The medical device market in China is substantial – it also has massive niche markets. The domestic market size growth has surpassed that of the global market for many years, showing strong potential for development.
► China’s aging problem has become increasingly severe, but it might help to trigger the demand for medical devices, especially household medical equipment.
► Benefitting from the COVID-19, there was a sharp increase in medical device demand. Nevertheless, this need will return to a more sensible level when the disease’s effects are under control.
The National Development and Reform Commission, Health Select Committee (卫生健康委员会) and the Chinese Medicine Council (中医药局) jointly released ‘the Construction Scheme of Controlling and Treating Public Health’ (公共卫生防控救治能力建设方案) on May 2020, promoting the establishment of public facilities. This policy will further increase the need for medical devices.
Medical devices mean goods that can be used for human healthcare, including hospital and clinic equipment, in vitro diagnostic reagents (体外诊断试剂) and relevant materials. Its top four classifications are the high-value medical consumables (高值医药耗材), low-value medical consumables (低值医用耗材), medical equipment and in vitro diagnostics (体外诊断).
Regarding the global market of medical devices, it shows stable growth and high concentration. Specifically, with the rising demand in public health, the medical device market's capacity has attained USD 451.9 billion. Moreover, as Evaluated Med Tech forecasted, its capacity will likely reach USD 600 billion in 2024. As for the niche market, the sales volume of in vitro diagnostics was the highest, obtaining USD 52.6 billion in 2017. The following figures were cardiovascular, shadow, orthopedics and ophthalmology, occupying over 50% of market share.
When it comes to the domestic market, the medical device market has maintained a growth trend, with the market size reaching CNY 500 billion in 2018. There are four factors causing an increase in demand in the medical device market. Firstly, the increasingly severe aging problem. As Wind mentioned, the ratio of people over 65 reached 12.6% in 2019, with a growth rate of 6%. Secondly, China’s medical resources allocation level is much lower than that of the US and Japan, implying a potential room for further development. Thirdly, the Chinese government keeps investing in health expenditure, presenting a stable rising trend. For instance, China’s health expense occupies 6.6% of the national income. Compared with the US’s 16.9%, there is still a large growth field ahead for China. Last but not least, China’s policies are also promoting the rise in the medical device industry’s need. Specifically, the new medical reform has helped to improve the value of medical services since 2019.
To elaborate further on the medical device market, four main classifications cannot be ignored. The first is high-value medical consumables, which focuses on vascular intervention equipment (血管介入器械) and orthopedics implants (骨科植入). As for the vascular intervention equipment, its market size shows a rising trend, as there is an enormous patient population. To be more precise, the ratio of cardiovascular deaths to the overall disease death was over 40%, further promoting vascular intervention treatment. While, for orthopedics implants, it also presents increasing market size, and it is expected to reach CNY 47.1 billion in 2024. Also, China is mostly pushing centralized purchasing in the medical device arena, enhancing the concentration ratio.
Under the shock of COVID-19, the demand for masks and gloves is rising sharply, which also drives the increase in the low-value medical consumables market. However, when the disease becomes less of a threat in the future, there will be a slight decrease in its need. Furthermore, the domestic competition has become more and more intense. Due to the increasing advantage of labor costs in the Southeast Asia region, firms are gradually transferring their overseas shares to China.
In terms of medical equipment, it could be explained by hospital-used medical equipment and household medical equipment, occupying 68.54% and 31.46% separately. As a whole, the market size of medical equipment also presents a rising trend, with its market size of about CNY 310.3 billion in 2018, an increase of 19.9%. As for hospital-used medical equipment, its market size has broken CNY 2 billion, with a growth rate of 18%. Specifically, its main products are ultrasound, DR, CT and endoscopy. Within these products, ultrasound has a comparatively high penetration rate in the hospital, coming from the construction of primary medical facilities and the iterative upgrade of current equipment. Additionally, the market size achieved CNY 10.36 billion in 2018, and it is expected to get CNY 12.5 billion in 2020. Next to the DR, its sales volume has presented a rising trend, with the growth ratio maintained at 18%. With the conduction of new medical reform, DR's distribution rate in the primary health care institution is expected to rise. Lastly, CT has an enormous market potential as its inventory per person is half of the US's, merely 20,000 units by the end of 2016. To be precise, GE, Siemens and Philips are the three leading suppliers of CT domestically.
With the increase in household consumption level and normalization of elderly chronic diseases, the household medical equipment sector has shown a strong growth potential. According to the Health Select Committee, over 0.18 billion older people suffer from chronic illnesses, triggering a rise in the household medical device market.
Concerning the in vitro diagnostic area, it has become one of the fastest-rising markets globally, reaching CNY 60.4 billion market size in 2018 and 18.4%. In general, in vitro diagnostic means acquiring clinical diagnosis information by detecting human body samples to determine the disease. Specifically, immune diagnosis, biochemical diagnosis and molecular diagnosis have the largest market share within the in vitro diagnostic industry, accounting for over 50% globally. Biochemical diagnosis is the most mature niche area within in vitro diagnostic, with its market size approaching CNY 11.5 billion.
Finally, COVID-19 has further triggered the development of the medical device market domestically and globally. Unfortunately, the virus is likely to show an increasing trend in the upcoming years. As for China’s market, the aging issue, increasing health expenditure and supportive policies have helped expand its market shares in several areas. In addition, some niche sections within the medical device market are also pretty valuable, as they have presented a comparatively low domestic manufacture rate, and there is still a large room for domestic firms to grow. The immune diagnosis could be seen as an example.