Medical Technology Potentials Are Enormous
Health Industry Summit (CMEF) in Shanghai opens path to Chinese market, features products for global distribution
Is China still a key driver for world economy? Some market observers underline that growth in 2014 was down to 7.4 per cent – the lowest rate within 24 years. However, this change is well within the range of the central administration’s policy aiming at sustainable dynamics. And what is even more important for the medical technology sector: As of 2013, the Chinese medical technology market sported in excess of 24 billion US-$ and the world’s highest sector growth rate – 25.9 percent. By 2020, the administration aims to increase spending in the sector to approx. 1 trillion US-$. These impressive figures provide the perfect backdrop for Reed Sinopharm’s Health Industry Summit which beckons to medtech stakeholders from around the world this spring.
The current situation of China’s healthcare reform: According to results presented at the State Council of the People’s Republic on January 19, the envisaged basic system providing care to urban as well as rural regions has been established as planned. “The future target of the country’s healthcare reform is to optimize healthcare resources enabling residents to receive more effective prevention and clinical treatment while paying less money out of pocket”, explains the marketing manager of a large Chinese manufacturer who is active at a global level.
Budgets from the government: As a priority, the central government will re-enforce the services capability of county-level hospitals, and support implementing a standard of care for community healthcare institutions. Furthermore, the administration is placing additional emphasis on strengthening medical IT infrastructure and telemedicine services.
Influences on the market: The strengthening of county-level hospitals and community healthcare institutions will lead to increased demand for medical devices. “Since the government aims at gradually implementing a system in which community healthcare institutions act as the patients’ first point of call for acute care, rehabilitation, and nursing services to reduce the number of outpatient cases in public hospitals, these institutions will need more diagnostic, rehabilitation, and hospital equipment”, according to the marketing manager.
Further drivers in the market: In addition, aims of the central administration include installing at least one hospital with comprehensive services and one traditional Chinese medicine (TCM) hospital in each county. Also the government encourages the involvement of social capital in improving medical services, and creation of new non-profit healthcare institutions is encouraged based on the cooperation of social capital and public hospitals. The government will support those hospitals built with social capital to increase their number of beds.
Drivers of the medical devices market: In China, currently devices made by Chinese manufacturers are mainly sold to public hospitals below category III – which is the top hospital category in the country – and to private hospitals. However, some large innovative domestic manufacturers have been successful in entering the top category market thanks to their strong technical and financial resources, impinging on the monopoly of imported devices category III hospitals.
Regions make a difference: Due to the unbalanced economic development in the various regions of China, healthcare resources mostly accumulate in the coastal areas, causing a large gap regarding medical technology and medical services skills between the coast, tier 1 cities, and the rural west of the country. In that rural area and parts of the underdeveloped provinces, medical equipment is generally used for a longer period without replacement. Much of the equipment is comparatively old, and penetration of high-end and value-added imported devices is low. With the continuous large investment from both central and local administrations at the basic level of care, a larger number of county-level hospitals and community healthcare institutions will refurbish their infrastructure and purchase new medical equipment.
“As far as middle and high-level equipment is concerned, for various reasons Chinese hospitals still prefer to buy imports. Both domestic and imported medical equipment will have an opportunity to grow by a large extent in China in the upcoming years”, explains the manager.
High-end medical equipment used in China is mostly from foreign manufacturers; in the middle-high end range imports own 80% market share; in the middle to low end sector, imports have 40% while national manufacturers take 60% of the market, and low-end equipment used in China comes mostly from national manufacturers.
Features Chinese hospitals focus on: Research and development of medical equipment requires huge staff and financial resources, with the added difficulty of highly restricted access and IPR (intellectual property rights) protection similar to the pharmaceutical industry. According to the marketing manager, roughly 80% of the domestic manufacturers focus on producing low value-added medical disposables, general surgical instruments, rehabilitation equipment, home-use devices, and low-end diagnostic equipment. Products with high value are mainly imports, which leaves hospitals with little choice.
Summit to present this market information: From May 15 to 18 in Shanghai, the Health Industry Summit in Shanghai – previously under the name of China International Medical Equipment fair (CMEF) – will sport more than 100 conference sessions, with more than half focusing on various fields of medical technology and market trends. “The conference portfolio will include the China Integrated Medical Imaging Summit, the In-Vitro Diagnostics China Summit, and many more”, explains James Wang, marketing director of the Summit. The China Healthcare Investment Summit – the key conference – will focus on topics such as China’s Health Reform and Healthcare Service Development, New Trends in Health Industry Regulations, and the Creation of the Intelligent Healthcare Ecosystem, drawing top level participation as business leaders and investors contemplate the next big moves related to investing in the booming China health market, outlines Wang.
Entering the market: CMEF has long been the leading medical equipment event in Asia, Wang goes on to say. “While sourcing and trading activities may attract the crowds, however, it is for companies wishing to enter the Chinese market that CMEF plays a vital role: Finding the best partner and picking the right product suitable for the market makes all the difference between growing rapidly and losing out”. No other event in China provides a similar exposure to the thousands of key hospital decision makers and end users where real trends are shaped, to institutions and R&D firms where the next big opportunities are defined. Ultimately, underlines Wang, the needs of the market and the technology benefits shape the opportunities of the market in China.
International players at the Summit: Over 3,000 suppliers and nearly all of the key players in the market are represented at the show – including, e.g. GE, Siemens, Philips, Mindray, Neusoft, Toshiba etc. – from the U.S., Japan, Europe, Asia Pacific, and of course China.
New set-up of the congress and tradeshow and investment environment: The Health Industry Summit combines the medical and pharmaceutical value chains into one mega event which explores a multitude of synergies including distribution, international trade, and investment opportunities. “Investment in the health sector is on the rise, with 255 investments in the health sector in China worth 19.5 bn RMB from January to October 2014, representing a major jump in growth compared to 5.3 bn RMB in 2013”, says Wang.
The event comes at the perfect time when China announces major investments and developments in the health sector, including in the health services and new technologies in health IT systems and digital health platforms. “In the context of the envisaged size of the health industry in the country at 8 trillion RMB by 2020, the central administration has made steps to speed up licensing and registration for health food and nutrition products as well as other international technologies in the medical and pharmaceutical fields. Favourable tax policies on selected product imports are also on the agenda between key countries and China”, is Wang’s overview of trends.
International buyers: More than 10,000 international buyers from more than 140 countries will join the event. The health industry Summit will effectively combine the world’s largest integrated health expo (with 280,000 square metres of exhibition space and an estimated 200,000 visitors) with a full Summit program to help the health industry in China to link up with its international counterparts. The event looks to be a highly anticipated prelude for larger changes and greater things to come in the health sector and the worlds of medical technology and pharmaceuticals.
About the Health Industry Summit
Location: Shanghai, China
Date: May 15 to 18
Focus: medical technology and pharmaceuticals
Expected audience: 10,000 international buyers, 280,000 square metres of exhibition space, total 200,000 visitors)
Further information: en.cmef.com.cn