China has become the world's largest consumer of ultrasound medical imaging equipment

I. Overview of Ultrasound Medical Imaging

Ultrasound instruments, also known as ultrasonic instruments or ultrasound medical imaging equipment, are medical instruments developed based on the principle of ultrasound. They are used as medical devices in medical clinical practice, diagnosis, and health care. Ultrasound diagnostic instruments mainly refer to ultrasound diagnostic devices in medical imaging systems. Because their Price is lower than that of CT and MRI, and they have the characteristics of being non-invasive and obtaining real-time images of human tissues, their clinical applications are becoming increasingly widespread. The total global sales are expected to exceed that of X-ray diagnostic devices.

Medical imaging equipment varies widely. In current medical diagnostic systems, the more common ultrasound medical imaging equipment is A-ultrasound and B-ultrasound, which are classified according to the instrument display. There are also M-ultrasound and D-ultrasound; by size, there are desktop and portable ultrasound; by application, they can be divided into general ultrasound, traditional clinical applications, non-traditional clinical applications, and bedside ultrasound; by performance and Price, they can be divided into six categories: low-end, mid-low-end, mid-range, mid-high-end, high-end, and ultra-high-end ultrasound.

Domestic ultrasound has experienced 38 years of development, mainly going through three important milestone stages: the monochrome ultrasound era (1983-2003), which involved two-dimensional images, lasted 14 years, and gradually developed from analog machines to digital machines. In 1983, China's first B-type ultrasound diagnostic instrument was successfully developed, and in 2003, Shantou Ultrasound successfully developed a world-leading fully digital B-ultrasound, beginning to fully replace imported products, marking the industry's entry into a new development stage. Since then, monochrome ultrasound has gradually become widespread, penetrating all levels of hospitals and becoming one of the commonly used clinical diagnostic instruments; the color ultrasound era (1997-present), which added blood flow imaging on the basis of two-dimensional images. The earliest foreign companies entered China around 1985, maintaining a monopoly for over 10 years. Shantou Ultrasound successfully acquired the color ultrasound technology and production line of ATL in 1997, becoming the first to produce color ultrasound. Since then, domestic color ultrasound has begun to rise, and due to the emergence of OEM manufacturers, the industry has developed rapidly, and the number of domestic Brands has gradually increased; the functional diagnostic era (2000-present), which is the current stage of ultrasound development. It has evolved from traditional morphological diagnosis to functional diagnosis, such as elastography, tissue speckle tracking, ultrasound contrast, and microscopic studies; the future fourth stage of development may start with the development of materials science. The development of digital models of the core components of ultrasound, the probe, and improvements in materials science and technology will likely be future directions. With the development of artificial intelligence diagnosis, it will first Enter the field of image and graphic diagnosis, and ultrasound may be the entry point for artificial intelligence and cloud diagnosis.

Development History of Ultrasound Imaging Equipment

II. Medical Imaging Equipment Industry Chain

The medical imaging industry is mainly divided into two parts: the upstream is imaging equipment, including component manufacturers, equipment manufacturers, and supporting software, ultimately serving hospitals and radiology doctors, with machine or system sales revenue as the statistical caliber. The barriers include R&D accumulation, precision manufacturing level, and supporting services. The downstream is imaging diagnosis, including doctors, imaging centers, imaging consumables, and remote diagnostic services, adding the labor cost of doctors on the basis of the images produced by imaging equipment, ultimately serving patients, with diagnostic revenue as the statistical caliber. The most important factor in the diagnostic process is a professional and reliable diagnostic conclusion.

Medical Imaging Equipment Industry Chain

III. Current Status of the Ultrasound Medical Imaging Equipment Industry

The global ultrasound medical imaging equipment market is developing steadily. In terms of sales volume, the global ultrasound medical imaging equipment market sales volume was approximately 159,800 units/tens of thousands of sets in 2016, and is expected to increase to 282,700 units/tens of thousands of sets in 2022, with an estimated average annual compound growth rate of 10%. Driven by factors such as the increasing aging population worldwide and the sub-segmentation of ultrasound clinical applications, the global ultrasound medical imaging equipment market has shown relatively stable growth in recent years and is expected to maintain good growth in the future.

In terms of industry size, according to the company's prospectus, the global ultrasound market size was US\$60.9 billion, US\$61.8 billion, and US\$64.2 billion from 2015 to 2017, respectively. If we estimate the annual compound growth rate at 5%, the global market in 2018, 2019, and 2020 will be approximately US\$67.4 billion, US\$70.8 billion, and US\$74.3 billion, respectively.

China has become the world's largest single market for ultrasound medical imaging equipment. In terms of sales volume, according to statistics, the sales volume of ultrasound medical imaging equipment in China was 28,000 units/tens of thousands of sets in 2016, and is expected to increase to 60,000 units/tens of thousands of sets in 2022, with an estimated average annual compound growth rate as high as 13.4%, far exceeding the expected global market growth rate.

In terms of market size, according to statistics, the market size of ultrasound medical imaging equipment in China was 11 billion yuan in 2019, a year-on-year increase of 5.77%, and an average annual compound growth rate of 9.45%, faster than the global growth rate.

IV. Competitive Landscape of the Ultrasound Medical Imaging Equipment Industry

From the perspective of the global competitive landscape of the ultrasound medical imaging equipment industry, on a global scale, medical ultrasound equipment is dominated by companies such as General Electric, Philips, and Toshiba, with a relatively small share of domestic equipment. In 2017, Mindray only accounted for 5% of the global market share. According to statistics, the CR5 in the global market in 2017 accounted for 75%, namely General Electric accounting for 25%, Philips accounting for 20%, Toshiba accounting for 12%, Hitachi accounting for 10%, Siemens accounting for 8%, and the Chinese company Mindray Medical accounting for 5%, ranking sixth.

From the perspective of China's competitive landscape, the ultrasound medical imaging equipment industry in China started relatively late, but after years of development, it has formed a complete industrial system with solid basic technologies. Since 2018, the sales amount and quantity in the Chinese market have surpassed those of the United States and Japan, making it the world's largest consumer market for ultrasound medical imaging equipment. According to statistics, in 2019, the domestic market share of the Chinese company Mindray Medical was 18%, ranking first, and domestic equipment is gradually seizing import market share with its cost-effective advantage.

V. Future Development Trends of Ultrasound Medical Imaging Equipment

Domestic high-end ultrasound substitution is ready to exert force: High-end market share accounts for the largest proportion, Mindray's high-end color ultrasound has begun to increase in volume, breaking the import monopoly, and the high-end color ultrasound newly launched by Canon in 2018 will also exert force; the mid-range market is expanding, and there are many benefits from domestic substitution.

Future industry development trends:

1. Due to the impact of the COVID-19 epidemic, the national finances in 2020 are still under pressure, but we believe that the country's investment in the medical system will increase: at the Central Political Bureau meetings on February 21 and March 4, it was pointed out that we should promote the accelerated development of medical equipment and increase investment in public health services and emergency supplies. Therefore, we believe that the construction progress of domestic hospitals is expected to accelerate in the future. The epidemic exposed the shortcomings of China's disease control system in responding to such a major epidemic, which mainly manifested in the serious lack of intensive care equipment in secondary and tertiary hospitals. In addition, the demand for portable ultrasound was very high during this epidemic, while temporarily suppressing the demand for desktop color ultrasound. We believe that in the future, we will also increase investment in the infrastructure and medical equipment of ICU and infectious disease departments.

2. The stricter regulation of private hospitals is a long-term trend. After standardized development, demand will be released, and the demand for physical examinations will rebound: stricter regulation will benefit the development of private hospitals in the long term, eliminating some illegal private hospitals and creating an orderly medical environment to increase the number of medical visits; as an important supplement to public hospitals, private hospitals are encouraged and supported by national policies. With the continued growth of medical demand, it is expected that the closure of private hospitals will improve in the future, and the demand for medical equipment procurement will also rebound. Ordinary residents have paid increasing attention to health during this epidemic, which will help the long-term and continuous release of the demand for physical examinations.

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