LONDON, January 31 /PRNewswire/ -- Asia's increasing emergence as a prime low-cost medical devices manufacturing spot is a source of much concern for European medical devices companies that run the risk of losing valuable market share. While this growing trend doubtless presents a strong threat to European companies, some view it as a promising opportunity to expand into Asia but will have to move fast to capitalise on early growth opportunities.

    "European medical device companies looking to capitalise on the
advantages offered by the Asian manufacturing industry - such as lower cost, skilled labour - are considering outsourcing, partnering with or even relocating manufacturing facilities to this region," remarks Frost & Sullivan
Industry Analyst Claire Staniforth.  "Shifting manufacturing facilities to Asia could also promote better penetration of the Asian medical devices market."
 

    Many European companies have started setting up their own production
facilities in Asia and are benefiting from reduction in operational costs.
Although the cost of distributing products back into the European market are
high, shifting the manufacturing locality is nevertheless a clever move for
European medical devices companies as they will be well-placed to increase
penetration of the massively underserved Asian market.
 

    The trend towards outsourcing production activities is also on the rise,
with medical device companies in Asia taking care to produce high-quality
products for the European market. In fact, Asian companies have taken several steps towards ensuring better and constantly improving quality standards as this increases uptake and acceptance in European countries.
 

    China and India are emerging as the most favoured destinations in Asia in
this respect. The increasing awareness in both countries of the need to
conform to international manufacturing guidelines and standards makes them ideally suited to handle outsourcing of medical devices production.
 

    Meeting such standards can also help in easing any concerns that
healthcare providers in the European market may have about the products being inferior or second-rate merely because they are less expensive. With
healthcare providers constantly implementing cost-containment measures,
purchasing less expensive medical devices that nevertheless meet certain
quality requirements may prove an attractive option.
 

    "When assessing the attractiveness of China and India for manufacturing
of medical devices, China has a much higher relative appeal as investment in
infrastructure and global foreign direct investment are high," adds Ms.
Staniforth. "However, there is a greater availability of skilled labour in
India, which could sway companies into investing in manufacture there
instead."
 

    Some European manufacturers are choosing the partnership route and
forming alliances with well-established Asian companies. These companies are likely to have good material supply relationships in place, thereby giving
manufacturers an edge in terms of negotiating power. The major logistical
task is likely to relate to the shipping of finished products either to a
holding warehouse close to the point of sale or to the customers themselves.
 

    The massive differences in language and culture between Asia and Europe
might also pose a major challenge to European companies. English is the
preferred language of business in Asia and much of its workforce, especially
in countries such as India, is fluent in this language. Therefore, European
companies might be compelled to use English for business communication in
Asia even if it is not their first language.   

    However, the biggest challenge that European companies are likely to face
is with regard to intellectual property (IP) protection, as current patents
do not hold global significance. As a result, there is a significant risk
that other manufacturers might copy their products as well as mass-produce
them at lower costs and sell them in the domestic market.
 

    "European companies must therefore ensure that they conduct business only with manufacturing organisations that understand and appreciate the
importance of IP protection," says Ms. Staniforth. "In Asia, contract
research organisations (CROs) - essentially research and development (R&D) outsourcing companies - are starting to introduce IP standards to increase confidence levels within the foreign investment community as well as promote greater outsourcing interest in both R&D and manufacturing in Asia."