Hong Kong molders target medical devices

HONG KONG (Nov. 6, 1:10 p.m. ET) -- A group of Hong Kong companies, including some large plastic firms, want to see the region become a hot spot for manufacturing medical devices, and one of their leaders is suggesting stepped up efforts are needed to do that.

Hong Kong manufacturers, who built their businesses partly by leveraging the low cost of mainland China, have been stung by rising costs in those Chinese factories and the collapse of their traditional export markets in Europe and America.

But some of them are now hoping to combine what they see as their strengths in manufacturing consumer electronics and other products for Western markets and join it with Hong Kong’s medical and university centers, to expand into the potentially more lucrative global medical device arena.

Hong Kong is traditionally strong in precision manufacturing of plastics, metals and electronics, and needs to find ways to link that with its solid base of university biomedical engineering programs and clinical research to start commercializing new medical technology, according to John Chai, chairman of the Hong Kong Medical and Healthcare Device Industries Association.

“What needs to be happening is there needs to be a health care innovation program, to coordinate this innovation activity,” said Chai, who is also an executive with plastic molder and measurement equipment maker Fook Tin Technologies Ltd. “We need someone, probably from the government, not leading itself but organizing all these elements to be put together.”

In an interview at the inaugural Hong Kong International Medical Devices and Supplies Fair Nov. 4, he said the city’s medical manufacturing industry “is in its infancy.”

Nonetheless, he said exports of medical equipment and health care products from Hong Kong have grown 50 percent since 2004, to US$4.2 billion last year.

For too long, Chai said, local firms focused on making consumer electronics, toys and other products for large multinational firms, but they need step into higher-end markets and focus more on product innovation. He suggested the Hong Kong Innovation and Technology Commission could play a stronger role in fostering health care innovation.

While Hong Kong-based firms have a long history of exporting to North America, Europe and Japan, they could still face hurdles transitioning to medical devices because of skepticism about whether China is a safe place to manufacture world-standard health care products, according to David Wong, business development president with Hong Kong-based injection molder Mediconcepts Ltd.

Mediconcepts, which has worked with doctors to manufacture complete minimally-invasive surgical tools such as tissue removal bags and laparoscopic devices at its factory in Shenzhen, Guangdong province, sometimes finds skepticism when it pitches China as a manufacturing location to American firms worried about risks, Wong said.

Still, Hong Kong plastics firms with business in the medical field say it has generally weathered the economic downturn better than other sectors.

Vincent Medical Mfg. Co. Ltd., which makes respiratory care products using injection, blow molding and extrusion processes at its factory in Dongguan, Guangdong province, said its export sales are down somewhat but sales to mainland China are “growing exponentially,” according to Calvin Koh, marketing manager.

Earlier this year, China announced plans to spend 850 billion yuan (US$125 billion) to significantly expand health care access, prompting firms like Vincent to focus more closely on the domestic China market.

Koh said Vincent Medical is also trying do more of its own product development, as its costs to manufacture in China have risen substantially in recent years from the rising Chinese yuan, the country’s labor law revisions in 2008 and higher raw material costs.

“It is really hard to make profits” making components or products for other companies, Koh said.

Hong Kong firms have the potential to use their Chinese manufacturing base to lower costs for international medical device firms, but the local industry sometimes needs help building up knowledge of regulatory requirements in the medical field, said Albert Lee, vice chairman of the HKMHDIA and CEO of Hong Kong-based injection molder Providence Enterprise Ltd.

Providence has about 180 injection molding machines in several Chinese factories.

Lee and others said Hong Kong firms will also face increasing competition from mainland Chinese medical device makers, which he said can be cheaper than Hong Kong firms.

One of the those potential mainland competitors, Ningbo Advan Electrical Co. Ltd., exhibited at the Hong Kong show, and said sales have doubled in the last year, driven by growth in its injection molded surgical skin staplers to America and Europe.

The company has a niche product that cannot be easily copied by other local competitors, said Vivian Liu, sales manager of exports.

Lee suggested Hong Kong firms could adopt a strategy similar to how his firm gradually developed its medical business.

Providence, which now gets about 25 percent of its US$100 million in annual sales from medical, entered the health care field almost by accident 10 years ago.

The company discovered that the motors and precision plastic gears it had been supplying for soft drink dispensers, its core business, suddenly started being used in dental equipment. The company saw an opportunity and began slowly expanding into medical, Lee said.

Today, the company makes complete devices like nebulizers for dispending asthma medication in a spray, and its plastic gears and motors go into some of the most heavily-regulated devices in America, such as hemodialysis machines, where the risks from product failure are very dangerous for patients, he said.

“A lot of electronics and home appliance makers in Hong Kong are ready to enter into medical devices,” Lee said.

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EDITOR'S NOTE: Processors considering entering the healthcare market can learn the basics at an April 12 workshop preceding the Plastics News Global Group's April 13-14 Plastics in Medical Devices 2010 conference in Cleveland.

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