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Korea’s Medical Equipment Exports Reached US$2 Billion Last Year
Medical Device Industry
Korea’s Medical Equipment Exports Reached US$2 Billion Last Year
  • By matthew
  • September 27, 2013, 03:47
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JW medical, a subsidiary of JW Holdings, released the Multi-Slice CT Scenaria, that enables 128 imaging photographs at a time on August 2013.
JW medical, a subsidiary of JW Holdings, released the Multi-Slice CT Scenaria, that enables 128 imaging photographs at a time on August 2013.

 

The Korean medical device industry has witnessed steady domestic growth to become internationally competitive. Now, the industry seems to be increasing its global market share.

Trade deficits are getting smaller. Local medical device companies have been suffering trade deficits on account of a massive amount of imports, but exports to emerging markets such as China, India, and countries in Latin America are increasing.

According to a September 26 report on health care industry trends by the Korea Health Industry Development Institute (KHIDI), exports of domestic medical devices rose 17.5% to reach US$1.967 billion in 2012, owing to the active expansion of overseas markets.

Since 2008, the growth rate in Korean exports to emerging economies, including Brazil, Russia, India, China, and South Africa (BRICS countries), and countries in Latin America, has increased more than 20%. This export growth has become the driving force in the domestic medical device industry’s overseas expansion.  

Increase in Exports to Emerging Economies

Korea’s medical device exports have been steadily growing.

Last year, exports of medical equipment amounted to US$2.61 billion, an increase of 17.5% compared to US$2.52 billion in 2011. But imports grew only 3.2%, contributing to a significant decrease in trade deficits from US$848 million in 2011 to US$634 million in 2012. 

Among export markets, the importance of the emerging market has been growing. The BRICS countries accounted for 15.1% of the total market in 2009, but 23.3% in 2012, up 8.2%. However, exports to advanced nations and other countries decreased by 2.8% and 5.4% each during the same period. 

In 2012, exports to the BRICS countries totaled US$458 million, a year-on-year growth of 36.1%. Since 2009, annual growth rate has been in the range of 30-40%. In particular, outbound shipments to China gained 66 percent on-year to reach US$175 million. Exports to the Russian Federation went up by 25.4% to hit US$160 million, which is followed by US$67 million to India (a 7.6% increase), and US$56 million to Brazil (a 36% increase). 

Along with export growth, the number of exporters has been increasing as well. Last year, the number of exporters to the BRICS countries was 304, a year-on-year increase of 10.5%. 

Average 10% Growth in Emerging Market 

Last year, the global medical device market grew by 1.7% from a year ago to reach US$308.3 billion won.

So far, major developed countries such as the US, Japan, and Germany have dominated the global market. But the importance of emerging economies is expected to grow in the global medical device market.

The emerging market is receiving attention as nations with export opportunities, since their growing interest in medical service is leading to a rise in medical device imports.  

According to KHIDI data, China has an annual growth rate of 18.7%, projected to be the second largest medical device market in the world in 2018. Other emerging economies such as India, Brazil, and Russia have average market growth of over 10%, expected to lead the growth in the global medical device market. 

Therefore, the world’s top medical device manufacturers, such as General Electric Company and Philips Healthcare, are laying the groundwork for emerging market entry by acquiring local medical device companies, expanding production lines, or establishing local subsidiaries in the region. 

Support from Pan-Government Departments Needed

Since the global medical device manufacturers' expansion in the emerging market is accelerating, the competition over exporting medical devices to the market is predicted to be fiercer. This means that Korean companies will inevitably vie with both global enterprises and local companies in the market.

As a result, experts point out that it is necessary for domestic medical device companies to enhance product competitiveness through investment in research and development (R&D), and to try to expand exports so that their entry in the emerging market can be accelerated. 

An official in the Ministry of Health and Welfare said, “We have provided support for the promotion of the domestic medical device industry, led by KHIDI,” adding, “We are discussing ways to nurture the industry for the revitalization of R&D and overseas expansion at the pan-governmental level.”