The endoscope market is booming, and import substitution is yet to break the ice

Digestive diseases are now highly prevalent, and the demand for endoscopic diagnosis and treatment in China is enormous. Japan, through its leading endoscopic technology, has pushed the level of gastric cancer diagnosis to the early initiating stage—microscopic gastric cancer (cancerous tissue diameter ≤5mm)—with a ten-year post-operative survival rate reaching 100%, significantly improving cancer survival rates. In China, however, gastric cancer and esophageal cancer are types of digestive tract cancers with high incidence and mortality rates, with an early diagnosis rate of only 10%. In addition, the incidence of digestive diseases such as acute gastritis, chronic gastritis, peptic ulcers, and functional dyspepsia has also increased significantly. Early detection and diagnosis are important ways to control digestive diseases and improve survival rates, and endoscopic examination is the preferred diagnostic method.

The rate of endoscopic examinations is lower than the international level. According to "The Current Status of Development of Digestive Endoscopy Technology in China," in 2012, the Ministry of Health conducted a nationwide survey on the application of digestive endoscopy technology in various medical institutions. The national health statistics yearbook that year showed that there were 21,979 hospitals nationwide, but only 6,128 hospitals conducted digestive endoscopy diagnosis and treatment, with a rate of only 27.88%.

Compared with other countries, the rate of gastroscopy and colonoscopy is still very large compared with developed countries in 2009. With the advancement of tiered medical treatment, increased public health awareness, and the promotion of projects using capsule endoscopy for early screening and treatment of digestive tract cancer, there is still considerable room for improvement in the rate of endoscopy.

China's gastroscopy rate compared to other countries (1/105)

China's colonoscopy rate compared to other countries (1/105)

Compared with Japan, China still has considerable room for improvement in endoscopic screening. Japan has a population of about 127 million, with about 15 million gastroscopy screenings per year, accounting for 12.5% of the total population, equivalent to a complete endoscopic census every eight years. In the Chinese population, few people have used gastroscopy as a routine physical examination item in the past eight years. Comparing the requirements of China and Japan for gastric cancer screening and endoscopy, we still have a significant gap. Japan's gastric cancer screening is of the "census" type, requiring routine screening for people over 40 years of age, while China, due to economic and other factors, is of the "high-risk screening" type, recommending early screening only for people over 40 years of age who are judged to be at high risk of gastric cancer. At the same time, in screening, Japan primarily uses endoscopic screening, while China uses body fluids and serum for preliminary screening, and only recommends endoscopic screening for high-risk individuals in the scoring, thus weakening the effectiveness of early screening.

Comparison of gastric cancer screening requirements and endoscopic applications in Japan and China

Recommended procedure for early gastric cancer screening in China

The shortage of endoscopists is a major factor limiting the development of the endoscopy market. As of the 2012 census data, there were 26,203 digestive endoscopists in 31 provinces, accounting for only 1.06% of the total number of physicians. There are an average of 19.59 digestive endoscopists per million people, less than one-tenth of that in developed countries such as Japan. The requirements for digestive endoscopists vary significantly depending on the different scenarios of endoscope use. Basic applications are mainly aimed at primary-level doctors and health examination centers. In the past, due to the lack of equipment and the very limited ability of endoscopists to operate endoscopes, basic endoscopy-related diagnosis and treatment were not carried out at the primary level. However, with the continuous advancement of endoscopy construction at the primary level by the National Health and Family Planning Commission in 2012, and the promotion and training of ordinary doctors to perform relatively simple endoscopic operations, health examinations and early screening of digestive diseases have gradually been transferred to the primary level. Primary applications are mainly aimed at ordinary doctors in secondary and tertiary hospitals, who can use endoscopes for disease screening and confirmation, use simple supporting devices to take biopsies or remove foreign bodies, remove polyps, perform local hemostasis, or use laparoscopy to assist in simple minimally invasive surgery. Advanced applications are mainly aimed at specialized doctors in tertiary hospital endoscopy centers, who can master the "3E" of gastroenterology, namely endoscopic submucosal dissection (ESD), endoscopic ultrasound (EUS), and endoscopic retrograde cholangiopancreatography (ERCP). For advanced applications, endoscopists have higher requirements for endoscopic equipment, and can assist in the diagnosis of difficult and complicated diseases, multidisciplinary consultations, and research.

Huge market demand. We have found that with the development of endoscope applications and the popularization of minimally invasive surgery, the market size of minimally invasive surgery supporting instruments for endoscopes remains at about twice the size of the endoscope market, reaching 312.29 billion yuan in 2015, with an average annual compound growth rate of over 20%. With the increasing acceptance of minimally invasive surgery, it drives endoscopic treatment. Minimally invasive surgery is already relatively mature overseas, and thoracoscopic and laparoscopic surgery in general surgery has become the largest sub-segment market, with growth rates remaining above 10%. In recent years, the understanding and acceptance of minimally invasive surgery by hospital managers and doctors have also changed, gradually rising from a new technology to the level of disciplinary diagnostic concepts, and the development of minimally invasive technology is regarded as one of the core competitive advantages of hospital construction. The "Twelfth Five-Year Plan" of Shanghai Renji Hospital and Sichuan University West China Hospital both clearly stated: "From the patient's perspective, minimally invasive treatment will be one of the major development opportunities facing medical science and technology." The application of endoscopy and minimally invasive surgery in China has been relatively short, but the popularization speed is fast, and it has been widely used in general surgery, otorhinolaryngology, obstetrics and gynecology, thoracic surgery, urology, pediatrics and other departments. Due to the advantages of minimally invasive surgery, such as small trauma, short operation time, and fast postoperative recovery, the acceptance of minimally invasive surgery by patients has significantly improved, and the maturity of endoscopic treatment and minimally invasive surgical technology in China will continue to expand the endoscope market in the long term.

China's minimally invasive surgery supporting instrument market for endoscopes

Domestic substitution breaks the ice, and the grassroots blue ocean is waiting to rise. The development of endoscopy and minimally invasive treatment in China started relatively late. Data from a 2012 census showed that there were approximately 12,472 digestive endoscopy systems in China, mainly concentrated in eastern regions and tertiary hospitals. Stimulated by the Health and Family Planning Commission's promotion of digestive endoscopy technology, the popularization speed has been rapid, and the medical endoscope market has expanded rapidly. Ten years later, in 2016, the output of electronic endoscopes in China had increased at a compound annual growth rate of 16.8%, reaching 20,900 units. Generally, the standard configuration of imported electronic soft endoscopes (one host, one gastroscope, and one colonoscope) costs between 1.5 and 2 million yuan, while the domestic Price is about 60% of the import Price. The Price of hard endoscopes is less than 100,000 yuan. The endoscope equipment market has long relied on expensive imported products, and after-sales maintenance costs are also high, which has restricted the wider implementation of endoscopy in China. However, with the introduction of high-end endoscopes and capsule endoscopes from domestic manufacturers, the grassroots endoscope market is expected to further expand and increase.

Output of Medical Endoscope Equipment in China

The advent of medical endoscopes has allowed patients to have a more intuitive understanding of their condition, and has also provided doctors with intuitive research evidence when facing numerous diseases. The research and design of professional endoscopes have greatly promoted the development and progress of medicine, and have also significantly improved the health level of the population.

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