China's medical device industry analysis, industry characteristics and policy support

Driven by a series of policies such as China’s nearly 30 rounds of drug price cuts and the “one product, two regulations, and double envelopes” of the new medical reform, the profitability of the pharmaceutical market has become increasingly dilute and difficult to do. This makes the highly anticipated market of medical devices a field for manufacturers to explore. With the support of 850 billion government funds, a market capacity of 200 billion, an annual growth rate of 30%, and no less than 10 mergers and acquisitions each year, all demonstrate the fascinating charm of this sunrise industry. From a policy perspective, the country is currently promoting industrial upgrading. As a high value-added industry, medical devices are receiving more and more policy support. It can be said that the time is right to tap the market potential of the medical device industry.

National macro policies with bright prospects

According to the "Twelfth Five-Year Special Plan for the Medical Device Technology Industry", it will focus on supporting 10-15 large medical device enterprise groups, supporting 40-50 innovative high-tech enterprises, and establishing 8-10 medical device technology industry bases and 10 national demonstration and application bases for innovative medical device products, perfect the industrial chain, optimize the industrial structure, increase market share, and significantly enhance the international competitiveness of the medical device industry. It is estimated that the output value of new medical equipment brought by scientific and technological progress and demonstration applications will be 200 billion yuan, and the proportion of exports in the total international market will increase to more than 5%.

Facing the current situation that China's large-scale medical equipment market is monopolized by foreign capital, relevant leaders stated that the medical equipment industry has become a development engine that drives national scientific and technological progress, leads multidisciplinary technological progress, and an important driving force for economic growth. In the future, my country will vigorously develop domestic medical equipment, reduce medical costs, and strictly implement the government procurement law to ensure that fiscal funds give priority to purchasing domestic medical equipment.

According to people familiar with the matter, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Finance and the Health and Family Planning Commission are jointly drafting a "special project for industrial revitalization and technological transformation," and the entire special support fund is 1.5 billion yuan. Among them, the 2013 high-performance medical diagnosis and treatment equipment development project will focus on medical imaging equipment, in vitro diagnostic products, treatment equipment and other fields to achieve the coordinated development of the upstream and downstream of the industry chain.

At present, the country is implementing county-level hospital reforms in various places, and they urgently need home-made, cost-effective medical devices. China's medical device industry is ushering in a new round of development opportunities.

The recent national favorable policies for medical devices: The State Food and Drug Administration issued a notice on June 26, 2013, deciding to delegate some of the responsibilities for the approval of registration certificate changes to the provincial food and drug Regulatory departments lower the threshold for capital to enter the medical device industry and further simplify the government's procedures.

In the near future, the drug regulatory authority will issue two new medical device supervision policies, which will guide the registration of innovative medical device products and further simplify the re-registration requirements for medical devices. Industry insiders said that the introduction of relevant measures will help promote the merger and integration of the medical device industry, and will be more conducive to the development of innovative medical device companies.

The development trend of the medical device industry

The concept of "patient-centered precision diagnosis and treatment" has become the future research and development trend of medical technology. "The future of medical technology is not simply to improve the performance and high-tech sense of these testing instruments and treatment equipment, but a more user-friendly application for operators and patients. It is fundamentally more accurate from the perspective of patients. High, safer, less costly, and more comfortable medical experience. Another reasonable concept-"happy diagnosis and treatment" makes children the biggest beneficiaries of this concept. In American hospitals, some NMR The resonant environment is designed as an adventure story, such as jungles, snakes, pirate ships, etc. During the scan, the doctor will tell the children that there will be pirates on the ship for a while, and they need to hold their breath instead of stiffly saying that they want to check. These experiences allow children to Like in a paradise, children will even ask parents and doctors if they can come back tomorrow after scanning!

With the continuous emergence of new technologies, such as telemedicine, surgical robots, etc., medical devices are now entering the era of non-invasive or minimal trauma, and some miniaturized and intelligent medical devices will be the future development direction.

"Big, many, small, high, weak" market structure

China's medical device industry presents the characteristics of "big, many, small, high, and weak".

One is the large room for growth: my country’s medical device market accounts for 14% of the total pharmaceutical market size, which is far from the global level of 42%. Compared with the global per capita consumption of medical devices, my country’s medical device market is 5-6 times larger Room for growth. According to the estimates of authoritative departments, China's medical device market will reach 53.7 billion US dollars by 2015.

Second, there are many manufacturing companies: There are currently more than 15,000 medical device manufacturing companies nationwide.

The third is the small scale of the enterprise and the small profit margin: In 2013, the total output value of China's medical device industry was 200 billion yuan, and the average output value of each enterprise was about 12 million yuan; the profit rate and growth rate of each sub-industry varied significantly, and the profit rate was due to technical barriers. The technical barriers are higher in areas with high profit margins. The high-end areas of the medical device industry have been monopolized by multinational companies such as GE, Philips, Toshiba, Siemens, Johnson and Johnson, while the products of Chinese national enterprises are mainly concentrated in one-off low-end products. Value consumables, massage appliances, blood pressure measuring instruments, syringes and other low-value-added and low-priced categories.

Fourth, the concentration of products is high, and there are many subdivided industries: there are more than 3,500 medical device products, with an average of more than ten registration certificates for each product; the homogeneity of products is serious, leading to fierce market competition.

Fifth, weak innovation capabilities and insufficient R&D investment: In the number of international patent applications for electronic medical equipment from 2001 to 2010, China ranked fourth in the world with 25,385, while the United States ranked first with more than 80,000. In foreign countries, funds invested in the development of new medical devices generally account for about 10% of their sales, while the ratio of investment in research and development to sales of most Chinese enterprises does not exceed 1%. Therefore, although some domestic medical devices (such as ultrasound focusing technology, radiofrequency ablation technology, cochlear implants, etc.) have advanced first-generation products, they suffer from a lack of funds for continued innovation and cannot update their products. The technological advantages will increase over time. Over time and gradually lost. Generally speaking, a medium-sized medical device investment project needs more than 10 million U.S. dollars at the beginning. With the development of my country’s medical device industry today, most of the medical device industry cannot rely on its own accumulation to bear such huge research and development costs. The government has a certain amount of financial support for the research and development of the medical device industry, but it is a drop in the bucket compared to the funding requirements of this industry.

Diagnosis and treatment products

There are currently 60 listed medical device companies in China, 70% of which are diagnostic products, such as Shenzhen Mindray and China Resources Wandong. And only 10% of the listed companies in therapeutic products, including Lepu and Minimally Invasive Medical.

Why can Chinese medical device companies blaze a trail in the field of diagnostics, in the pursuit of foreign brands, and a number of great companies such as "Shenzhen Mindray" and "China Resources Wandong" have emerged, while therapeutic products have never been large. What is the reason for not being strong? Why is the development of Chinese medical device companies in the therapeutic field so difficult?

The reason is that the entry barriers for therapeutic products are high, hospitals have high requirements for therapeutic products, hospital demand is small, continuous sales in the market and continuous profitability are poor, especially the early market investment of unconventional therapeutic equipment.

Second, the current China's independent innovation technology is mainly derived from the minimally invasive, leading technology with independent intellectual property rights invented by authoritative hospital academic leaders and research institutions based on years of clinical experience, such as wireless Bluetooth EEG, scalp impedance However, when the independent innovation technology is transformed into the industry, the detection device is affected by factors such as funds, talents, and management.