Asia\'s Challenge to Medical manufacturers

Steve Stine

Director Life Sciences (Medical), TNT Asia, Singapore


The era of passive sales to local distributors is rapidly drawing to a close.


Medical products manufacturers take heed! There’s a quiet revolution stirring throughout the Asian healthcare sector, and unless you are privy to these changes, the impact on your bottom-line could be severe.“How can this be?” you ask. The region’s economies are on the rise. Out-of-pocket spending by a more health-conscious middle class is propelling demand for improved healthcare services. Innovative prescription drugs and medical devices hold promise of improving the lives of millions. With such market dynamics in play, you might say it would be easy to take a “business-as-usual” stance by pushing an ever-increasing litany of products on local distributors and logging sales, accordingly.

Unfortunately, this old-school reliance on small and specialist distributors now comes with a new batch of risk. On the one hand, consumers are becoming increasingly savvy about new medical products, treatments, and thousands of times a day, are using the internet to “shop” for information on the latest developments and treatments, and then demand them from their physicians. On the other hand, governments are getting smart. Stemming demand won’t be easy. But curtailing supply is possible. How? By exacting new guidelines and regulations designed to lower the cost of procuring advanced drugs and medical technologies and insisting upon improved efficacy and reliance of these products.

Take China for instance. As the fastest growing healthcare market in the world, the country’s State Drug Administration (SDA) and the State Food & Drug Administration (SFDA) have issued some 40 statutory regulations that monitor the import, sale and usage of pharmaceutical and medical products. Such regulations – in China and elsewhere in Asia – are an attempt to stem the rise in public and private healthcare spend, reduce misappropriation of these products, and safeguard – wherever possible – those who seek out these advanced and high-cost treatments.

Asia's Challenge to Medical manufacturersOddly enough, it is the advent of economic change in Asia that drives demand for new medical treatments. With greater prosperity come environmental pollution, over-population, dietary changes and stress, all of which contribute to changing disease patterns. In less than two decades, chronic illnesses, such as cancer and heart disease have overtaken infectious diseases, such as malaria and cholera, as the leading cause of death among Asians.

Initially, Asia’s healthcare systems were caught off guard. In recent years, governments have made a flurry of investments in new hospital technologies, surgical procedures, and leading edge prescription drugs, resulting in soaring annual healthcare spend. In an attempt to stem the hemorrhaging of healthcare budgets, a new wave of strict procurement and regulatory changes are forcing suppliers to share the burden.

In short, the pressure is on. Consumers, hospitals, physicians, and governments are increasingly aligned against manufacturers of modern medical miracles, and the era of passive sales to local distributors is rapidly drawing to a close. The onus is now on these global giants to both find ways to lower the cost of sales to Asian buyers as well as enhance the quality and efficacy of their products.

One sound way to get started is to re-think archaic supply-chains and distribution arrangements that traditionally have kept manufacturers at arms length, and left it up to distributors to manage the sale, support, and delivery of medical products to hospitals. There is ample evidence to suggest that these traditional methods are losing their vitality.

As a result, medical products manufacturers must search for the most cost-effective, reliable answer1. Take chemical reagents as an example. The vast majority of chronic diseases are revealed through blood tests or other diagnostic methods, and chemical reagents are the means by which life-threatening diseases are tested. Hospitals in the region (ex-Japan) purchase an estimated US$ 30-40 million of diagnostic reagents and instruments each year. Expired, defective, or inappropriately handled reagents can mean the difference between a correct and incorrect diagnosis, and in some cases, the life or death of a patient.

So how are the majority of these critical, life-saving products handled today when making their way from overseas manufacturing centres to Asian hospitals? Frankly, it varies.

In some markets with clear regulations and careful monitoring, reagents are delivered and, therefore, perform as intended. But in developing markets, where demand is outstripping government ability to monitor procurement and use, there are inevitable shortfalls in appropriate product management, thus making the importance of logistics all the more apparent.

For instance, maintaining reagents at 2-8 degrees Celsius is critical if the chemicals are to perform their intended function. Manufacturers typically take charge of moving a product from a factory location to an Asian port of entry, but after that, the efficient handling of a product is anyone’s guess. We know, for instance, that drugs, devices and reagents can be held at Customs for days on end. On other occasions, incorrect documentation can stall transfer of goods, and even when in-country distributors do take ownership, controls on product handling and expirations are uneven at best, and dangerous at worse.

The good news is that new service solutions and IT platforms are available to track and safeguard your product from point-to-point. RFID, or Radio Frequency Identification, is one technology that is proving both effective and cost-effective (see box item).

Using RFID to Safeguard the Integrity of Your Medical Products

In March this year, TNT Asia embarked on a revolutionary new way to track and monitor the distribution of chemical reagents using RFID cold-chain technology.

As required by law in many countries in the region, reagents must be maintained at 2-8 degrees Celsius both in storage and in transit in order to ensure that upon use, these life-savings chemicals perform at their optimal level.

Operating out of a medically-approved Regional Distribution Center (RDC) in Singapore, TNT has established a revolutionary technique where battery-activated passive RFID tags are carefully placed in gel-packed and insulated boxes designed specifically for chilled shipment of reagents. The tags are activated at the RDC, scanned again at the Singapore hub, and programmed to “wake-up” and take a temperature read every 30 minutes until reaching its final warehouse destination at two pilot locations: Shanghai and Bangkok.

By observing the performance of the temperature-controlled boxes during the 2-3 day door-to-door transit period, we are able to make adjustments to the packaging by adding gel packs or layers of insulation. The idea is to optimize the performance of the packaging, while minimizing the cost to our manufacturer customers.

One hundred shipments later, results are promising. Not only is TNT able to guarantee for the first time absolute temperature integrity, but also we are doing our part to raise awareness among distributors and hospitals that have a vested interest in ensuring reagents arrive at hospitals and into labs in the best possible condition.

For TNT, RFID applications for the Asia healthcare sector are unlimited. What’s next? RFID readers strategically placed in hospital storerooms in order to allow remote inventory management and auto-replenishment of surgical products. These high-value products are typically held on consignment by the world’s leading medical products manufacturers and their distributors. With RFID at the hospital level, gone are the days when patients suffer because storerooms weren’t properly replenished.


1At TNT, we urge manufacturers to consider a “direct ship” model where your existing distributors manage hospital accounts, market new products, invoice, and collect, but rely on a third-party logistics provider, such as TNT, to coordinate the physical distribution and inventory management. TNT’s global network, leading edge IT platforms, and professional workforce are best suited to ensure your product’s integrity from point-of-manufacture to point-of-use. Without the end-to-end visibility to your product made possible by TNT’s integrated healthcare supply-chain solutions, you may be in violation of a growing litany of government regulations, and not even know it, until it’s too late. For more on TNT’s life science solutions in Asia see