SGX Market Updates

Singapore’s Fast-Expanding MedTech Sector


PUBLISHED ON |

25 January 2018

  • Asia’s MedTech (Medical Technology) Sector is expected to become the second largest globally by 2020 (with CAGR of 8%). Singapore is becoming a regional MedTech hub as supportive government policies and the manufacturing sector contribute positively.

  • SGX lists four stocks with MedTech businesses (Clearbridge Health, Techcomp Holdings, Vicplas International and QT Vascular) with a combined market capitalisation of S$413 million. Clearbridge Health is a recent debutant with management announcing an acquisition a month after its listing.

  • A handful of SGX IT companies have also diversified some of their businesses into MedTech. There are six SGX IT stocks generating revenue from MedTech, of which three are EMS providers.




Asia’s MedTech Sector Set to Be Second-Largest Globally by 2020

Medical Technology, or MedTech, is a term encompassing technologies that diagnose, treat and/or improve human health care. In recent years, MedTech has been playing an important role in diagnosing, monitor and treating conditions and/or diseases that affect humans’ health.

According to a McKinsey report , the Asia Pacific MedTech sector is expected to grow from US$88 billion in 2015 to US$133 billion in 2020 (a CAGR of 8%), becoming the second-largest market globally after the U.S. As consumers increasingly take a proactive approach to seek higher quality medical care and lifestyles, demand for MedTech is expected to increase.

While the advancement of technologies is an enabler, demand drivers in the Asia MedTech space are similar to that of the overall Healthcare Sector (click here for more).



Singapore as Regional MedTech Hub

According to Market Intelligence firm Emerging Strategy, the MedTech Industry in Singapore contributed more than S$4 billion to the economy in 2016.

The Singapore Government has also identified MedTech as a key sector within the biomedical sciences industry for development. According to the Economic Development Board (EDB), Singapore is strategically placed to enable MedTech companies to tap into the opportunities in Asia. Singapore is also home to more than 60 multinational MedTech companies, which undertake a range of activities from regional headquarter and manufacturing operations to research and development.

In the nearer term, Singapore’s MedTech Sector has also seen strong growth – in the first half of 2017, manufacturing output for the sector grew 13.5% YoY, building on the 13.0% increase in 2016.

SGX currently lists 35 Healthcare stocks and related Trusts with a combined market capitalisation of over S$60 billion. Among the 35 stocks, there are 4 stocks with MedTech-related businessesClearbridge Health, Techcomp Holdings, Vicplas International and QT Vascular. Apart from these four stocks, SGX also lists The Trendlines Group, an Israeli-based MedTech and agricultural technology incubator. 



SGX listed Healthcare - MedTech Companies
Name SGX
Code
Market
Cap
S$m
Last Price Price Change
YTD %
P/E
(x)
P/B
(x)
ROE
%
GICS Sub Industry
Clearbridge Health 1H3 241 0.500 40.8 N/A N/A N/A Health Care Services
Techcomp Hldgs T43 88 0.320 14.3 N/A N/A 4.3 Health Care Distributors
Vicplas International 569 53 0.106 7.1 16.6 0.9 5.5 Health Care Equipment
QT Vascular 5I0 31 0.016 33.3 N/A N/A N/A Health Care Equipment
Average 23.9

Source: Bloomberg & SGX StockFacts (data as of 24 January 2018).



Recent MedTech Debutant – Clearbridge Health

Clearbridge Health, which made its trading debut on the Catalist board in December 2017, focuses on the delivery of precision medicine in Asia with businesses comprising:

  • Provision of laboratory testing services
  • Ownership and operation of medical clinics/centres
  • Strategic equity participation in complementary precision medical technology companies.

The company listed at a price-to-revenue ratio of over 190x and has returned +78.6% from its IPO price to-date. Click here for more details on the company.

Post-listing, the company announced the completion of its 65% equity interest acquisition (for c.S$1.86 million) of Marzan Health Care Inc. (a Philippines healthcare services provider), with 40% of the consideration funded by its IPO proceeds. Management stated that in addition to being an ideal platform for the Group’s expansion into the Philippines, it also intends to tap on Marzan’s existing network to distribute its suite of precision medicine products and services to benefit from revenue synergies within the Group.



6 SGX IT Stocks Generating Revenue from MedTech 

In 2016, Minister for Finance Mr. Heng Swee Keat commented that in recent years, Singapore-based IT manufacturers have recast their businesses from labour-intensive activities to more capital-intensive and high value creation activities (click here for more).

In addition, SGX also lists 6 Information Technology (IT) stocks which currently generate revenue from customers in the MedTech segment, of which three are electronics manufacturing services (EMS) providers. An example would be Venture Corporation (now part of the STI), which in recent years has pivoted its businsses to focus on high value-creation segments (e.g. Life Sciences and MedTech). As previously discussed, SGX’s EMS providers are diversifying their businesses into emerging technologies such as life sciences and MedTech (click here for more).



SGX listed IT Stocks Generating Revenue From MedTech
Name SGX
Code
Market
Cap
S$m
Last Price Price Change
YTD %
P/E
(x)
P/B
(x)
ROE
%
GICS Sub Industry
Venture Corp V03 6,800 23.80 16.3 23.5 3.3 14.7 Electronic Manufacturing Services
Valuetronics Hldgs BN2 429 1.00 9.9 13.6 2.6 20.3 Electronic Manufacturing Services
Memtech International BOL 200 1.42 32.7 10.5 1.3 12.5 Electronic Components
CEI AVV 93 1.07 4.9 12.0 2.4 19.5 Electronic Components
Trek 2000 International 5AB 89 0.28 1.9 8.5 1.4 18.0 Technology Hardware
Avi-Tech Electronics BKY 85 0.50 4.2 11.6 1.7 14.9 Semiconductors
Average 11.6 13.3 2.1 16.6

Source: Bloomberg & SGX StockFacts (data as of 24 January 2018).



Venture Corporation – A global electronics services provider, Venture has successfully diversified its business from traditional technology into the medical technology and life sciences segment. In FY2016, the company’s revenue from the Test & Measurement/Medical & Life Science/Others segment grew 37.3% YoY to represent 43.3% of total revenue. Venture is a recent addition to the FTSE STI (click here for more).

Valuetronics Holdings – Valuetronics is a leading integrated EMS provider. Some of the medical technology products the company produces for its customers include temperature sensing devices and in-vitro diagnostic medical equipment (testing human tissue samples).

Memtech International – Memtech is a global components solution provider. While the company is focused on automotive products (43.8% of total revenue in 2016), the company also helps develop innovative MedTech products for its customers.

CEI Limited – CEI is an established EMS with more than 25 years of history. The company serves customers in the industrial equipment market segment, manufacturing products such as medical and health care equipment. According to CIMB Research, the company derives almost half of its revenue from the medical technology/life science sector, with customers being used for chromatographs, analysers and atomic absorption.

Trek 2000 International – Trek 2000 is the original inventor and patent owner of the ThumbDrive® (i.e. USB Flash Drive) and FluCard®. The company also offers customers customised solutions in the MedTech segment (e.g. smart socks, and smart sensors for diapers).

Avi-Tech Electronics – Avi-Tech is a leading solutions provider for burn-in services and engineering services for the semiconductor, electronics and life sciences industries. The company has diversified into the provision of printed circuit board assembly services for the medical industry. Moving forward, Avi-Tech stated that it will continue to focus efforts on high growth sectors as well as in areas such as life sciences, medical imaging and industrial applications





Did You Know?

About 60% of the world’s microarrays (laboratory tools to detect expression of genes) and a third of the world’s thermal cyclers and mass spectrometers are manufactured in Singapore. In addition, eight out of 10 of the top global players in the life sciences tools industry already have activities in Singapore. The life science tools industry is a subset of the MedTech segment.






This article is provided by SGX My Gateway.



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