SINGAPORE - Singapore's medical device market is projected to register a compound annual growth rate (CAGR) of 8.4 per cent from 2018 to 2023, down from a previous estimate of 9.1 per cent, with the industry valued at some $1.3 billion in 2023, according to a report by Fitch Solutions Macro Research on Thursday (July 25).
This comes amid weaker global economic momentum, and the ongoing US-China trade tensions, though increased government expenditure on the growing healthcare needs of an ageing population will likely cushion the effects of a slowing economy, Fitch Solutions said.
The research house also expects Singapore's medical device market to grow by 6.6 per cent this year, and by 8.4 per cent in 2020.
According to Fitch Solutions, market drivers include a rapidly ageing population with a growing disease burden, high quality healthcare provision financed by a combination of private saving schemes and government subsidies, as well as a well-developed medical tourism industry ranked among the top five worldwide.
Furthermore, strong government financial backing for the healthcare sector, an expanding medical device industry attracting multi-national investment, ongoing regulatory improvements, and new free trade agreements should also drive sector growth, the report stated.
Nonetheless, market barriers include a small population limiting market size, government restrictions and controls that can hinder market development, and high medical device market competition, Fitch Solutions said.
Separately, it added that medical device imports will benefit from increased government spending on healthcare capacity and new medical technologies.
The modest appreciation of the Singapore dollar from 2020 will also benefit import growth over the coming years, said the report. "The latest monthly trade data show that imports rose by 7.2 per cent year-on-year to US$1 billion in the three months to April 2019, and increased by 8.8 per cent to US$4.2 billion for the 12 months ending April 2019," it said.
But medical device exports, which primarily consist of re-exported goods, will face mounting headwinds in 2019 due to the global economic slowdown, particularly in the US and China, the country's two most important destinations, Fitch Solutions said.
"That said, the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) trade agreement, which has entered into force for seven countries including Singapore, will support exports to Australia, Canada, Japan, Mexico, New Zealand and Vietnam, while ratification of the EUSFTA (European Union-Singapore Free Trade Agreement) will support further expansion of exports to the EU," it noted.
"Exports increased by 11 per cent y-o-y to U$1.9 billion in the three months to April 2019, and rose by 6.8 per cent to U$7.5 billion for the 12-month period ending April 2019," Fitch Solutions added.
Fitch Solutions is part of Fitch Group, which also owns Fitch Ratings. Their research and commentary are independent of each other.