mountain
areas
Northern
Central area
and Central
coastal area
Central
Highlands
South East Mekong
River Delta
Hanoi Thanh Hoa Nghe An Ho Chi Minh
City
Region Key cities
No.ofhealthestablishments
Number of health establishments by regions and by key cities in 2014 (*)
• Hanoi, the capital, is expected to receive the largest share of the central funding for purchasing new and
advanced medical devices, given its preferential budget allocation from the MoH.
71% of healthcare establishments are situated in Northern Vietnam
(*) excluding private health establishments
Source: GSO
Healthcare Facilities by Regions and Cities

Inadequate number of public hospital to serve rising demand in healthcare needs, coupled with government
encouragement are driving the growth of private hospital
• Public and Private hospitals are not sharing the patients burden:
• 40% capacities/facilities are under-utilized
• Public facilities are under constant overloaded
• Public hospitals’ overcapacity due to:
• Affordable prices
• Accessibility
• Lack of well-trained and experienced staff with the private sector
Source: MoH Report (2011-2015), GSO and Ipsos Analysis 7
Private
hospitals
7%
Public
hospitals
93%
Patient Visits by
Public vs. Private Hospitals 2015
Total patients visit = over 146 Mn
91% 88% 88% 88% 86%
9% 12% 12% 13% 14%
Private
Public
Vietnam Hospital Classification & Growth, 2011 – 2015
1,224 1,232 CAGR
13.6%
1,142 1,197
0.7%
1,241
Hospital Infrastructure vs. Demand

Vietnam’s Medical Device Market

IPS
OS
KN
OW
LED
GE
AN
D
EXP
ERTI
SE
Source: BMI
consulting.bc@ipsos.com
459.0
668.7 698.0 747.1
815.8
892.3
977.8
0
200
400
600
800
1,000
1,200
2010 2014 2015e 2016f 2017f 2018f 2019f
EURmn
Medical equipment market value, 2010-19f
85.1
43.5
14.2
7.2 2.6 2.1
0
20
40
60
80
100
Singapore Malaysia Thailand Vietnam Philippines Indonesia
EUR
Medical equipment market value per capita, 2015
Vietnam’s medical devices market has observed a stable growth to estimated €977.8 million in 2019 with CAGR
projected around 7%, which is considered one of the fastest growing markets in Asia
Medical Equipment Market Value, 2010 – 2019

Vietnam’s Medical Equipment by Segments, 2014 – 2019
• Consumables and diagnostic imaging segments are accounted for near half of the market.
• Dominated by imported goods with nearly 95% of the medical devices are from overseas, especially in high-
end segments such as diagnostic imaging products. Local manufacturers can only meet the market demand
for basic equipment such as hospital beds, rubber health products and disposable supplies.
23%
22%
5%5%
15%
30%
2014
25%
23%
5%
6%
15%
26%
2019
Consumables
Diagnostic Imaging
Dental Products
Orthopaedics &
Prosthetics
Patient Aids
Other Medical Devices
€668.7mn €977.8mn
Medical equipment market structure, 2014-19f
Source: BMI
Vietnam’s medical equipment sector is expected to record a 46% increase to reach nearly €1 bn in 2019 with
nearly 95% of devices are imported

Medical equipment imports reached €631 million in 2014 with Diagnostic Imaging and Consumables segments
account for over 45% of the total export value. Singapore and Japan were the top two suppliers of medical
equipment to Vietnam in 2014
14%
27%
5%5%13%
36%
2010
23%
23%
5%5%
14%
30%
2014
Consumables
Diagnostic Imaging
Dental Products
Orthopaedics &
Prosthetics
Patient Aids
Other Medical
Devices
€437.8mn €631.3mn
Medical equipment’s import structure, 2010-2014
Source: BMI
24.0%
19.2%
12.8%
10.8% 10.6% 8.9%
7.0%
3.1% 2.8% 2.8% 2.5% 2.5%
17.0%
0%
5%
10%
15%
20%
25%
30%
Vietnam’s medical equipment import by main countries, 2015
Total import value = €631.3mn
Vietnam’s Medical Equipment Import Structure (2014 – 2019)

Experiment with the latest and
most innovative technologies and
systems. These end-users can be
considered potential partners for EU
investors to strategically market their
products in Vietnam.
Major buyers but tend to purchase equipment
from their country of origin.
Government-
funded
hospitals,
clinics and
healthcare
centres
Foreign-
owned and
joint-venture
hospitals,
clinics, and
healthcare
centres
Local private
hospitals
Medical
education and
research
institutions
Purchase the largest quantity of medical
equipment (70% of the market). Funded
by the Government, this group of buyers
often look for advanced and brand
name medical devices made in
G-8 countries
Expected to show the strongest
growth as a result of the
development of private healthcare in
Vietnam in order to compete with
public and foreign-owned healthcare
centres.
Profile of End Consumers
Government-funded healthcare centers (hospitals, clinics and others) are considered the biggest purchaser of
medical equipment

Decree 36 and Its Influences

Decree 36: New Regulation For Medical Device Management
01/07/2016 01/01/2017
Effective date
of Decree 36
•Complete announcement to
eligible organizations to
trade medical devices
•Receive the declarations of
applicable standards for type
A medical devices
01/07/2017
•Complete the declaration of
eligibility to produce medical devices
•Complete submission of application
for declaration of eligibility to
provide technical advisory services
and to conduct the
inspection/calibration
•Effective date of receipt notes for
applicable standards of type A
medical devices
•Receive application for registration
of free sale of Type B, C or D medical
devices
01/01/2018
• Effective date of
registration number of
free sale of type B, C
and D medical devices
• Medical device
manufacturers
complete application of
the ISO 9001 quality
control system
01/01/2020
• Medical device
manufacturers
complete
application of the
ISO 13485 quality
control system
Timeline:
Management System
Pre Decree 36 Post Decree 36
 Medical devices market was managed under two separate
legislation systems:
 Local products: are required to be registered for Marketing
Authorization (MA) licenses for circulation in Vietnam
 Foreign products: are required to obtain import licenses for
circulation in Vietnam. In fact, only 49 out of 10,500 medical
devices were required to get import licenses, whereas the
remaining products can be imported under the general
consumer goods and other categories.
 No clear responsibilities of stakeholders, especially ones of
suppliers.
 Medical devices market was managed under an uniform
legislation systems:
 Both local and foreign products are required to registered
for MA licenses to be circulated in Vietnam
 Rights and responsibilities of stakeholders are regulated
clearly. Suppliers must provide their products’ information
and take responsibilities for whole products’ life cycle from
supplying to after sale services.
Decree 36 on medical devices management will bring the medical devices market under an uniform legislation
system and enhance the market transparency with existence of qualified suppliers and products
Source: Ipsos’ Research and Analysis, MoH

Impact LevelStakeholders Impacts
Suppliers in
High-end
segment
Low • With valid MA licenses, importation activities will be simplified without requirement of import
license or import quota for each shipment
• Exemption from certain certificates (for example, certificates of quality control standards,
summary of clinically testing data and others) for companies having the certificate for free sale
(CFS) from countries or organizations such as: EU, Japan, Canada, TGA of Australia, FDA of USA,
which will simplify the registration procedure and reduce the workload for the suppliers.
• More administrative tasks for suppliers to conform with the new regulations, especially the
MA license requirement.
Suppliers in
Mid-end and
Low- end
segments
High
• With the valid MA licenses, importation activities will be simplified without requirement of
import license or import quota for each shipment.
• Qualified suppliers can be benefited from tighter control and governance when disqualified
suppliers are eliminated leaving room for growth for this current oversupplied market
segment.
• More administrative tasks for suppliers to conform with the new regulations, especially the
MA license requirement.
• Existing companies without the CFS who provide unqualified or substandard products will face
a new barrier with new certificate requirements (e.g. certificates of quality control standards,
summary of clinically testing data, importation, manufacturing, circulation and trading
activities).
• New and existing unqualified product suppliers will also face difficulties with additional human
resources and infrastructure (storage facilities, logistic requirement, employee’s technical
qualification in medical device technology) to operate.
Positive impact Negative impact
Source: Ipsos’ Research and Analysis via secondary research, primary research
Decree 36: Influences to Stakeholders

Impact LevelStakeholders Impacts
Healthcare
practitioners
Low • Removal of substandard products and unqualified suppliers will give healthcare practitioners
more chances to procure high quality products from qualified suppliers
• They have more rights to request for suppliers’ responsibilities for their products’ life cycle,
from supply to after-sale services
• The procurement bidding results must be published online as part of the new transparency
initiative; hence, healthcare practitioners will be able to select the best fit suppliers
• The more stringent control of unqualified/substandard medical devices will lead to fewer
choices of cheaper products which will put new strain to the current financial budget for
medical devices
Positive impact Negative impact
• Removal of substandard products and unqualified suppliers will give patients more chances to
use high quality products from qualified suppliers
• Patients’ out of pocket payment may increase to cover the rise in payment for higher quality
medical devices.
• Challenges in finding additional sources of finance to cover the rise in payment for medical
devices as well as sufficient resources to implement and maintain the new Decree 36
effectively and accurately.
• More workload, administrative and management jobs as well as challenges in the
implementation process to ensure the timeline, effectiveness and compliances of stakeholders.
• Top-down approach with clear responsibility and governance from the government and all
relevant authorities to control products quality throughout their lifecycle and ensure market
transparency
Patients Low
GO and Other
Organizations
High
Source: Ipsos’ Research and Analysis via secondary research, primary research
Decree 36: Influences to Stakeholders

Key Growth Drivers of Vietnam’s Medical Equipment Sector
Key
Drivers
Increasing
population and
life expectancy
Modernizing
public
healthcare
facilities
Encouraging
International
initiatives
A significant expected surge of the 60-79 age group, exposes
the healthcare infrastructure to higher demands and
potentially also leads to increased investments to meet
these needs. Furthermore, the rapid urbanisation also
facilitates the emergence of hospitals, reducing the access to
healthcare service in economical-disadvantaged areas.
To achieve this objective, it is estimated that the
Government will need to spend approximately €1.06 billion
per year. In addition, the expansion of the private healthcare
sector in Vietnam has been facilitated by the lifting of the
ban on private practice in 1989. More than 200 private
facilities are in operation across the country to cater to the
increasing demands of the emerging middle class.
Some international initiatives have been launched to support
Vietnam’s plans in the healthcare sectors. For example, the
2nd phase of the EU Health Sector Policy Support
Programme (EU-HSPSP-2) or the bilateral agreements with
South Korea, Japan and the EU. This creates a momentum for
the increase of import and export of medical equipment,
while also opening new avenues for domestic
manufacturers.

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Medical Devices Market Overview and Degree 36 First Impression

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