Feature Article

REGIONAL FOCUS

Don’t expect rock-bottom prices to be an initial part of the sales pitch if you are sourcing a supplier in Singapore. Back in the 1980s, the tiny city-state on the southern tip of the Malay Peninsula was a hub of low-cost manufacturing, but the world has moved on. Nowadays, Singapore is catering to companies in advanced manufacturing sectors, such as medical technology. To get their attention (and their business), the country’s supplier base has focused on adding value, building world-class quality systems, and establishing an un­impeachable record of IP protection. The med-tech industry has taken notice: over the last few years, this sector has been responsible for annual turnovers of more than $2 billion, according to International Enterprise (IE) Singapore.

Driving Growth

A long-standing tradition of solid IP protection has been a key driver of med-tech manufacturing growth in Singapore, according to Andrew Khaw of IE Singapore. Thanks to a strong legal framework and inherent respect for IP, companies such as Baxter and Siemens Medical are able to entrust design and production of their components to suppliers [in Singapore] without fear of infringement, says Khaw.

“Our regulations are equivalent to those in the United States,” adds Keat-Chuan Yeoh, executive director, biomedical sciences group, Singapore Economic Development Board. Noting that regulations are little more than window dressing if they are not consistently applied, Yeoh adds that Singapore is “serious about enforcement.” In this part of the world, it is an important distinction to make.

The country’s network of suppliers to the med-tech industry have made a fundamental commitment to quality. More than 10 companies have been inspected by US FDA, says Yeoh, and some 15 firms have gained ISO 13485 certification. Several more are working toward that goal.

“A supplier’s ability to meet the requirements of US and EU regulatory authorities is a key consideration when medical device manufacturers are evaluating partners,” says Yeoh. “The global medical technology industry has confidence in Singapore-based companies and employees to meet those standards,” he notes.

Manufacturing Traditions

Electronics and precision engineering are the foundations of Singapore’s manufacturing base. In the mid-1980s, Singapore was a magnet for the US electronics manufacturing services (EMS) industry. That tradition continues, with many tier-one EMS firms maintaining operations on the island.

“Electronics continues to represent about 38% of Singapore’s total manufacturing output,” says Yeoh. “Many of the electronics manufacturing companies have developed a keen interest in supplying the med-tech sector. Over the years, they have acquired the sort of expertise that medical device manufacturers require,” Yeoh explains.

Companies with proven expertise in materials research, optics, and diagnostics also abound in Singapore, according to Yeoh. Moulding services are plentiful, he adds, as are prototyping and development. In fact, Singapore can lay claim to a highly diversified supplier base. Cleanroom injection moulding, assembly, packaging and sterilization, machining, and die-casting all can be sourced here. To help manufacturers locate qualified suppliers able to meet their specific needs, the government has created the Medtech Local Supplier Group. The online tool is a work in progress, but you can find out more about it by going to www.biomed-singapore.com. Business matching is also the focus of the Global-Asia Trade Exchange, which is organized every other year by IE Singapore. Attendees of the two-day conference define their sourcing needs upon registering, and meetings with appropriate suppliers are scheduled during the event. Go to www.gate.gov.sg to learn more.

While Singapore is not in competition with its low-wage neighbours for the high-volume production contracts, its firms have the ability to take on low-volume, high-mix jobs while remaining competitive in terms of costs. “It’s important to remember that many suppliers in Singapore have a reach into the Southeast Asia region,” says Yeoh. “They have operations in places such as Indonesia or Vietnam, where labour costs are very competitive.” In fact, this arrangement can provide OEMs with the best of both worlds, according to Yeoh. The high-value parts of a project can be carried out in Singapore, he explains, with production being moved to a low-cost site in Southeast Asia when appropriate.

Singapore is the smallest country in Southeast Asia and one of the few remaining city-states in the world, but it has big ambitions. One of them is to be on medical device OEMs’ shortlists of outsourcing options. Given its history and single-minded determination to succeed—Singapore has risen to become the 18th wealthiest country in the world in terms of GDP per capita—I would bookmark the Singapore Airlines flight schedules page if I were you.