Shot in the arm for med-tech 

MALAYSIA’S semiconductor sector is widely acclaimed. Everyone knows that.

But there is another related industry for which the country has become notable – medical technology or med-tech, the making of medical devices.

This sector has grown by leaps and bounds and Malaysia is now a global hub. About a third of global multinational medical device makers have a presence here, led by pioneer B Braun which first opened its manufacturing facility in Penang back in 1970.

Today these multinational corporations (MNCs) manufacture state-of-art devices such as cardiac pacemakers, cochlear implants, orthopedic implants and continuous glucose monitoring systems, most of which are exported.

The MNCs are increasing their presence in Malaysia and the economic spillover is palpable.

Listed semiconductor companies such as Pentamaster Corp Bhd, Ambest Group Bhd, UWC Bhd and QES Group Bhd have been seeing increasing work coming from these MNCs in Malaysia – whether in the form of machinery or electronics manufacturing services jobs.

What is making Malaysia so attractive?

According to Association of Malaysian Medical Industries (AMMI) chairman Samuel Pooranakaran, the Northern Corridor Economic Region or NCER, anchored by Penang and Kulim, has evolved into Malaysia’s principal med-tech cluster and one of South-East Asia’s most concentrated medical device manufacturing ecosystems.

The strength of the cluster also lies in the depth of its supporting ecosystem, he says.

“Companies can draw on Malaysia’s decades of expertise in electronics, precision engineering, automation, cleanroom operations and specialised manufacturing capabilities,” he tells StarBiz 7.

MNCs, Pooranakaran says, are diversifying their manufacturing footprint amid geopolitical tensions and supply chain disruptions, and are introducing higher levels of automation, digital manufacturing and engineering functions into their Malaysian operations.

In November 2024, US-based continuous glucose monitoring specialist Dexcom Inc opened its RM2.83bil plant in Batu Kawan, Penang – its first manufacturing facility outside the United States.

The 28-acre campus is expected to create more than 3,000 jobs.

That year also saw Insulet Corp, known for its Omnipod insulin delivery systems, set up a large facility in Johor.

Australia’s Cochlear Ltd has said its Malaysian operations will continue to expand steadily over the next three to five years, particularly in manufacturing, repairs and research and development (R&D).

Smaller players are also ramping up. Singapore-headquartered Asmech Technology Pte Ltd, which makes factory automation and equipment, that has had a long presence in Johor is one such example.

Its group CEO Loh June Yong tells StarBiz 7: “Our longer-term ambition is to position Malaysia not merely as a lower-cost production location, but as a high-value centre for engineering, automation design, system integration, testing and customer support.”

“Malaysia is particularly important to Asmech because it has developed a strong ecosystem encompassing medical device manufacturing, electronics, semiconductors, precision engineering and industrial automation.

“It also offers access to skilled technical talent, well-established supporting industries and strong connectivity to the rest of South-East Asia. As global companies seek greater supply-chain resilience and reduce their dependence on any single manufacturing location, Malaysia is well positioned to benefit from this diversification,” Loh says.

More needs to be done though. AMMI’s Pooranakaran says there is a need to strengthen product development and advanced manufacturing technologies.

This, he says, will require sustained investment in talent and having enhanced med-tech ecosystems.

“There is also a need for policy consistency and government support to encourage companies to locate more strategic functions in Malaysia, beyond manufacturing alone,” he says.

Low levels of local high-end med tech

MNCs aside, and if you strip out the consumable devices made by Malaysian med-tech companies such as rubber gloves, syringes and catheters, hardly any higher end products are made by local companies.

For example, of the 30,000 or so medical devices purchased by hospitals in Malaysia, less than 100 are made locally, says Johari Abu Kasim, president of Malaysia Medical Device Manufacturers Association (Perantim).

Even within that small pool, most items are the lower end disposables.

“What we want is to become producers of high-tech medical devices, medical equipment and diagnostic products. However, we are still constrained by issues such as certification requirements and investment,” he says.

Johari notes that although MNCs have played an important role in developing Malaysia’s med-tech ecosystem, the benefits have not always translated into stronger local capabilities.

“Their presence has both advantages and disadvantages. The good thing is that it brings business and investment into the country. The downside is that it does not create much value-add for local companies,” he says.

Certification remains one of the biggest hurdles. Johari says obtaining internationally recognised approvals such as Europe’s CE or US Food and Drug Administration (FDA) can take years and cost millions of ringgit.

Without these certifications, local companies risk becoming little more than local champions, confined to the domestic and Asean markets.

Johari, a former corporate banker, had ventured into med-tech around 20 years ago and bootstrapped his venture making proprietary branded disposable bubble humidifier, used in hospitals when oxygen is delivered to patients.

The product has secured both CE and FDA approvals and his company Star Medik is fully ISO 13485 certified. The product is exported to 30 countries worldwide from its manufacturing facility in Nilai, Negri Sembilan.

Other well known local players include Straits Orthopedics (a unit of the now privatised Apex Healthcare Bhd), which is a contract manufacturer of orthopedic implants and surgical instruments.

Public listed UMediC Group Bhd makes its own pre-filled humidifiers and nebulisers. When it was listed in 2022 at a historical price-to-earnings ratio of 23 times, it attracted much investor interest with its share price almost doubling soon after.

But the group’s earnings have been declining after what it claims is lower demand for medical devices and consumables from both public and private hospitals, alongside softer demand for its respiratory-related product.

Medical device security

Another interesting personality in Malaysia’s homegrown med-tech scene is OSA Technology Sdn Bhd managing director Dr Hyzan Mohd Yusof.

The accomplished orthopaedic trauma surgeon who still practises at the major private hospital that he has been with for the last 20 years, knows all about the importance of med-tech security.

As a volunteer in Aceh, Indonesia, during the catastrophic tsunami of 2004, Hyzan and fellow surgeons ran short of orthopaedic supplies. Calls to major MNCs went unheeded.

Instead, he had to make do with makeshift wires and a Black & Decker power drill to treat patients with broken bones.

“For an orthopaedic surgeon, the experience was deeply affecting. I felt we were at the mercy of those MNCs.

“It also raised a fundamental question. Why was South-East Asia, a region of more than 600 million people with a large and growing need for healthcare, so dependent on orthopaedic implants manufactured elsewhere? That was when I decided I wanted to set up my own manufacturing plant to make orthopaedic implants,” he says.

The early journey was anything but easy. Commercial banks were reluctant to lend.

The idea of a Malaysian company manufacturing highly regulated orthopaedic implants was still unfamiliar, and the risks associated with building a medical device business from scratch were considerable.

A breakthrough came when OSA Technology secured support from the Malaysian Technology Development Corp and Perbadanan Usahawan Nasional Bhd. The company subsequently obtained certification from the Medical Device Authority (MDA) and also pursued CE certification initially to meet European standards.

When maintaining the CE certification proved prohibitively expensive, Hyzan said the company decided not to continue with CE certification and instead focused its resources on strengthening its domestic operations.

In 2010, OSA Technology was appointed by the Health Ministry as a manufacturer and supplier of orthopaedic trauma implants. Today, its products are supplied to 67 major government hospitals through Pharmaniaga, as well as private hospitals.

Yet, Hyzan says manufacturing alone is no longer enough.

“Malaysia cannot build a sustainable medical technology industry simply by producing products developed elsewhere. We need to move further up the value chain,” he says.

The Covid-19 pandemic, too, taught many countries the importance of medical device security.

Johari recounts that at one point during the pandemic, a shipment of 2,000 ventilators destined for Malaysia from Europe was stopped during the first Trump administration and redirected to Italy because the Italians were deemed to need them more.

“This is why medical devices such as ventilators, vaccines and oxygen concentrators are strategic products that Malaysia must be able to produce on its own. Whether we make money or not is secondary,” Johari says.

Meanwhile Hyzan’s OSA Technology and another four local med tech players are working on their own initiative by hubbing together in Batu Kawan, Penang, with factory lines powered by Pentamaster.

The companies share common facilities such as cleanrooms, robotics and manufacturing services to reduce costs, while presenting a unified front to customers and investors.

MDA’s important role

The MDA, the country’s sole regulator for the medical device industry, has in recent years introduced new regulatory pathways and cross-border collaborations as Malaysia seeks to grow its medical technology industry.

One such initiative is the Innovative Medical Device Pathway (IMDP), which aims to shorten the time-to-market for innovative medical devices by engaging developers earlier in the regulatory process.

MDA chief executive Dr Muralitharan Paramasua adds that the MDA has also established reliance arrangements with Singapore, Thailand, Uzbekistan and Japan, with discussions ongoing with the United Arab Emirates, Brazil and Egypt.

This gives Malaysian companies alternative pathways into overseas markets instead of relying solely on obtaining Europe’s CE and US FDA certifications.

This, Muralitharan explains, allows companies to enter overseas markets faster by reducing duplicate regulatory assessments.

“More importantly, instead of waiting for these technologies to be introduced elsewhere before they eventually reach Malaysia, our patients can benefit from them much earlier,” he says.

Just last month, the MDA launched the second phase of its Malaysia-China Regulatory Reliance Programme for innovative medical devices, allowing companies to obtain approvals in both countries through a single joint evaluation.

The first phase of the reliance with China, launched last year, only covered in-vitro diagnostic devices such as test kits.

“This is a game changer. Malaysia is the first country to establish a regulatory reliance arrangement with China for innovative medical devices,” Muralitharan says.

While concerns have been raised about an influx of Chinese medical devices into Malaysia, Muralitharan says the reliance does not exempt these products from Malaysia’s regulatory requirements.

“Products from China will still be subject to import permit requirements, Customs checks and product registration with the MDA. If a product does not meet Malaysia’s regulatory requirements and specifications, we retain the authority to reject it. Foreign manufacturers must also appoint a local authorised representative before their products can be marketed here,” he says.

Muralitharan says the MDA is encouraging companies to diversify beyond the traditional EU and US markets through reliance programmes with other countries.

“Rather than waiting years for CE certification, some companies have chosen to withdraw their applications and focus on other markets instead,” he adds.

Reliance programmes can also shorten the process of obtaining the CE and FDA certifications, while reducing application costs by up to one-third.

For example, a local company that obtains MDA approval can use Malaysia’s reliance arrangement with Singapore to gain faster approval there.

Singapore’s reliance arrangement with Australia can then help the company’s entry into the Australian market, while Australia’s reliance arrangement with the United States allows it to get FDA approval more quickly.

Funding constraints

Funding remains one of the main hurdles in developing more home-grown medical technology companies, industry players say.

While the MDA’s IMDP is designed to accelerate the time-to-market of medical devices, Hyzan says many promising technologies continue to stall at Technology Readiness Level (TRL) 6 – the prototype testing stage – because companies struggle to secure the financing needed to progress to commercial production.

Government grants, he says, have generally been effective in supporting early-stage research.

The bigger challenge comes at around TRL 6, where companies often need to commit substantial upfront capital under matching grant arrangements.

“We are not short of innovation. There are many promising technologies and untapped research at Mimos Bhd and our universities, with patents that have strong commercial potential.

“What we are short of is financing. Rather than relying and competing for the same pool of government funding, companies need to gain access to the much larger pool of private capital,” Hyzan says.

Perantim’s Johari says that while programmes like IMDP have helped spur innovation, funding is released progressively, requiring innovators to ascertain viability at every technology readiness level before receiving further support – a process he says inevitably slows commercialisation.

“In the United States, big companies are prepared to commit substantial funding to promising innovations in exchange for an equity stake. That is the fastest way to commercialise innovation. We do not have that in Malaysia,” he says.

For this reason, Perantim launched INNOMed, a national medical innovation platform that connects researchers and startups with venture capital firms, high-net-worth investors and industry players, with the aim of helping promising technologies secure the financing needed to reach commercialisation.

MDA’s Muralitharan also says local companies cannot expect the state to fund the entire innovation journey from research to commercialisation.

However, Muralitharan says funding is not as scarce as it is often portrayed. Beyond grants offered by agencies such as Science, Technology and Innovation Ministry, Higher Education Ministry and Sirim Bhd, the MDA last year launched its own MedTechpreneur grant programme to support local small and medium enterprises.

The five-year programme has been allocated RM10mil, or RM2mil annually, to support R&D, automation, certification and facility upgrades among local medical device companies.

Muralitharan says successful applicants receive an MDA evaluation report, which serves as an endorsement of the project and can be used to secure further financing from agencies such as SME Bank and SME Corp.

“Many local companies expect the government to fund them from TRL1 all the way to TRL9, even patenting. It doesn’t work that way. Companies also have to invest in their own technologies.”