The ASEAN Economic Community and the Healthcare Market in Thailand

The Association of Southeast Asian Nations (ASEAN) aims to have the ASEAN Economic Community (AEC) regulated and fully operational by the end of 2015. This blog post looks at the characteristics of the regional healthcare market standards and the impact of the regulation on the Thai Healthcare market.

The goal and purpose of the AEC

ASEAN member countries
ASEAN member countries

The AEC is designed to integrate the economies of the Southeast Asian region. Its highlights and priorities are:

  • To provide and foster a single unified market and production zone
  • To be highly competitive economically, driving quality and standards up in the region
  • To enable an equitable economic development for all its member states
  • To be fully integrated and suited to the demands and standards of global markets

It will do this by removing trade tariffs across borders for the member states of ASEAN, and by unifying production standards and regulations in various sectoral activities.

ASEAN healthcare market volumes

The ASEAN members are Brunei Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, Philippines, Singapore, Thailand and Viet Nam.

In total, the ASEAN healthcare market is valued at around €84.479 bln.

The largest healthcare markets, and respectively also the richest countries in 2015 of ASEAN, are Indonesia, followed by Thailand and Singapore.

Malaysia, though it has slightly lower expenditure than the highest spenders on healthcare, is also considered a hotspot for business, investment and sales.

Spending on ASEAN healthcare in bln in 2015
Spending on ASEAN healthcare in bln in 2015

Impacts on the Thai Healthcare market under AEC regulation

In terms of regulatory changes affecting the healthcare market, within the AEC there will be an internationalization of health services, allowing a free transfer of services and health professionals from one member state to another.

Licensing of medical products and certification/qualification of healthcare professionals is also under stricter review in the AEC and will be re-designed to provide a unified mechanism for the region as a whole. Whenever possible, licenses and qualifications will also match Western and international standards.

Mutual Recognition Agreements (MRAs) have been created in the last 10 years within the region and with certain further-distance nations (such as Australia, Japan and China), and will gradually continue to grow in scope and sectoral coverage in the coming years under the AEC.

AEC will also implement a Common Technical Dossier (ACTD) for Pharmaceutical and Medical Devices and a Common Submission Dossier Template (CSDT) for Medical Device.

Post-marketing processes to follow up on efficacy and health risks will also be more methodically evaluated and controlled in the AEC. In particularly, the issue of traceability of a medical device or product will be more strictly under surveillance.

Medical tourism is of great interest to Thailand, Singapore,Malaysia and Indonesia and is impacted by the AEC regulations. By adopting international standards and removing trade tariffs, the AEC greatly improves growth opportunities for Thailand and other ASEAN countries as a medical tourism hub.

The most common demands of a medical tourist, and accordingly the most demanded products/services of suppliers are:

  • Cardiovascular (angioplasty, CABG, transplants)
  • Orthopedics (joint and spine sports medicine)
  • Cancer (high-acuity or last resort)
  • Reproductive (fertility, IVF, women’s health)
  • Weight loss (LAP-BAND, gastric bypass)
  • Scans, specialized examinations, and health screenings
  • Cosmetic surgery

Classification of medical devices in Thailand

In Thailand today, there is a classification of medical devices in reverse order to the current systems from Europe and Northern America. In Thailand there are two classes of medical devices which require licensing and notifications, and a third large group comprising 80% of all the medical devices (including the most complex and high risk devices), which in fact is the least regulated and controlled group.

With the full implementation of the AEC, the Thai FDA aims to revise this classification to match the degree of control to the degree of risk.

Spread of medical care chains across ASEAN, some of them originate in Thailand

One of the main trends of the last few years in China and South East Asia, is the increasing role of private investors in the healthcare sector. This translates in the creation of new private hospitals and clinics, private hospital chains and increasingly multi country chains.

E.g.: The Bangkok Hospital Group, has manifested itself strongly in the Thai market, but also built facilities in Cambodia and is seeking further business opportunities in ASEAN.

Collaboration with an ASEAN healthcare provider opens many doors, as they can move freely within the AEC to provide services and trade.

Mergers and acquisitions amongst ASEAN healthcare providers and suppliers are forecasted to increase in the near future, taking advantage of the growing healthcare expenditures in industrializing nations such as Cambodia, Brunei and Lao.

The ASEAN future foresees growth and increased expenditure

TforG expects universal healthcare coverage to spread throughout ASEAN, in line with overall increases of life standards and public service provisions. Thailand has already institutionalized universal healthcare in the last ten years, and is expected to increase healthcare investments in order to cover healthcare services, as the demands for care are rising amongst the growing urban population.

In terms of medication, traditional medicine will continue to be a widespread market in ASEAN, yet pharmaceuticals are expected to increase by 10-20% annually in the next 5 years in various member nations.

An integrated market economy in Southeast Asia, will benefit healthcare patients locally and internationally, foster economic growth as a whole for the region, and facilitate business opportunities for international suppliers seeking regional partnerships.

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For further quantitative information on the Thai healthcare system and the macroeconomic climate, please look into our Business intelligence platform or order the TforG Deep Dive report for Thailand containing volumes of 980 surgical procedures in 13 specialisms.

About Laura Weynants

Performs primary and secondary market research to create country reports at TforG. Interviews KOLs and medical sector professionals to build on TforG’s healthcare market expertise and competence networks. Complementing five years of sustainability policy and CSR communication, she now focuses on grasping key medical market trends, structures and opportunities in medical sectors worldwide. Coming from an international background of living in Germany, Spain, USA, UK and Belgium, she has gained a keen insight in international organizations and language skills to perform first hand investigations. She graduated from Sussex University Brighton, UK with a BA English Literature and Sociology and achieved a Master Degree in Sustainability and Corporate Social Responsibility in EOI Business School in Madrid, Spain.