05/11/2009

Taiwan External Trade Development Council

Taiwan's Medical Materials: Innovation and Real Value

The crisis in world financial markets began in the second half of 2008. Amidst this adversity, only a small number of industries have been able to achieve growth; the medical equipment industry being one of them. Due to outbreaks of infectious diseases, the emergence of preventive medicine, the reform of medical systems, and the growing need for elder care and telemedicine due to the aging population and increase in chronic disease patients, the growth of the medical equipment industry continues to surge, and has become one of the world's most promising industries. Thanks to policy incentives, vigorous R&D efforts, and exploration of new markets, Taiwan's medical equipment industry has recently maintained steadily increasing exports, and is now seen as driving the growth of Taiwan's biotechnology industry.

Taiwan's medical equipment industry enjoys relatively mature R&D capabilities and an excellent global reputation in the areas of mobility aids, medical consumable materials, and physiological monitoring products. However, as emerging countries make inroads into the low-price medical equipment market, Taiwan's medical equipment manufacturers have increasingly sought to develop mid- and high-end medical equipment, while continuing to strengthen their international marketing and channel expansion ability. Since Taiwan's highly-competitive ICT industry is now aware of the promises of the medical equipment market, it has invested considerable resources in the development of relevant products, and has helped put Taiwan's medical equipment industry in the front ranks of the global industry, ensuring that it will not be overlooked.

A Lasting, Superior Reputation
According to the Industrial Technology Research Institute's Industrial Economics & Knowledge Center (IEK), in spite of the lingering effects of the global economic downturn, the medical equipment industry continues to expand. After growing at a rate of 6.1% in 2009, the market is expected to increase from US$242.0 billion 2008 to US$289.7 billion in 2011. The world's largest consumer market for medical equipment (not including consumable materials) is the US, which accounts for 41% of the global market, followed by Japan, Germany, Britain, and France; China is ranked ninth.

Taiwan's medical equipment industry is ranked 24th worldwide, and the value of its output surged from US$1.216 billion in 2004 to US$1.672 billion in 2008, and is projected to grow to US$1.78 billion in 2009; the industry's 6.5% growth rate surpasses that of the global industry as a whole. In particular, consumer equipment for home use (including wheelchairs, mobility devices, sphygmomanometers, thermometers, and glucometers) accounts for 56.8% of the Taiwanese industry's output, and has displayed the best performance. This shows that Taiwan's conventional medical equipment still retains a high degree of competitiveness. Apart from home consumer products, hospital therapeutic products (dental, ophthalmological, and orthopedic instruments and equipment, surgical apparatus, and orthopedic and dental prosthesis) account for 22.1% of the industry's output, hospital diagnostic and monitoring equipment (X-ray instruments and equipment, electrocardiograph, ultrasound, MRI, and physiological monitors) account for 20.4%, and medical consumable materials (gloves, syringes, catheters, first aid kits, and dressing materials) account for 0.7%.



Value of global medical equipment market
Year 2008 2009 (est.) 2010 (est.) 2011 (est.)
Output value (US$1 m) 242,037 256,845 272,729 289,776
Source: ITRI IEK, 2009/04

Output of Taiwan's medical equipment industry
Year 2004 2005 2006 2007 2008 2009(e)
Output value (US$1 m) 1,216 1,353 1,520 1,609 1,672 1,781
Note: The data above had been converted from NTD to USD at an exchange rate of US$1 : NT$32.

Source: ITRI IEK, 2009/04

Accelerating Industrial Upgrading
Taiwan's medical equipment industry focuses primarily on consumer products for home use, and produces a relatively low percentage of large instruments and equipment for hospital use. The government passed the "Biotech and New Pharmaceutical Development Statute" in June 2007 to further stimulate the development of Taiwan's medical equipment industry; this statute contains many tax exemptions and R&D incentive measures intended to encourage firms to target the high-end medical equipment market. In view of the many opportunities and vast promise of the medical equipment market, in 2009, the government further included medical equipment as one of the two key items in the "Diamond Action Plan for Biotech Takeoff," and also listed "medical equipment prototype" industrialization R&D and rapid prototyping centers as key development directions.

Furthermore, the government has begun the active development of three flagship biomedical parks: Jhubei Biomedical Park in Hsinchu, Nangang Biotechnology Park, and Tainan Science Park's Lujhu Kaohsiung Biomedical Park. The government's total investment in the development of these parks will exceed US$0.84 billion. The Jhubei Biomedical Park will focus on medical equipment involving electronics and communications technologies and provide a base for large biotech firms. The Nangang Biotechnology Park will focus on clinical testing and R&D, and the Kaohsiung Biomedical Park will encourage the development of metal and precision micro-electromechanical instruments for dental, orthopedic, and surgical applications. It is hoped that the establishment of these biomedical parks will enable medical equipment firms to draw on the core technologies of Taiwan's conventional industries, such as metal processing, promote the establishment of medical equipment industry chains, and transform Taiwan into one of the world's most important medical industry centers.

While the government's incentive policies have helped sustain the development of Taiwan's medical equipment industry, the private sector's vitality deserves most of the credit for the industry's solid foundation. Building on its methodical growth in the past, the industry is now sprinting ahead. According to IEK statistics, Taiwan's medical equipment firms are performing a rapidly growing share of their technology R&D and manufacturing work in-house, and are also swiftly increasing their sales and service capabilities. This serves to show that Taiwan's medical equipment industry is developing in the areas of both hardware and software, steadily increasing its in-house R&D capacity, and gradually freeing itself from its restricting dependence on foreign technology. The expansion of such information firms as Hon Hai Precision, Quanta Computer, and Chi Mei into the medical equipment and medical electronics industries will accelerate the upgrading of the medical equipment industry from the production of relatively low-level consumable materials and consumer products to the design and development of mid-/high-end medical equipment.

Changes in the business area of Taiwan's medical equipment firms
Unit: %
Category Manufacturers Import/export
trading companies Channel firms or
retailers R&D Service firms Others
2007 81 36 13 31 12 1
2009 89 35 30 49 24 1

Note: Raw data was obtained from the 2007 and 2009 Taiwan Medical Equipment Industry Census (Source: IEK, ITRI, 4/2009)

Sources of technology used by Taiwan's medical equipment firms
Unit: %
Category Technology sharing with foreign firms Technology sharing with domestic firms Support from academic or research organizations Purchase of foreign technology Purchase of domestic technology In-house R&D
2007 28 17 21 6 2 72
2009 22 19 34 3 0 86

Note: Raw data was obtained from the 2007 and 2009 Taiwan Medical Equipment Industry Census (Source: IEK, ITRI, 4/2009)

Export statistics for Taiwan's medical equipment industry
Unit: US$1 M
Year 2006 2007 2008 2009 (est.)
Surgical and therapeutic medical equipment 163.46 198.21 204.59 218.37
Assistive and prosthetic equipment 377.18 378.90 386.03 396.78
In vitro diagnostic equipment 70.18 103.25 132.40 148.25
Other medical equipment 187.53 214.96 225.62 235.12
Total 798.35 895.32 948.64 998.52

Note: The raw data above had been converted from NTD to USD, at an exchange rate of US$1 : NT$32. (Source: IEK, ITRI, 4/2009)


TAITRA (Taiwan External Trade Development Council) holds the Taiwan Excellence Awards Selection every year as part of the MOEA's Branding Taiwan Program. The purpose of the Taiwan Excellence Awards is to encourage Taiwanese firms to invest in R&D and innovative products; firms in all industries mass producing "Made in Taiwan" or "Made by Taiwan" products (apart from foods and pharmaceuticals) can participate in the Taiwan Excellence Awards Selection. The four award categories are "R&D," "design," "quality," and "marketing." Special emphasis is placed on "innovalue" (innovation & value) in either product- or marketing-related aspects. Products embodying Taiwan's innovation and value have a chance to be selected.

Firms in Taiwan's biotechnology and medical industries have been continuously introducing innovative new products in the market, and many of these products have received the Taiwan Excellence Award. Apex Medical, Rossmax, Advantech, and HiwinMikro are all excellent examples of these highly innovative firms. For further information, please visit the Branding Taiwan web site at http://brandingtaiwan.org/eng/twn_excellence.aspx.


Rossmax International: In-house R&D & Boundless Innovation
Founded in 1988, Rossmax International Ltd. specializes in home health care and medical products such as upper-arm and wrist-type electronic sphygmomanometers, portable electronic electrocardiograph machines, pressure gauges, and surgical shoes. Rossmax, which held a 60% share of the German market in 2005, is currently the second largest firm in its category worldwide, and manufactures the leading brand of electronic sphygmomanometers in the world. Rossmax's outstanding global performance has enabled it to win the Rising Star Award, National Award of Small and Medium Enterprises, Model Venture Award, Industrial Technology Advancement Award, and Taiwan Innovalue Award. Rossmax is also one of the most representative and successful firms in Taiwan's medical equipment industry.

An R&D Leader; Number One in Creativity
When Rossmax entered the electronic sphygmomanometer market in the 1990s, this market was almost entirely a Japanese monopoly, and extremely few Taiwanese products of this type were made. After assessing the market, Rossmax discovered that it possessed the necessary design and production skills, there was no benchmark brand in the electronic sphygmomanometer market, the medical and nursing industries were on the rise, and sphygmomanometer parts could be easily purchased on the market. As a result, Rossmax resolutely decided to join the ranks of electronic sphygmomanometer producers. After a year and a half of R&D, Rossmax successfully developed its proprietary sphygmomanometer technology, and became the first non-Japanese producer of wrist type electronic sphygmomanometers. It is also the only firm in Taiwan to have independently developed its own electronic sphygmomanometer measurement software.

Rossmax's absolute commitment to R&D has been the key to its success. As much as 33% of the employees working at Rossmax's corporate headquarters are engaged in R&D. After factoring in R&D personnel at its subsidiary Rossmax InnoTek and its Shanghai plant, Rossmax has a total of more than one hundred engineers engaged full-time in technological R&D. The company has received close to 40 patents in seven countries, including patents for an automatic memory type, exhaust pressure-R&D improvement mechanism, measurement scenario, new measurement device, linear pressurizing device, and digital detectoscope technology. Rossmax cooperated with a German partner in the development of the patented HSD sphygmomanometer, which can take dynamic blood pressure measurements allowing the judgment of a patient's physical and mental state. This example is testament to Rossmax's unceasing efforts to develop new markets.

A Brand Strategy; A Two-Track Policy
Starting in 2003, Rossmax began adjusting its business strategy and introduced its Rossmax brand worldwide. Taiwan and China have remained Rossmax's primary OBM markets, however. The company expects branded products to account for more than 40% of shipments in 2009, with the remainder consisting chiefly of ODM products produced for channel firms and exported mainly to Europe and the US.

According to its Sales Manager Miguel Chang, Rossmax is a young brand, and mainly targets emerging markets such as Eastern Europe, the Middle East, and South America. Rossmax's strategy will be to perform intensive brand marketing in emerging markets surrounding mature markets, and then enter the mature markets. Rossmax looks forward to constructing a channel and marketing framework encompassing OEM and ODM production functions, establishing global production and sales networks, setting up three major distribution networks in each main market, and achieving a market share of at least 30%. Company web site: www.rossmaxhealth.com


HiwinMikro: Technological Patents & Boosting Competitiveness

Founded in 1997, HiwinMikro is a manufacturer of specialized linear actuator and linear motor transmission systems and industrial robots. Its customers are predominately in the semiconductor equipment, medical equipment, precision measurement, and automation industries, and include the world’s top three semiconductor equipment manufacturers. HiwinMikro has recently begun producing medical equipment such as hospital beds, and plays a pivotal role in the key medical equipment parts and components industry. It consequently has won the Best Industry-Academic Development Award, Taiwan Innovalue Award, and Taiwan Small and Medium Enterprises Innovation Award, and its corporate capabilities are widely acknowledged.

Key Components: A Secret to Success
R&D manpower accounts for one-third of all personnel at HiwinMikro, which has R&D centers in Tokyo, the German city of Offenburg, and Moscow. It applied for more than 40 patents in Taiwan during 2008 alone. HiwinMikro ranks 45th on the list of the top 100 patent holders in Taiwan, and technology is the source of the company's formidable competitiveness.

Due to an aging society and rapid growth of health care markets around the world, HiwinMikro regards the medical industry as a key area for future corporate growth. Taking linear actuators as an example, HiwinMikro has widely used these devices to provide electrical hospital beds with automatic control functions such as lifting and helping patients to roll over. Thanks to their stability, long-term durability, and low breakage rate, HiwinMikro's linear actuators are widely employed throughout the medical equipment market, and HiwinMikro has become a leading brand worldwide. In addition to hospital beds, HiwinMikro's products are also used in heart resuscitation equipment testing units, gamma knives, joint rehabilitation devices, and treatment platforms. Furthermore, certain DNA testing equipment and artificial insemination devices use component parts from HiwinMikro.

Vigorous Marketing; a Marketplace Winner
HiwinMikro's "Hiwin" brand name signifies "You are a Hi-Tech Winner with us!," and implies that customers using its linear transmission products can achieve the innovalue and competitiveness they require to succeed in the market. HiwinMikro therefore naturally hopes to become a leader in innovative technology, and according to HiwinMikro Assistant VP Daniel Lin, the company participates in an average of more than 100 international trade shows each year, and relies on these shows to energetically market its Hiwin brand. In addition, HiwinMikro also relies on high-visibility Internet and transportation hub advertisements to reinforce its image in the marketplace.

In contrast to its European and American competitors, HiwinMikro derives its competitiveness chiefly from vertical integration and the production of linear actuators, air bearings, and most mechanical elements in-house. It offers cost competitiveness and enjoys the advantage of being able to ship products to its major customers from nearby. HiwinMikro's marketing network spans the globe, and it has established subsidiaries in the US, Germany, Japan, Switzerland, and the Czech Republic. As such, HiwinMikro is one of Taiwan's best examples of international market development. Company web site:
www. HiwinMikro.com.tw


Apex Medical: Constantly Fighting for its Medical Materials Brand
Currently Asia's leading supplier of air cushion beds, Apex Medical started out as a contract manufacturer of medical equipment in 1990, and has dramatically enhanced its R&D and manufacturing capabilities after almost two decades of tempering. In addition to ODM services, Apex markets its products throughout developing countries under its "Apex" brand. The company's product line includes welfare equipment such as mobility aids and vehicles, transcutaneous electrical nerve stimulators (TENS), anti-bed sore reduced-pressure support surfaces, respiratory therapy atomizers, and sleep apnea treatment apparatus. Apex puts great effort into investigating the needs of users and the market, and is gradually establishing itself as the place to go for one-stop shopping.

Shaping a Superior Brand Image; Harboring Great Ambitions
"We didn't know what we were fighting for when we first introduced the "Apex" brand name," said Edward Tisu, Apex's vice president in charge of brand marketing. Tisu explained that Apex's brand "DNA" was not very strong in the beginning, and the brand's central idea and positioning were very unclear. In fact, Apex already marked its export products with the "Apex" name when it was a trading company, on the off chance that this would help sales. Now, with the popularity of in-house brands in Taiwan, Apex feels that it should put more effort into developing its brand. Brand development is an inevitable response to the steady erosion of profit margins among contract manufacturers. Having introduced its "Apex" brand a considerable time ago, Apex naturally feels that it should play a part in today's branding campaign.

In 2008, Apex participated in the "TBM Boot Camp," which was sponsored by the Bureau of Foreign Trade, MOEA, TAITRA, Taiwan Excellent Brand Association, and Aspire Academy, which formally began Apex's commitment to total brand management. Apex analyzed its existing strengths and weaknesses from the angles of strategies, branding, and brand profile, and asked the question, "Who Is Apex?". Apex then drafted a new brand strategy that would ensure the brand's coherence.

A Service Strategy Aimed at Penetrating Markets
Demographic aging is currently one of the major drivers of the global medical equipment market, and is a source of market opportunities for Apex. Although there is still plenty of room in this market, the differences between the medical equipment industry and other industries, as well as the effects of the different health insurance systems, market structures, and competitive ecologies in different countries, have deeply affected Apex's marketing strategies.

Apex approaches marketing from the four angles of products, communication, channels, and customer service. It wants its brand to be in direct communication with consumers, and wants to see consumers clearly. Apex has realized that channel firms play an important bridging role that allows the company to satisfy consumers' needs, and it therefore considers every channel firm to be a key strategic partner. Apart from selling Apex's products, channel firms also play the role of "trainers" for Apex, which requires channel firms to be service specialists in addition to their sales role.

Apex won the 16th Taiwan Innovalue Award in 2007, and was granted the "Best Innovative Product" award by the organizers of the Taipei International Medical & Healthcare Exhibition and professional judges in 2008. These accolades confirm that Apex's innovative ability and brand marketing strategies meet world-class standards. Company web site: www.apexmedical.com.tw


Advantech: Customized Service & Unique Market Appeal

Advantech has consistently specialized in the development and manufacture of high-quality, high-performance industrial computers since the company was founded in 1983. Thanks to its talent as a leader and an innovator, Advantech is currently one of the world's three largest industrial computer vendors. Advantech has won honors including the Taiwan Innovalue Award, Corporate Social Responsibility Award, and the MOEA Outstanding Industrial Technology Development Award for several consecutive years. In 2004, Advantech was ranked among Taiwan's Ten Leading International Brands and won the Taiwan Excellence Awards, SecuTech Expo Innovation Award, and National Award of Small and Medium Enterprises.

Maintaining High QC and Satisfaction Standards
Advantech first ventured into the medical equipment market in 2001. The industrial computer market is characterized by high customization needs and diverse functionality requirements, and Advantech entered the medical applications market in response to the medical needs of its customers. The emphasis on small batches of diverse products in the field of industrial computers enabled Advantech to hone its customization skills. Advantech's standard products currently number more than 400; its core competitiveness lies in its outstanding management and technological application innovation.

After accumulating many years of R&D experience, Advantech developed a "Patient Infotainment Terminal" combining electronic medical information, patient case histories, entertainment, the Internet, TV, a menu system, telephone, and health education information. This bedside multifunctional terminal can provide medical service and entertainment functions; it is currently being used in Hong Kong, Norway, and Ireland.

Advantech's other medical equipment R&D work chiefly focuses on medical-grade computers, and its products include general medical computers and computers for surgical and intensive care rooms. According to Lydia Cheng, the assistant manager in charge of medical computing, medical computers are highly specialized and customized, and must pass demanding product certification, such as Europe's EN 6060-1 and America's UL 6060-1 certification. Advantech's Taiwan factory has now passed ISO 13485 certification, and can fully meet the high quality requirements of its customers in the medical industry. For instance, Advantech has developed a handheld computer with a 10.4" screen that includes a barcode and RFID reader, digital camera, and video camera. Advantech depends on its rigorous standardized operating procedures and many years of accumulated R&D experience to successfully provide highly customized solutions.

Localized Service with a Considerate Touch
In order to satisfy customers' real-time needs, Advantech relies on distributors to serve its customers, while it focuses on R&D, design, production, and work in the education market. This is a so-called "B2B2C" business model. Since the European and American markets are so large, Advantech relies on its regional distributors to serve customers locally, which gives it a close-up knowledge of customers' needs and helps it develop new markets.

Advantech's medical equipment includes both branded and OEM/ODM products; branded products are mostly sold in the European and Taiwanese markets, and OEM products are chiefly sold to North America. “Advantech will enter the Chinese medical equipment market in the second half of 2009,” said Assistant Manager Cheng, who regards China as Advantech's largest potential market worldwide. Company web site: www.Advantech.com.tw


News Contact:
Mr. Andrew Liu
Senior Project Manager, Strategic Marketing Department
Taiwan External Trade Development Council
Tel: (886)-2-27255200 Ext. 1393
Fax: (886)-2-87891605
E-mail: andrewliu@taitra.org.tw