Health-Care Upgrades in Asia Portend Improving X-ray Sales

French supplier Trophy Invests in Indonesia

Medical imaging vendors are flocking to Asia because of growthprospects for the sale of sophisticated imaging equipment, suchas CT, for use in emerging health-care provider systems. The regionalso offers good potential for x-ray replacement sales, accordingto Patrice Benilan, export director for the medical division ofFrench x-ray supplier Trophy.

What makes the Asian x-ray replacement market different fromEurope and the U.S. is the large number of obsolete and nonfunctioningdevices in the field, Benilan told SCAN. Nations of the regionare also eager to upgrade primary health-care delivery systemsto meet the basic needs of underserved populations.

"In Asia, as in most developing countries, you never throwaway a system," Benilan said. "Vendors will sometimesreplace equipment that has not been used for 10 years. This isdifferent from the replacement market we have in Europe, whereyou replace equipment that is still functioning, sometimes becauseregulations require it to be changed."

Trophy is a 48-year-old company that holds the claim as thelargest French-owned manufacturer of x-ray systems. The firm hasbeen active in Asia for 15 years, according to Benilan.

The vendor's biggest push in Asia is in Indonesia. Trophy hasa foot in the door of this market with its joint venture TrophyRajawali Indonesia of Jakarta. Trophy Rajawali began domesticmanufacturing of x-ray equipment in 1993, he said.

"The most active area economically for the time beingis Asia," Benilan said. "We are convinced that the onlyway to be there within the next 10 years is to produce locally."

The Indonesian government is seeking to upgrade its x-ray technology,according to Junita Tjahjadi, commercial director of Trophy Rajawali.A national policy has been implemented to seek out and removeradiographic equipment that is 75% to 100% nonfunctioning.

However, Trophy's creation of a domestic Indonesian x-ray manufacturingcapability remains largely an investment in the future. The islandnation of about 190 million people is large on potential but stillweak in terms of real sales.

"This is partly because of financial problems," Tjahjadisaid. "The government spends only about 2% of its budgeton health care. Compared to other countries in Asia, Indonesiahas one of the lowest health expenditure levels per capita --around $13 a year."

Indonesia's economy is growing rapidly, however. Economic developmentshould boost the funds available for future health-care upgrades.The country may experience about a 7% growth in gross nationalproduct this year, Benilan said.

Meeting domestic x-ray demand is not the only reason Trophydecided to establish a local x-ray factory, he said. The Indonesianfacility will produce low-cost imaging equipment using advancedEuropean technology that can satisfy demand in neighboring marketsas well.

Many Asian countries are seeking cost-effective yet high technologyx-ray products to upgrade primary health care, he said. Marketseasily reached from Indonesia include Association of SoutheastNations (ASEAN) partners Thailand, Malaysia and the Philippines.

Trophy's French connections are also helpful in accessing theVietnamese x-ray market, which holds promise, given its underdevelopedhealth-care system and large population. Trophy is already activein Vietnam, having sold about $1 million in imaging equipmentthere last year for an 18% share in that national x-ray market,Benilan said. Vietnamese sales were a major portion of the vendor'stotal regional turnover of about $15 million.

X-ray sales prospects in China are not as high as in Indonesiaand other regional markets for Trophy, he said.

"The problem with the Chinese market is that local manufacturersare using very low quality standards," Benilan said. "Becauseof the high (technical) specifications required by European regulations,we wouldn't be competitive even if we manufactured 100% in China.Compared to what is done today in China, we would be overpriced."

Neither has India provided much business for the French supplier.Import quotas have stymied the vendor from selling more than atoken number of x-ray systems there, Benilan said.