Medical devices firm gets boost from ETP focus

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Manufacturing orthopaedics is just beginning as an industry in Malaysia but that has not prevented TH Su, founder of StraitsOrthopaedics (Mfg) Sdn Bhd from building a RM53 million a year business with 99% of that coming from exports and with minimal assistance from the government. Interestingly, the former lawyer turned entrepreneur used to have a poor perception of government agencies. Why has he changed his opinion?

What impact has the Economic Transformation Programme had on your business?

Until we came into the radar of Pemandu some 9 months ago, our perception of having a constructive engagement with any government agency was poor. Consequently, for the last 10 years, we have quietly built our business without much interaction with the government.

But then Pemandu took an interest in our business under the ETP, and introduced us to various people in various government agencies, and because of that personal touch, these agencies are listening, regardless of whether they agree or not. We are now very much encouraged that our earlier perception was wrong, and that we can all work together – private and public – to create an enabling relationship to grow our business more speedily and provide more gainful employment in Penang. Recent interactions with these agencies continues to encourage us in this thinking.

What portion of your revenue comes from overseas versus Malaysia?

99.9% of our revenue comes from overseas. We do a little bit of contract manufacturing work in orthopaedics for a couple of local companies.

Does it seem harder for you to win local business?

It is not harder to win local business. On the contrary it is easier because we can offer manufacturing solutions to local Original Equipment Manufacturers (OEMs) through our tremendous amount of understanding gained by working with some of the top 10 orthopaedic multinationals in the world for the last 10 years.

You have to remember, the industry of manufacturing orthopaedics in Malaysia is just beginning, and local players are still relatively insignificant.

What standards do you need to adhere to in order to sell your products overseas?

We sell manufacturing solutions. In other words, we contract manufacture for orthopaedics OEMs. The manufacturing of orthopaedics is a subset of the manufacturing of medical devices, and this activity is highly regulated by the three most important markets in the world, namely the USA, the EU and Japan. These three markets consume 80% of the world’s production of orthopaedics.

Consequently, we have to comply mainly with the standards set by these regions, and they are:

  • The Regulations of the US FDA;
  • ISO 13485 and its subsidiary standards that deal with smaller areas within the umbrella of 13485;
  • The Pharmaceutical Affairs Laws of Japan.

Of increasing importance now are the standards set by the regulatory agencies of China and Brazil.

Is it difficult to meet the standards?

It took us some years to understand them, and we are still learning every day. We suppose, once, one gets a good foundational understanding of these regulations, constantly work on complying with these standards, one gets better. It is not something that can be done overnight. It takes years of constant practice to mature an effective quality management system that is demanded by these standards without which one cannot objectively demonstrate that one can assure safe and effective products.

Do you feel that the standards you need to meet when exporting are in reality a form of trade barrier?

We do not think so. Every country has its own history of medical horrors which in turn shaped and continues to shape their thinking and their regulatory frameworks. Local and foreign manufacturers in any country play by the same standard. I have not seen any evidence of any country discriminating against a foreign manufacturer by using the same standard.

Because of the obligation to comply with these tight regulations before one can do business in the supply of medical devices, we can understand why some people may say that the standards are a form of trade barrier. The necessity to comply with strict standards is, of course a barrier, but it is a barrier to prevent products that cannot be objectively demonstrated to be safe and effective from entering the market. Society needs this minimal protection.
Have you received financial assistance from the government? Were you  
not able to raise funds from banks?

We have not applied nor have we received any grants or loans from any agencies. MIDA was kind enough to give us a 10 year pioneer status that has enabled us to reinvest more into our business.

Initially, we had problems securing banking support because it was an unproven enterprise. However, in the last five years, we have not had any difficulty to secure reasonable and justifiable banking support.

On Wednesday, Su shares what hurdles he had to overcome to built his medical devices company and what his game plan for 2013 is.

Photo courtesy of Flickr User Cambodia Trust

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