Why ASEAN MedTech Startups Struggle to Survive

Billions of dollars are being pumped into MedTech startups, so why do many fail before they can scale?

Southeast Asia is rapidly gaining momentum in medical technology (MedTech) and health technology (HealthTech), with Singapore leading the way as a global innovation centre.

Singapore’s strong regulatory expertise and research (R&D) capabilities support more than 400 MedTech firms and startups. A compact and well-funded market with robust intellectual property protection, world-class clinical networks and access to regional partners, Singapore is often the testbed for new MedTech products before they are deployed to the rest of the region

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Malaysia is emerging as a high-value destination for manufacturing, production and clinical trial base. A strong manufacturing base, improving regulatory pathways for medical devices and supportive national agendas to enhance digital health and life sciences position Malaysia as a cost-effective launchpad for product localization and regional distribution.

Other countries such as Thailand, Vietnam, Indonesia and the Philippines are also steadily growing their MedTech sectors due to rising healthcare demand, improved infrastructure and strengthened government support, and emerging as key markets and production hubs for digital health, medical consumables and high-tech manufacturing.

Despite billions of dollars invested into the MedTech industry, about 60% to 70% of startups fail within the first five years and early-stage MedTech innovation across Asia Pacific seems to be losing momentum. Venture-financing and merger and acquisition (M&A) values have fallen 22% and 37% respectively since 2021 with inflation, supply-chain shocks and tough regulatory requirements increasing the risks and pressure for young startups.

High barriers of entry

Unlike other tech startups, MedTech startups face significantly higher barriers in their journey towards commercializing their products or services.

Dr Jocelyn Ng, co-founder and Chief Executive Officer (CEO) of Pilot Medical Group

“Key barriers include having to navigate complex regulatory and compliance requirements, integrate with existing workflows, build trust with physicians and clinicians, and demonstrate real-world clinical and economic value, also known as clinical validation,” says Dr Jocelyn Ng, co-founder and Chief Executive Officer (CEO) of Pilot Medical Group who works at the intersection of medicine, AI innovation and HealthTech and MedTech investment.

Clinical validation for MedTech startups requires proving, through data-driven trials or studies, that a medical device or software can safely and effectively deliver the intended clinical outcomes in target consumers, in real-world environments.

In addition to meeting regulatory and compliance standards, the technology must be able to address or solve an imminent problem or fulfil an actual need.

According to Dr Ng, “Scalable ideas and innovations typically solve clear clinical or operational problems, are adaptable across settings and have a sustainable business model. In contrast, ideas without clear demand or integration potential may struggle to scale. Many startups fail due to insufficient understanding of clinical workflows, lack of stakeholder engagement, overestimating technology readiness, and limited evidence of effectiveness or ROI in the real world.”

Complex regulatory pathways

Even with strong R&D ecosystems, startups often struggle to translate innovations into marketable products and scale beyond the domestic market, which for countries such as Singapore, is limited.

On the other hand, scaling the business regionally involves navigating approvals across multiple markets; each with its own distinct regulatory pathways. This process can prove to be complex, tedious and resource-intensive, particularly for startups with limited expertise and funding.

Paul Lim, Head of Asia Distributor Markets, Lotus Pharmaceuticals Co. Ltd.

Paul Lim, Head of Asia Distributor Markets, Lotus Pharmaceuticals Co. Ltd. explains, “While ASEAN markets broadly align under the ASEAN Medical Device Directive (AMDD), execution varies significantly between countries, with distinct regulatory regimes, data privacy norms and procurement cycles. A product that works in one market may require substantial localization of language, clinical guidelines and reimbursement models, to succeed in other markets.”

“One of the biggest missteps of many startups is they treat regulation as an afterthought rather than a design input, ultimately limiting their ability to scale and sustain over time. Early-stage startups often fall into traps which can be avoided such as misclassifying products as 'wellness' instead of medical, delaying regulatory planning until late-stage development, lacking clear clinical evidence strategy, overlooking data privacy and cybersecurity requirements, and assuming that one approval covers all ASEAN markets,” adds Lim.

The early exit dilemma

Historically, successful MedTech Venture Capitalists (VCs) have relied on “big exits”, realised through strategic M&As.

However, many MedTech startups today focus on their exit strategy before they can achieve clinical validation or build a sustainable reimbursement pathway. This occurs due to limited funding, as investors tend to seek returns on capital within a five-to-seven-year window, forcing startups to exit early rather than scale up.

While early exits provide a quick return for investors, it can be detrimental to long-term innovation as they may stunt the development of truly disruptive technologies, limit the growth of competitive, independent companies and create a “stagnant exit environment”.

Says Dr Ng, “Although exit-driven strategies are common, focusing on exits too early in the game can backfire and prevent the longevity of startups. Solving genuine clinical problems and creating measurable impact can lead to more sustainable success.”

Disconnect between research and practice

Numerous studies highlight the transformative potential of artificial intelligence (AI) in diagnostics, treatment planning, improving administrative efficiency, as well as enhancing patient safety and quality of care. However, the adoption of these technologies and innovations into real-world clinical practice in Southeast Asia has been slow, and at best, fragmented.

As a second-generation opthalmologist in the Philippines with an ambulatory surgical centre, Dr Rainier Milante, Chief Medical Officer for Growth, Legazpi Eye Centre and Visiting Consultant, Cardinal Santos Medical Centre, highlights some of the economic and systemic barriers in implementing MedTech and AI in his practice.

“Economically, the Philippines operates as a resource-constrained market. Because we have highly skilled, cost-effective clinical and administrative workforce, the immediate financial imperative to replace human-driven workflows with highly automated AI systems is less pronounced than in Western markets. Most proprietary AI models are also based on Western or centralized datasets, which do not always account for the specific realities of our market.”

Dr Rainier Milante, Chief Medical Officer for Growth, Legazpi Eye Centre and Visiting Consultant, Cardinal Santos Medical Centre

High-fidelity clinical data is the foundation of any advanced ambulatory care service, and Dr Rainier utilizes MedTech to improve data quality through modalities such as high-resolution Optical Coherence Tomography (OCT), Fluorescein Angiography (GA), OCT Angiography (OCTA) and automated visual fields.

Says Dr Rainier, “These traditional digital tools are the engines of our diagnostic accuracy. In a fully optimized ecosystem, AI would sit on top of this data to act as a triage force multiplier. However, the reality within the Philippine ambulatory setting is that our current infrastructure does not yet support automated AI diagnostics at scale. At present, the most practical application of AI in our clinics is largely to streamline workflows while we continue to rely heavily on our core imaging technologies to inform clinical decision making.”

Balancing technology with human touch

Research shows that the lack of human intervention is another a barrier to adoption of AI and MedTech for both clinicians and patients. Physicians reveal they are less likely to trust AI in delivering reliable decisions due to their familiarity with the patient’s condition and the value of intuition in clinical decision making. From a patient’s standpoint, the lack of empathy and emotional connectivity, or simply the lack of a human presence to communicate with, was seen as a significant limitation.

Ultimately, for startups to be commercially successful, they must be able to successfully integrate into existing real-world systems. Dr Rainier emphasizes that while technology guides clinical decisions, the execution of care must remain strictly human.

“Clinically, my ultimate goal is the integration of predictive analytics capable of accurately forecasting glaucoma progression. From a practical standpoint, the first wave of AI expansion in our region should be administrative, to free up physician time for direct patient care. Ideally, it should solve accessibility issues and drive down the cost of care for marginalized patients. However, with technology development outpacing global hardware, energy resources and infrastructure, it will take time before AI becomes an affordable and scalable solution for developing markets such as the Philippines.”

Growth areas and future evolution

MedTech and HealthTech startups in Singapore and the wider ASEAN region are gaining traction as they address gaps in healthcare delivery. Some of the key growth areas include AI-driven diagnostics, remote patient monitoring, preventive health solutions and personalized medicine.

Beyond infrastructure, Singapore has positioned itself at a strategic advantage by enabling a “Singapore-first, ASEAN-next” market entry model, making it a preferred launchpad for regional expansion.

Regulatory approvals from Singapore’s Health Sciences Authority (HSA) are increasingly referenced by authorities of other markets including Malaysia, Thailand, Philippines, Australia, Hong Kong, and Sri Lanka – paving the way for smoother and less resource-intensive regulatory journeys for startups that wish to penetrate regional markets. As of September 2025, more than 500 applications of medical devices have been processed through Thailand and Australia’s reliance on HSA approvals.

Says Lim, “Regulation is expected to move away from one-time, pre-market approvals towards lifecycle-based oversight, i.e. continuous, dynamic and adaptive monitoring. AI-specific regulatory frameworks, greater use of real-world evidence (RWE) and stronger post-market monitoring of algorithms will see regulators increasingly acting as partners in innovation, rather than gatekeepers.”

“MedTech companies that succeed aren’t necessarily the ones with the best technology but the ones whose go-to-market (GTM) strategy is tightly aligned with the strength and execution of their clinical and regulatory work,” he adds.

One of the key strengths of the MedTech ecosystem lies in collaboration. Dr Ng highlights that closer collaboration between startups, investors and clinicians is important in aligning incentives towards more impact-driven solutions and ensure more sustainable ventures.

“Encouraging collaboration and partnerships between startups hospitals or clinicians, government grants, mentorship programs and impact-focused investment can nurture solutions that address real-world healthcare gaps and challenges. Impact-driven innovation can move startups away from the “exit-first” mentality,” she says.

MedTech-focused accelerator platforms, such as MedTech Innovator Asia Pacific,  serve this very purpose by connecting startups with global investors, corporate, healthcare providers, clinicians, and industry experts, as well as provide regulatory support. Such platforms strengthen the region’s ability to bring products to market efficiently and successfully.

Around the region governments are supporting local startups with similar platforms. These include HealthTechX Asia and Block71 in Singapore; Malaysian Global Innovation & Creativity Centre (MaGIC) and MRANTI (Malaysian Research Accelerator for Technology & Innovation), Thailand's National Innovation Agency (NIA) and True Digital Park which is one of Southeast Asia’s largest startup hubs, and QBO Innovation Hub and IdeaSpace Foundation in the Philippines.

Everyone one is betting on the future of MedTech innovation as a driver for Southeast Asia’s economies. However, would-be innovators should understand success takes more than a good idea and lots of capital; it also requires multiple collaborations to better understand unmet needs, regulatory pathways, and all the other hurdles that startups face on the long journey from bench to bedside.