China's medical device industry will enter a peak period of mergers and acquisitions

The COVID-19 epidemic continues, causing a sharp increase in demand for epidemic prevention products such as masks, disinfectants, and protective clothing. The development prospects of the domestic medical device industry have thus become a topic of market concern.

Recently, a reporter from the Securities Daily interviewed experts from the National Medical Products Administration's Southern Institute of Pharmaceutical Economics (hereinafter referred to as "Southern Institute") on issues such as the current state of the medical device industry, its development prospects, and challenges faced by the domestic medical device industry.“Southern Institute”）的专家。

Globally, according to data from EvaluateMedTech, a well-known global medical market information and data consulting company,Evaluate（EvaluateMedTech）数据，全球医疗器械市场销售额为4050US dollars, with a compound annual growth rate of around5%左右，行业集中度进一步提升。其中IVD(in vitro diagnostics) is the largest segment of the medical device market, while the neurological and cardiovascular fields are expected to be the fastest-growing segments.

Domestically, the medical device industry is currently in a period of rapid development, with a compound annual growth rate of approximately20%。“Most domestic medical device companies are concentrated in East China, South China, and North China, mainly in Shanghai, Jiangsu, Beijing, Shenzhen, and Guangzhou. These regions account for over80%of the large-scale medical device companies nationwide, showing a clear trend towards cluster development. For example, Shenzhen has become an important manufacturing and processing base for high-end medical device industries in China, with strong growth momentum in medical imaging and patient monitoring equipment.”said Zong Yungang, Deputy Director of the Southern Institute.

“In terms of future development trends, China's medical device industry is expected to maintain its rapid growth momentum, and its industrial innovation capabilities will be further strengthened.”Zong Yungang provided a six-point analysis of this.

First, compared to developed countries, China's per capita medical expenditure is still at a relatively low level, with significant room for improvement in the future and enormous market potential. Data show that the ratio of China's pharmaceutical and medical device consumption is1∶0.33significantly lower than the1∶0.7world average and even lower than the1∶1level in developed countries.

Second, domestic innovative medical devices are undergoing upgrades and transformations, and their innovation capabilities are constantly strengthening. In particular,3Dprinting,AItechnology, and internet+、5Gtechnology integration will further break down the traditional boundaries of medical device products, providing a broader range of technological applications for new medical devices.

Third, domestic mid-to-high-end medical device products are gradually achieving import substitution, and exports are growing year by year. Especially under the“Belt and Road Initiative”domestic medical devices are entering the international market and continuously meeting international market demand.

Fourth, the industry concentration is constantly improving. As the country continues to increase its regulatory efforts in the medical device industry and standardize medical device procurement policies, the barriers to entry are gradually increasing. New registered and renewed registered medical device products have begun to decrease year by year, and the industry is entering an optimization phase. The medical device industry will Enter a period of mergers and acquisitions.

Fifth, the internet+e-commerce, and micro-business and other emerging business models continue to bring vitality to industry development. The e-commerce market for medical devices will expand rapidly, and the online sales model for medical devices has played an important role during the current COVID-19 epidemic.

Sixth, the development prospects of medical devices for home and personal use are worth looking forward to. Medical devices will further replace drugs in the diagnosis, prevention, and auxiliary treatment of diseases.

Although the medical device market has broad prospects, it also faces many challenges. Zong Yungang believes that the current major shortcomings of China's medical device industry are threefold: First, the proportion of domestically produced high-end equipment is low, such as in the high-endCTMRI, and endoscopy fields; second, the industry concentration is low,90%of medical device companies are small and medium-sized enterprises; and third, product homogeneity is serious, and industrial integration is urgently needed.

“With the implementation and promotion of various national policies, China's medical device industry will continuously move towards technological innovation, compliance management, and healthy development. Some previously non-compliant business models and barbaric growth in the industry will eventually be eliminated by the market.”said Zong Yungang.