Claudio Mazzucchelli, head of Swiss Business Hub South Korea, presents trends and business opportunities in the medtech sector in this Country. A Swiss SME delegation trip is scheduled for October 2013.

1. Prospettive e tendenze del ramo medtech in
Corea.

2. • Land Area: 99'678 km2 (108th)
• Population: 48.6m (24th)
• Birth Rate: 1.2
Agenda. • Capital: Seoul (9.8 mil)
• 16 local governments incl. Cities & 9 provinces
• GDP: 1,164 Bil USD (15th)
GDP/ppp: 1,549 Bil USD (12th)
• GDP/capita: 20,591 USD (34th in 2010)
GDP(ppp)/capita: 31,700 USD (26th)
• GDP Growth: 3.6%
• Trading volume: 1 Tri. USD (9th)
• Inflation (CPI): 4%
• Unemployment rate: 3.4%
• Global Mfng Competiveness index
: 3rd (2010)
• Politics: Presidential system
2 elections in 2012
• Religions: Atheists (47%)
Christians (29%)
Buddhist (23%)
Source: www.eiu.com 2 2 2

3. Seoul 1961

4. Seoul 2013

5. Korea as it is known.
• 4th largest economy in Asia
• 7th exporter / 20/50 club
• Gateway to China, Japan and SE Asian market
• Attractive domestic market
• Test market for Asia
• High-tech infrastructure
• EFTA FTA – no tariff barriers
• Employing cutting-edge technology in production
from mobile phone to ships
• Quick decision-making, driving force
• Innovation capabilities
• Good market environment – stable legal basis,
FTAs, well trained staff, predictable economy
• 8th in business environment (out of 183 countries)
- 2012 Doing Business Report by World Bank 5

6. Growth rate of the Korean Economy
Copyright © Osec 2009. All rights reserved.

7. Korean companies‘ performance
Copyright © Osec 2009. All rights reserved.

8. Korea GDP per Capita.
Unit: USD
Global Finanical Crisis
Asian Financial Crisis
8
<Source: IMF, BOK, KGCCI >

9. Korea - From Yesterday to Today
Development Stages
Factory Driven Investment Driven Innovation Driven
Industry Knowledge
Sophistication High-Technology Based
& Value Added Innovation
Technology
Intensive
Heavy &
Chemical
Industries
Light
Industries
9
1960s 1970s 1980s 1990s 2000s 2010s

10. Korean Exports

11. Korea as it is not known.
11

12. Economical Interests of Switzerland in Korea.
• Swiss capital stock in Korea in 2010: 4.8 bn. CHF
• FDI from Korea into Switzerland: USD 188 Mio (+ 121%)
• More than 100 JV and subsidiaries have been established in
Korea covering the traditional sectors of Swiss excellence
• Personnel at Swiss companies in Korea: 9’900 persons
• Trade volume 2011: CHF 2.813 bn.
• Switzerland has trade surplus of CHF 1.8 bn.
(exports to ROK 2011: CHF 2.31 bn.)
12

13. Key factors of the Korean market
• Very qualified and well educated labor
• High industrial capacity (and again speed…)
• Korea not known in Switzerland and Switzerland not
known in Korea (only small, innovative country not
known)
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14. Korea opens more and more.
In effect Concluded Underway On the agenda
Japan,
Canada, Mexico, GCC, Korea-China-Japan,
Chile, Singapore, EFTA, ASEAN, Australia, MERCOSUR, Russia, Israel,
India, EU, Peru, USA
Turkey New Zealand, Vietnam, Mongolia, SACU,
Colombia, China Central America, Indonesia,
14 Malaysia 14
(Source: www.fta.go.kr, Ministry of Foreign Affairs and Trade)

15. Medtech Industry in Korea

16. South Korea: Aging Tiger

17. Korean National Medical Expense Ratio
• Korea: 6.9 (% of GDP)
• OECD: 9.6
• UK: 9.8
• Germany: 11.6
• France: 11.8
• Korea ranks lowest in
OECD
• Chart: Health Expenditure over 65
17

18. Korean Medtech Industry - Overview
• Medical Device Industry Trend
– Paradigm Shift : From Treatment to Prevention
– Industry Technology Trend : The development of IT, BT, NT led into
value added convergence of advanced medical technology.
• Market Size:
– > 3,8 billion USD( 2011)
– Market Size in KRW has been continuosly increasing since 2004.
• Import Market:
– Import > 2,5 billionUSD (2011)
– Import Dependency : 65%
– Top 5 import products by value : stent, contact lens, CT system, MRI
system and artificial knee joint
18

19. Korean Medtech Industry – market trend
• Due to the weaker dollar in 2006 and 2007, the figure looks like the market has
been decreasing in 2008 and 2009, however, the actual market size in KRW has
been continuously increasing.
(million USD)
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2004 2005 2006 2007 2008 2009 2010 2011
Production Exports Imports Market Size
19

20. Korean Medtech Industry - characteristics
• Characteristics of Korean Medtech Industry
– Vulnerable Industry Structure
– Immature Technology Level : Domestic medical products are generally
targeting low-priced market
– Chronic Trade Deficit (848million USD, 2011)
– IT Convergence Medical Information System such as PACS is
consistently increasing towards advanced countries.
– Conglomerates Entering into Medical Device Market
(e.g. Samsung, SK and LG)
Untransparent rules 20

21. Swiss companies in Korean medical device market
• Overview
– Swiss products’ market share : 4.6% of Import Market (10th)
– Top 5 Product groups by Value :
Orthopedic Materials, Dental Materials, Human Tissue & Its Function
Replacement , Clinical Thermometric System Instruments
– Top 5 companies by Value :
Synthes GmbH, Cendres+Métaux, Key Tronic Coporation,
Medtronic Europe Sarl, STAAR Surgical AG
– The 90% Swiss’ export of medical device is concentrated on top 30
companies
21

22. Opportunies in Korean medical device market
• Prospective Products
– Emergency & Trauma Treatment Products
– Disposable Products
– Products Not Available in Korea
(e.g. linear accelerator, digital X-ray, clinical pathologist
diagnostic devices, endoscope, and microscope)
– Rehabilitation Devices
– Minimal Invasive Operation Products
22

23. Recommendations for Swiss companies
• Suggestions and Recommendations for Swiss Companies
– Understanding of Regulatory Requirements (KFDA)
– Preparation to GMP Inspections for Manufacturing Site
– Preparation to IEC 60601 3rd Edition
• Opportunities for Swiss Companies
– Market Entry through Multi-National Clinical Trial
– Strategic Alliance through OEM with Korean Medical Device
Manufacturer *
– Technical Partnership with Korean Medical Device Manufacturers
23

24. Important to know
• Be aware of cultural differences
• Less planning than Swiss and getting to solutions more rapidly
• Hierarchy dominated society (from A to Z)
• Pace of communication very rapid
• Be prepared (do homework, hire a lawyer, et.)
• Take time to study the market
• Talk with others / important to learn from somebody else
experience (experts, other companies. etc.)
• Start (open doors) rather difficult but when it works can get very
lucrative
Copyright © Osec 2009. All rights reserved.

25. Korea Medtech Study (75 pages)
• Medical Device Industry Overview
(Trend, Overview, Outlook)
• The Role of Government
(Organisations, Management system,
Regulations, Import Procedures)
• Korean Medtech Sector
(Hospital, Dental, Orthopedics & Trauma,
Disposables , Instruments, Rehabilitation
Machines, Laboratory & In-Vitro
Diagnostics, Ophthamologic Devices)
• Opportunities for Swiss SMEs
(Companies, Suggestions & Opportunities)
• www.osec.ch/de/blog/osec-marktstudie-
medtech-industry-koreamendations

26. Swiss Medtech Delegation to Korea
• Quando: 13 - 16 ottobre 2013
• Scopo: - dare la possibilità di familiarizzarsi con il mercato
coreano (attori, imprese, associazioni,
regolamentazione, ecc.)
• Programma: - seminario con partecipazione di specialisti coreani e
imprese svizzere in Corea
- visita ad imprese (piccolo/medie e conglomerati-
Samsung)
- visita di un parco Medtech (Taegu)
- serata di networking
Shanghai / Hong Kong

27. Swiss Business Hub services
• Providing up-to-date market-relevant information and product data
• Assisting companies who are seeking distributors, representatives and
import partners
• Individual consulting for small and medium-sized enterprises
• Assistance to SME’s participating in trade fairs and reporting on these
events
• Information about the Korean economy and market via the central
information platform at Osec Business Network Switzerland
• Organizing promotional events for Swiss industry and providing media
access
• Providing information on the Swiss economy to Korean companies and
media

28. Domande?
28

29. Claudio Mazzucchelli
Executive Director
Swiss Business Hub Korea
Embassy of Switzerland
Seoul, Republic of Korea
32-10 Songwol-dong, Jongro-gu, Seoul 110-101
C.P.O. Box 2900, SEOUL 100-629, Republic of Korea
Phone +82 2 3704 4741
E-Mail claudio.mazzucchelli@eda.admin.ch
Web www.osec.ch // www.poolofexperts.ch // www.eda.admin.ch/seoul 29

31. The Roots of Korean Management

32. SWOT Analysis.
Strengths Weaknesses
• World leader in flat screens, memory • International competitiveness limited to
chips, batteries shipbuilding some companies and sectors
• Excellent IT infrastructure • High dependence from foreign
• Very open to new technologies technologies and components
(especially in telecommunication) • Low productivity in service sector
• High reserves in strong currencies • Contradictory administrative rules and
little transparency
• Occasionaly very hard labor conflicts
32

33. SWOT Analysis.
Opportunities Threats
• Large scale investments in R&D • Strong export dependence from few
• FTA with EU, US and potentiallyChina markets and producs groups
• Proximity to Chinese market • Now row materials and depending from
energy imports
• High reserves in strong currencies
• Political instability in the peninsula
• High debt of private households and
partially high companies debts
• High short term debt, especially banks
33

34. Korea and Switzerland - Companies & Economy.
Korea Switzerland
• Conglomerate (Chaebol) dominance • Swiss SME dominance in economy
• Focus on manufacturing and export • Strong services industry
• Competitive IT infrastructure • Lag behind IT developments
• Hierarchy in daily business • Bottom-up or team based proceeding
• Distinct business etiquette (dress, • Less formal and standardized rules
greeting, contracting)
• Longer decision making process
• “Bally bally” attitude
• Worker fluctuation seen as normal
• “Can do” mentality
• Loyalty towards company often for
a life time
34

35. Ratio working / non working