Insights and Opportunities
Overview: China is now the world’s third largest market for medical equipment. According to information from the China Association for Medical Devices Industry (CAMDI), China’s medical equipment market grows at 15% annually with a total size of $10.2 billion in 2008 and the figure is expected to reach as high as $17.5 billion by 2010. An annual growth of sales of large, high-end medical equipment was reported between 20-30%. Clinical laboratory equipment and reagent sales are growing at about 15-20% per annum. According to incomplete figures from the World Trade Atlas, China’s imports of medical equipment accounted for about $5.7 billion in 2007 and $7.2 billion in 2008, showing an increase of over 27%.
Chinese end users consider U.S. products to be of superior quality and the most technologically advanced. China’s hospitals particularly welcome medical equipment and products with high-technology content. At the same time, domestic medical device companies are consolidating, upgrading quality, and beginning to compete in medium-level technology niches. According to the information given by CAMDI, China currently has over 12,600 medical device manufacturers, of which only 60 have sales valued over $14.6 million. Among the industry’s top 10 manufacturers, seven are foreign invested firms or joint ventures. Positive indicators fueling imports and increased domestic production include the desire to utilize a wider array of advanced technologies in China’s over 18,000 domestic hospitals & clinics. Currently about 15% of the medical devices in use were made in the 1970s and they are expected to be replaced by new ones.
The newly released Chinese government’s healthcare system reform scheme is expected to have a great impact on the market in China. The scheme released in draft in late 2008 is aimed at providing basic healthcare access and coverage for all population in China. To guarantee the implementation of the scheme, the government at various levels plans to invest $124 billion during 2009-2011, including $24 billion for 2009. The fund is directed to construction of basic healthcare infrastructure.
Although it is not clear how much will be used for medical equipment procurement for hospitals, on a centralized basis or by province, it will likely have a significant impact on how companies will sell to healthcare institutions in the coming years due to the government’s efforts to address concerns over accessibility and affordability of healthcare. Other concerns for U.S. and foreign suppliers center on the uncertain regulatory environment and extensive delays in registration and re-registration of products, although efforts are reportedly being made to reduce the large backlog.
Best Products/Services: In vitro diagnostic equipment and reagents: Clinical and diagnostic analysis equipment, diagnostic reagents, medical test and basic equipment instruments; Implantable and intervention materials and artificial organs: Interventional materials, implantable artificial organs, contact artificial organs, stent, implantable materials, and artificial organ assisting equipment; Therapeutic products: Tri-dimensional Ultrasonic focused therapeutic system, body rotary Gamma knife, simulator, linear accelerator, laser diagnostic and surgery equipment, nuclide treatment equipment, physical and rehabilitation equipment; Medical diagnostic and imaging equipment: Black & white and colored supersonic diagnostic unit, sleeping monitor, digital X-ray system, MRI, CT, DR, and ultrasound equipment; Surgery & emergency appliances: Anesthesia ventilation systems and components: high frequency surgery equipment, high frequency and voltage generators; and Healthcare Information technology related equipment and products: Medical software, computer aided diagnostic equipment, and hospital informatization system (HIS, CIS, HLT).