The competitive landscape of China's medical device industry in 2019, with the industry advancing towards internationally advanced levels

I. Overview of the Medical Device Industry

Medical devices include instruments, equipment, appliances, in-vitro diagnostic reagents and calibrators, materials, and other similar or related articles, including the necessary software, mainly used for medical diagnosis, monitoring, and treatment.

Data Source: Compiled from Public Information

2014Since [Year], various provinces and cities have introduced relevant policies requiring the prioritization of domestically produced medical equipment in procurement, prohibiting the specification of imported products, and setting targeted parameters; in particular, provinces such as Zhejiang and Sichuan have essentially required the procurement of domestically produced equipment, except for certain particularly high-end equipment or high-end tertiary hospitals.2017[Year] onwards, Zhejiang, Sichuan, Guangdong, Shanghai, and Jiangsu5provinces and cities were included in the first batch of pilot programs to support domestic medical equipment, indicating that national support policies are gradually being implemented, and the process of import substitution is expected to accelerate.

Data Source: Compiled from Public Information

II. Analysis of the Current Status of China's Medical Device Industry

Currently, the world's top ten medical device giants have chosen sub-sectors with larger market space as their main business direction, with large markets creating large enterprises.

Data Source: Compiled from Public Information

From the perspective of the domestication of medical imaging equipment,DR、life monitoring, and color ultrasound have achieved comparable performance to imported products.

Data Source: Compiled from Public Information

From the perspective of the domestication of cardiovascular and orthopedic devices, the domestication level of cardiac stents and some orthopedic products is relatively high.

Data Source: Compiled from Public Information

In terms of exports, as of2019[Year] H1, China's exports of medical instruments and devices amounted to59.41US dollars, a year-on-year increase of10.8%。

Data Source: China Customs, Huajing Industry Research Institute

In terms of imports, as of2019[Year] H1, China's imports of medical instruments and devices amounted to57.39US dollars, a year-on-year increase of6.5%。

Data Source: China Customs, Huajing Industry Research Institute

III. Analysis of the Competitive Landscape of China's Medical Device Industry

Mindray Medical, a leading company in the medical device sub-sector, has achieved the number one position in China in multiple fields such as color ultrasound, monitoring, defibrillation, anesthesia, and biochemistry. Its high-end monitoring and color ultrasound products have made breakthroughs in domestic tertiary hospitals and top international hospitals. Future penetration rate and market share will gradually increase. Although the growth rate of its medical imaging segment has slowed slightly due to the slowdown in the growth of the primary and private hospital markets, its high-end products maintain rapid growth in domestic tertiary hospitals and high-end international hospitals. It is expected that Mindray Medical's color ultrasound growth rate will still be far higher than the industry average.

In terms of revenue, according to statistics, as of2019[Year] H1, Mindray Medical's operating revenue reached82.06billion yuan, a year-on-year increase of20.5%and net profit was23.69billion yuan, a year-on-year increase of26.6%，

Data Source: Compiled from Public Information

Among Mindray Medical's upstream suppliers, the main electronic components include: World Peace International (Hong Kong) Co., Ltd. (3): electronic components, Shenzhen Zhaohengxing Electronics Co., Ltd. (5): circuit boards, Shenzhen South Circuit (8): printed circuit boards, etc. Structural components mainly include ZTE Xin Di (7): chips, etc., Shenzhen Jinsanwei Mould (10): molds, etc.

Data Source: Compiled from Public Information

From the perspective of Mindray Medical's revenue breakdown by product, as of2019[Year], Mindray Medical's life information and support product revenue accounted for39.32%in-vitro diagnostic product revenue accounted for34.67%medical imaging product revenue accounted for24.06%and other revenue accounted for1.95%。

Data Source: Compiled from Public Information

Through years of development, Yuwell Medical has formed a series of household medical device products, covering a range of household medical devices needed for chronic disease management, such as blood glucose meters, thermometers, blood pressure monitors, and scales. With the continuous strengthening of brand awareness and product lines, Yuwell Medical's platform value has become increasingly prominent.

In terms of revenue, as of2019[Year] H1, Yuwell Medical's operating revenue was25.02billion yuan, a year-on-year increase of12.5%and net profit was5.33billion yuan, a year-on-year increase of13.5%。

Data Source: Compiled from Public Information

According to statistics,2018[Year] Taobao/and Tmall's combined medical device sales (calculated at sales price) were99.75billion yuan, of which Yuwell Medical's product sales were10.72billion yuan, surpassing world-renowned medical device brands such as Omron, Johnson & Johnson, and Roche, as well as numerous domestic brands, becoming the2018[Year] Taobao/number one medical device Brand in terms of online sales on Tmall, with a market share of10.75%。

Data Source: Compiled from Public Information

From the perspective of Yuwell Medical's household product line revenue, the company's largest product line remains oxygen concentrators. Products with faster growth include blood glucose testing, thermometers (electronic thermometers), wheelchairs (electric wheelchairs), and ventilators. According to statistics, the breakdown of Yuwell Medical's online product revenue is as follows: blood glucose products account for4.28%blood pressure monitors account for18.93%wheelchairs account for4.68%thermometers account for4.77%oxygen concentrators account for42.24%ventilators account for10.12%other products account for14.97%This shows that YuYue has a relatively rich product line. The existing oxygen concentrator and blood pressure monitor series account for a higher proportion, but the newly added products are growing rapidly and have a large market space, which will become a direct driving force for the company's growth.

Data Source: Compiled from Public Information

IV. Analysis of Development Trends in China's Medical Device Industry

With the acceleration of the internationalization process of China's medical device industry, the design, R&D, manufacturing, and service of medical devices are moving towards internationally advanced levels. Mid-to-high-end medical products are expected to gradually enter the global market, promoting the acceleration of the domestication of the international market and increasing the role of China's medical product foreign trade. The changes of the century create new opportunities for domestic enterprises to become new trading partners under new business models, developing from simple product trade to technology output, capital output, and all-round medical services.

In recent years, domestic advanced medical device companies have rapidly risen, and the technical standards of some products have also caught up with the world, realizing a transformation of independent research and development and innovation. National enterprises such as DongSoft, Anke, Mindray, Wandong, KaiLi, AoTai, MicroPort, Pubo, Wego, Lepu, Aomei, ZhenDe, and WengJian have gradually gained a foothold on the international stage, and their products and technologies are gradually occupying a favorable position in international market competition, reducing the overall technical cost of the industry. A number of powerful companies have also implemented overseas investment and mergers and acquisitions, building platforms to enter the international market, becoming one of the ways for domestic companies to internationalize. For example, Fosun Pharma acquired the Israeli medical laser companyAlmaCompany, BGI acquired the American gene sequencing companyCompleteGenomics，China Resources Medical acquired the American magnetic resonance imaging equipment companyAuroraCompany, Shenzhen Mindray acquired the American ultrasound diagnostic system manufacturerZONARECompany, and Sanno Bio acquired Nipro and2.73US dollars and2.9US dollars respectivelyTrividia/PTSDiagnostics, Shanghai MicroPort Medical acquired AmericanWrightMedical Group's orthopedic joint product business. In addition, Wego Group, Chengdu Xinzinshifeng, ZhenDe Medical, and Sinopharm International have invested in the construction of factories or deepened market development business models in Kenya, Pakistan, Ethiopia, Ecuador, and Bosnia and Herzegovina, respectively.

2019Year, China's medical device industry is committed to industrial restructuring, improving R&D and innovation, and popularizing intelligent manufacturing. The domestic market is"Under the trend of price reduction, cost control, Bidding, compliance, two-invoice system and internet+"policies, it has played a huge role in promoting the expansion of the domestic market. It is believed that under the guidance of domestic policies, the two-invoice system will promote concentration, tiered diagnosis and treatment will benefit the grassroots level, medical insurance policies will change mechanisms, centralized procurement will raise the threshold, zero markup will extend the payment, and drug and consumables ratios will limit the amount, etc., which can further promote industrial transformation and upgrading and provide higher quality products for foreign trade products.