China Jumps Second Biggest Medical Machinery Market
- Mar 22, 2018 -

After 30 years of sustained high-speed development, China's medical device industry has initially established an industrial system with complete professional categories, a sound industrial chain, and a solid industrial foundation. China has surpassed Japan to become the second largest medical device market in the world.

According to the "2018-2020 China Health Industry Investment Research Report," data: Since entering the 21st century, China's medical device industry has entered a period of rapid growth. The total sales volume has increased from 17.9 billion yuan in 2001 to approximately 255.6 billion in 2014. Yuan, an increase of 14.28 times. From 2010 to 2016, the domestic medical device market grew from RMB 126 billion in 2010 to RMB 370 billion in 2016, with a compound annual growth rate of 19.67%. In 2017, the scale of China’s medical device market exceeded RMB 400 billion.

Although the sales volume of the domestic medical device market has grown rapidly, the consumption ratio of drugs and medical devices in 2015 was only 1:0.33, far below the global average of 1:0.7, and even lower than the 1.02:1 level of developed countries. Therefore, the domestic medical device market has broad prospects for development and the market is far from saturated.

The scale of China's medical device market in 2011-2016 (100 million yuan)

I. Four major problems in China's medical device companies

1, domestic brands low bid strategy. Lack of strategic positioning, lower than the benchmark high-end products, with the agent to squeeze profits.

The competition is at a disadvantage, there is not enough profit to continue R&D, there is no financial support, and upgrading and replacement are also faced with technical and financial pressures, and the market brand investment is insufficient.

2. It is difficult for a single technology breakthrough to form a platform advantage. Lack of long-term technology portfolio, dilute customer development costs, dare not invest in training and development of customers.

3. There is a gap in technical details during the simple imitation process. The shape is similar to that of God, and the quality is uneven. With the localization of the production of imported products, domestic companies should really grasp the research and development ideas of technology and products. The key raw materials, high-precision processing equipment and technical mastery can significantly reduce the gap.

4. Quality control puts forward higher requirements. The safety of medical devices is placed in front of the benefits. The stage of product development and technology change must be repeatedly verified and confirmed. The system must ensure the stability of the product's batch size and can continue to improve. According to the official website of the State Food and Drug Administration, as of January 1, 2018, the "Administrative Measures on the Conditions and Filing of Medical Device Clinical Trial Organizations" has been officially implemented.

Global Medical Device Sales Scale (US$100 Million), 2011-2016

Second, China's medical equipment compared to foreign deficiencies and advantages

There is a certain gap between the size of China's medical device market and foreign countries, but the growth rate is alarming:

In 2016, the global medical device market was 406.3 billion U.S. dollars, the U.S. market was the largest, reaching 208.4 billion U.S. dollars, while the Chinese market was 370 billion U.S. dollars, accounting for 1/6 of the global market, and the U.S. medical device growth rate was only 6.03%, while China's growth rate is around 19.67%.

Global medical devices account for 42% of the total pharmaceutical market, while Chinese medical devices account for 9.16% of the total pharmaceutical market. There is still much room for development in the medical device industry in China.

China's medical device companies have a huge income gap compared to the United States, but their growth rate is much higher than the United States and the global average. In 2016, the revenue of medical equipment companies in China's TOP10 increased by 30% year-on-year, compared with 6.84% in the United States.

Absolute input and relative investment have a larger gap than the United States:

In 2016, the total R&D input of US medical device revenue TOP10 companies was 10.4 billion U.S. dollars, accounting for 8.14% of the total revenue. In the same period, the total R&D input of China's medical device revenue top 10 companies was 1.806 billion yuan, accounting for 5.35% of the total revenue.

The gap in R&D at home and abroad is mainly reflected in: lack of mass, product originality, technical details, core materials, and key components. The cooperative R&D model of domestic industry and clinical needs is gradually maturing, and original products are relatively scarce.

Third, in the next three years, the space for in vitro diagnostics, neurology, and cardiac devices will be full of imagination.

In vitro diagnostics continues to lead medical devices, accounting for 13.1% of total industry sales. By 2020, in vitro diagnostics will remain the largest submarket in the medical device market.

Cardiac medical devices can be ranked second, followed by a number of traditionally advantageous industries such as diagnostic imaging, orthopedics, and ophthalmology.

Neurology is the fastest growing submarket in medical devices. The rapid growth of the medical device market is also due to the fact that many diseases are difficult to solve with drugs, so medical diagnosis and neurological regulation will help diagnose and treat diseases.

Overall, investment in medical innovation technology will be the future trend. In the future market of China, domestic import substitution is the general trend, and the country’s policy is also tilting toward domestically produced equipment. Overseas, cost-effective Chinese manufacturing will challenge international brands as soon as possible on a global scale. Globally, it will truly break through the bottleneck of the development of medical devices, deepen clinical research, new materials, new technology and other basic disciplines, and combine new emerging disciplines such as artificial intelligence to accelerate technological iterations.