Medical Device Market Report: Market size is expected to exceed 900 billion yuan in 2022, with the high-end market becoming the next focus

The size of China's medical device market has shown steady growth over the past five years. Recently, iMedia Research released the "2019-2022 China Medical Device Market Big Data and Benchmark Enterprise Operation Monitoring Report," which discusses the global medical device market development scale, the current status of China's medical device market development, product structure, sub-sectors, favorable development factors, typical enterprise cases, development opportunities, and challenges.

The scale of China's medical device industry is continuously expanding, and its concentration will further increase.

Globally, the global medical device market size exceeded US\$400 billion in 2017, reaching US\$427.8 billion in 2018. It is expected to approach US\$600 billion by 2024, with a compound annual growth rate of 5.6% between 2017 and 2024. China has become the fourth largest medical device market after the United States, Western Europe, and Japan.

iMedia Research data shows that the overall market size of China's medical devices has increased from 255.6 billion yuan in 2014 to 530.4 billion yuan in 2018, with an average annual growth rate of around 20%. Both operating income and net profit have maintained a high-speed growth trend, signifying a golden period for the medical device industry's development. It is predicted that by 2022, the size of China's medical device market will exceed 900 billion yuan.

Domestic medical device companies are mainly concentrated in the Pearl River Delta, the Yangtze River Delta, and the Beijing-Tianjin-Hebei and surrounding Bohai regions. As of April 2019, there were approximately 18,800 medical device companies nationwide, with Guangdong, Jiangsu, and Beijing as typical provinces and cities, possessing 3,743, 2,558, and 1,852 medical device companies respectively.

With the acceleration of horizontal and vertical integration mergers, joint ventures, and reorganizations among enterprises in recent years, production will accelerate towards large medical device enterprises. Small and medium-sized enterprises will focus their efforts on the research and development of specific devices or components, or be merged and reorganized by large medical device manufacturers. Enterprises with small scale and lack of competitive advantage will gradually exit the market, thus improving industry concentration.

The market structure has become optimized, and the high-end market will be the next point of effort.

In terms of market structure, according to different market positioning, the Chinese medical device market is mainly composed of low- to mid-range products and high-end products. The low- to mid-range market includes products such as DR equipment and CT machines, while the high-end market includes MRI and PET-CT products.

In the early days, Chinese medical device companies held the largest market share in the mid- and low-end markets of China's medical device industry, accounting for nearly 70%, resulting in a fragmented competitive landscape.

In the high-end market, due to the high technical content and added value of the products, which are not easy to research and manufacture, limitations in technology level and resource monopolies by developed countries, it only accounts for about 30%. Therefore, high-end products in the industry still mainly rely on imports, while the structure of the international medical device market is 55% high-end products and 45% low-end products.

iMedia Research analysts believe that compared with the global medical device market, the structure of China's medical device market has been optimized in recent three years, but the structure is still severely unbalanced, and the high-end medical market will become the next point of effort.

Sub-sector enterprise overview: Many companies have shown impressive Achievements.

Currently, competition among Brands in different sub-sectors of China's medical device industry is fierce, with many excellent companies entering and performing impressively in numerous fields.

Mindray Medical mainly engages in the research and development, production, manufacturing, marketing, and service of medical devices. Its main businesses include life information and support, medical imaging, and in vitro diagnostics.

In October 2018, Mindray Medical was listed on the Shenzhen ChiNext board. In 2018, the company's market value reached 132.7 billion yuan, making it the highest-valued company on the A-share ChiNext board and currently the A-share medical device company with the largest revenue and profit scale. In 2018, its operating revenue reached 13.753 billion yuan, with a compound annual growth rate of 15.1% in operating revenue from 2014 to 2018 and a compound annual growth rate of 68.69% in attributable net profit.

The medical trade sector is an innovative business model for Xinhua Medical and its main revenue stream, accounting for over 50% of its revenue from 2017 to the first half of 2019.

Lepu Medical is a cardiovascular full-industry chain platform enterprise including devices, pharmaceuticals, medical services, and mobile medical care. Since 2014, Lepu Medical's operating revenue, comprehensive gross profit margin, and net profit have shown a growth trend, mainly benefiting from the continued stable growth of the medical market and also from the company's competitive advantages in research and development, production, and marketing.

The industry's development prospects are good, with both opportunities and challenges.

iMedia Research predicts that the size of China's medical device market will exceed 900 billion yuan in 2022, heralding a golden age and a promising development trend for the industry. However, rapid development always brings both opportunities and challenges.

In terms of opportunities, as of 2018, the number of elderly people in China exceeded 160 million. The increase in the elderly population will continuously increase the demand for medical devices. Simultaneously, due to population aging, the prevalence of chronic diseases in the total population has doubled, and the number of patients will show a steady increase.

In addition, in terms of sub-sectors, endoscopic diagnosis and treatment, as a core part of minimally invasive treatment, is experiencing rapid development with the global expansion of minimally invasive treatment. iMedia Research analysts believe that China has a high incidence of digestive system diseases. With increasing public awareness of endoscopic examinations, coupled with China's aging population, improved residents' consumption capacity, and higher medical insurance coverage rates, China's endoscopic diagnosis and treatment market has vast development potential. It is predicted that the market size will reach at least 4.892 billion yuan by 2022.

However, there are too many platforms, leading to fierce competition. iMedia Research data shows that by the end of 2017, there were 16,000 medical device manufacturers in China, including 6,096 capable of producing Class I products, 9,340 capable of producing Class II products, and 2,189 capable of producing Class III products.

At the same time, small enterprise scale and insufficient R\&D investment have resulted in weak technological achievements transformation capabilities, lacking the technology and strength to surpass multinational and domestic mainstream companies. They can only follow the path of imitation, or produce low-to-mid-range, conventionally priced products, including small and medium-sized instruments and consumables. Only some products can compete with imported medical devices, such as monitors, anesthesia machines, blood cell analyzers, color ultrasound, and biochemical analyzers, but the overall level still lags behind foreign countries.

Overall, iMedia Research analysts believe that in the future, with government support, expanding market demand, accelerating aging of the Chinese population, and technological development and industrial upgrading of the medical device industry, medical equipment is expected to continue its high-speed growth and achieve the vision of import substitution from low-to-mid-range markets to high-end markets.