Consumer spending on over-the-counter health care products in Myanmar is anticipated to grow from around $140 million in 2013 to $480 million by 2020, providing a huge and growing market for distributors and logistics providers.
The medical devices market in Myanmar is anticipated to grow threefold by 2020, and eight out of 10 Myanmar consumers are willing to spend more on health care products and services if they have access to better options, according to research by Rubicon Strategy Group.
The strong overall market growth is partly driven by the vast increase in government spending on pharmaceuticals and medical devices. Specialty products, in particular, cardiovascular, diabetes and oncology products, are expected to experience high growth rates for the next few years.
“One of the key policy priorities of the Myanmar government is to focus on people-centric development, particularly in the areas of improving education, health and living standards,” KPMG, which has also been studying the market, said in a report.
Health indicators in Myanmar currently compare poorly to those of neighboring countries and the government has doubled its commitment to improving health care services and public financing in the health care sector.
“Given the government’s strong interest in rural development and improvements to social infrastructure to improve the living standards of the people, we can expect that new projects will be launched in this sector to address infrastructure gaps,” the KPMG report said.
Highways are being built to link the inland areas to the coast where the competition to develop ports has a regional flavor. India is investing in the northern port of Sittwe that will link Myanmar to northeastern India via the Kaladan River, and in the center of the country, Chinese investment is developing Kyauk Phyu port, primarily to build energy logistics facilities as part of the Sino-Burmese oil and gas pipeline.
The southern Port of Dawei also has a deep-water port and special economic zone plans in a joint venture with the Thailand government. Few of the projects can report smooth going, and most are behind schedule.
But the development of infrastructure is only one part of the puzzle. Market expansion specialist DKSH said the Rubicon study confirmed that collaborating with a local distribution partner is the only viable means for a foreign service provider to efficiently access the market in Myanmar. It said this is due to Myanmar’s opaque regulatory environment, the abundance of counterfeit products, complex channels to market and the extremely fragmented point of sale network.
“With the opening of Asia’s economy, Myanmar offers great potential for health care companies. Companies intending to expand in Myanmar should look for an experienced partner with the knowledge and connections to reach a broad range of channels and consumers,” said Varun Sethi, DKSH general manager of its Myanmar health care business unit.
The sophisticated health care segment is to supply a growing local need and not part of the emerging low-cost manufacturing that is being attracted to the country. This sector is dominated by garment makers escaping the rising labor costs in China; several of the world’s top clothing brands have set up sourcing operations in the country.
The usual logistics suspects are all piling into the country to serve the growing market: DHL Global Forwarding established a fully owned office late last year after years of agency representation; CEVA Logistics is there, as are Kuehne + Nagel and Toll Global Express. Kerry Logistics opened its office in Yangon 2012, and both Damco and French logistics company SDV have a strong presence.