Mon, Aug 01, 2016 - Page 16 News List

Aging good for medical device industry

IEK FORECAST:While Taiwan’s manufacturing industry is expected to shrink this year, the medical device industry is expected to see growth of between 6.9 and 8.5 percent

By Lisa Wang  /  Staff reporter

The nation’s medical device industry is expected to grow as much as 8.5 percent this year to a record high, supported by demand for medicare devices from a steadily aging population worldwide, the Industrial Economics and Knowledge Center (IEK) said.

If that proves the case, it would be the industry’s fifth consecutive year of revenue growth of more than 5 percent, according to the research house’s latest projection.

The growth comes against a decline of Taiwan’s manufacturing sector, which is expected to shrink by 1.71 percent year-on-year to NT$17.44 trillion (US$546.26 billion) this year, as demand for Taiwanese electronic goods weakens amid the flagging global economy.

“The medical device industry is less affected by macroeconomic ups-and-downs. ‘Brexit’ should not have any significant impact on the industry,” center analyst Tsai Meng-nan (蔡孟男) told a news conference on Monday last week. “Rather, it is more prone to regulatory changes.”

Taiwan’s medical device industry is expected to expand at an annual rate of between 6.9 percent and 8.5 percent this year to between NT$100.81 billion and NT$102.32 billion in revenue, from last year’s NT$94.3 billion, Tsai said.

Tai attributed the growth to rising medical spending as the world’s population ages. Spending in the US and Germany, in particular, accelerated last year — increasing at an annual rate of 4.7 percent and 4 percent respectively, from a compound annual growth rate of less than 4 percent for the two countries between 2011 and 2014, the center said.

“We believe the nation’s medical device industry is heading to an up cycle this year and the industry has promising business prospects,” Tsai said.

Contact lenses and blood sugar testing strips are the two largest revenue contributors, constituting 24 percent and 14 percent respectively of the local industry’s total shipments this month, the center said.

US, Japan and China are the top three export destinations for the industry, the center said.

In the first half this year, major Taiwanese firms such as medical bloodlines and tubing systems supplier Bioteque Corp (邦特生物科技) and contact lens supplier St Shine Optical Co (精華光學) saw their revenues increase 5.3 percent annually, the center said.

St Shine, the nation’s biggest eye contact lens maker, which sells primarily to Japanese clients such as SEED Co, is expected to outperform its local peers.

The company is expected to increase revenue by 12.59 percent to NT$6.6 billion this year, from NT$5.86 billion last year, Credit Suisse analyst Jeremy Chen (陳建名) said.

For the last quarter, St Shine is expected to report a 12 percent increase in net profit to NT$459 million, or NT$9.1 per share, Chen said.

St Shine reported NT$408.67 million in net profit in the first quarter of this year.

Chen expects the company’s gross margin last quarter to increase to 43.5 percent from 41.9 percent in the previous quarter.

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