SHANGHAI (Oct. 2, 8 a.m. ET) — Seeing growing interest from global medical device companies in manufacturing in China, Singaporean firm Forefront Medical Technology is investing S$10 million (51.3 million Chinese yuan) in a plastics molding and extrusion facility in East China to tap into market.
The facility, in Changzhou, Jiangsu province, would include more than 30 injection presses, six extrusion lines and 200 employees when fully built out in about 18 months, company officials said in an interview at the recent Medtec China 2012 show.
“Increasingly our customers are telling us that they are kind of focused on the domestic China market, and in doing so, they would definitely need to work with partners like us with facilities that are closer their plant,” said J.S. Chong, vice president of business development.
The Changzhou factory will open in October with eight molding presses and about 40 employees, and is the company's second in China. A facility in Xiamen, Fujian province, is focused almost exclusively on direct exporting, Chong said in an interview at Medtec, held Sept. 26-27 in Shanghai.
With the Xiamen plant and another at its headquarters in Singapore, the company has 800 employees and about 40 injection molding machines.
The firm focuses on components and complete device manufacturing for surgical, diagnostic and drug delivery products.
Niew Ker Ran, the company's business development manager, said the area around Shanghai and Suzhou is home to manufacturing and procurement offices for many of the world's largest pharmaceutical and medical device manufacturers.
Its customers are interested in both manufacturing for the local Chinese market and in using China as an export base, said Niew.
While salaries and other costs in China are rising, Chong argues that these are trends that have not hit as hard in the medical manufacturing industry.
“If compare today to a mere five years ago, costs are definitely increasingly,” he said. “If you talk about the cost of doing business here versus the cost of doing business in [North America or Europe], the cost here is still much less.”
The company has a medical device contract manufacturing license from the U.S. Food and Drug Administration and a Class 2 medical device manufacturing license from the Chinese government.
Forefront is a unit of VicPlas International Ltd., a publicly-traded company on Singapore's stock exchange that also has a unit that manufactures plastic building products including uPVC pipe, fittings and conduits. Those sales are mostly in Singapore, Malaysia and Bangladesh, the company said.
In the fiscal year ending July 31, 2011, the last for which figures are available, VicPlas said revenues in the Forefront medical unit grew 35 percent to S$50.4 million.
Forefront accounted for 69 percent of VicPlas total revenues, with VicPlas reporting a profit of S$1.4 million (7.2 million Chinese yuan). It did not break out income for the two units.
It said its largest customer in its medical business, the Laryngeal Mask Company (Singapore) Pte. Ltd., accounted for S$44.30 million in revenue.
The company said it also saw increased business from the transfer of production lines of nasogastric and jejunostomy catheter tubes from a U.S. company and the integration of hydrophilic and antifogging coating technologies into its products.