Analysis of the Domestic and International Medical Device Industry in 2019 (Part 2)

China's medical device sector is experiencing rapid growth, with market growth far exceeding the global average.《2019 Domestic and International Medical Device Industry Analysis (Part 1)》Following this, this article will focus on reviewing the innovative elements of China's medical device development and analyzing the market share distribution of key medical device sub-sectors, to conduct a preliminary assessment of the current state of development of the domestic medical device industry.

I. Analysis of Innovative Elements in China's Medical Device Development

1. Comprehensive Advancement of Medical Reform Brings Development Opportunities for Medical Devices

Recently, with the implementation of the Party and state's institutional reforms, the establishment and restructuring of the three major institutions—the National Healthcare Security Administration, the National Health Commission, and the National Medical Products Administration—has ushered in rapid development for the healthcare industry, with the scale and speed of reforms far exceeding those of the past. As indispensable tools and medical means in clinical medicine, medical devices have, under the dual regulation of the state's "visible hand" and the market's "invisible hand," achieved unprecedented development.Table

1 Key Policy Catalog for Medical Devices in China2. Selection of Excellent Domestic Medical Devices: Simultaneous Support and Elimination

The selection of excellent domestic medical equipment has injected new impetus into China's medical device industry. This not only promotes the improvement of the quality of domestic equipment and alleviates the problems of "high medical costs and difficulty in seeing a doctor," but also is expected to break the monopoly of multinational corporations in the high-end medical device market, laying the necessary foundation and pointing the way for primary-level medical care, thereby accelerating the development of domestic medical devices in the primary-level medical care market.

Table2 Selection of Excellent Domestic Medical Equipment Products in China (2014-2018)

1 Key Policy Catalog for Medical Devices in China3. Special Approval for Medical Devices Accelerates Industrial Innovation and Development

Since

the implementation of the "Special Approval Procedures for Innovative Medical Devices (Trial)" in 2014 and the "Priority Approval Procedures for Medical Devices" in 2017, a green channel has been opened for specific medical device products, accelerating the listing of medical devices with strong innovation, high technological content, and urgent clinical needs, while simultaneously accelerating the pace of import substitution of high-end medical devices.According to data from Huoshi Chuangzao Database,

the number of innovative medical devices included in the review and approval process from 2014 to 2018 has increased year by year. By the first half of 2019, a total of 234 innovative medical device products had been included in the special approval process, of which 63 had been approved for listing.Figure

2 Number of Innovative Medical Devices Included in Review and Approved (2014-First Half of 2019)Note: The number of approved kit products is counted separately according to the registration certificate number.

4. Medical Device Industry Standardization, Accelerated Industrial Integration, and Favorable Capital for New Technologies

Policies such as the "Draft Amendment to the Regulations on the Supervision and Administration of Medical Devices," the "Guiding Principles for Technical Review of Registration of Customized Additive Manufactured Medical Devices (Solicitation of Opinions Draft)," and the "Catalog of Permitted Configuration Management for Large Medical Equipment (2018)" have been implemented. These policies promote medical device product standards and method standards, improve the work, improve the medical device listing license holder system, reform the clinical trial management system, optimize the approval process, and improve post-market supervision requirements.

Table3 Overview of Medical Device Financing in 2018

2 Number of Innovative Medical Devices Included in Review and Approved (2014-First Half of 2019)II. Analysis of Key Sub-sectors of Medical Devices in China

1. Medical Imaging Field

The high-end medical imaging equipment market in China is basically monopolized by foreign companies, with General Electric (US), Siemens (Germany), and Philips (Netherlands) occupying the top three positions. These three companies are also known as

GPS. GPS holds over 80% of the CT equipment market share in China, over 85% of the MRI equipment market share, over 90% of the DSA market share, over 70% of the ultrasound imaging market share, and over 94% of the nuclear medicine market share, demonstrating a clear advantage. However, in recent years, China has gradually broken through the monopoly in the mid-to-low-end imaging market. In the high-end market, with continuous breakthroughs in key technologies, excellent domestic imaging companies such as United Imaging and Mindray have emerged.Figure

2 Number of Innovative Medical Devices Included in Review and Approved (2014-First Half of 2019)4 Market Share Distribution in Different Medical Imaging Fields

2. Gene Detection Field

China's gene detection industry is developing rapidly, with predictions thatthe market size of China's gene detection industry reached 60.329 billion yuan in 2018, and is expected to reach 101.549 billion yuan by 2020, with a compound annual growth rate of 37.87%.

1 Key Policy Catalog for Medical Devices in ChinaTable

2 Number of Innovative Medical Devices Included in Review and Approved (2014-First Half of 2019)3 Revenue from Gene Detection Business of Leading Gene Detection Companies in 2018

Figure5 Market Size of China's Gene Detection Industry (2015-2020)

In terms of industrial chain structure, the upstream, midstream, and downstream distribution of China's gene detection industry is relatively unbalanced, with the upstream supply chain exhibiting a typical oligopoly competitive landscape.

In 2018, Illumina's market share grew to 84%, securing the top position; LifeTech and Roche also held market shares exceeding 5%. In addition, companies such as 454 Life Sciences and Pacific Biosciences also have a certain degree of competitiveness. China's gene detection companies mainly focus on the research and development and production of low-end instruments and reagents.3. AI+Medical Field

2 Number of Innovative Medical Devices Included in Review and Approved (2014-First Half of 2019)From a global perspective,

AI can mainly bring upgrades to scientific research and medical services, as well as the precision of marketing methods. For example, artificial intelligence can help pharmaceutical companies simulate drug research and development, accelerating the research and development process; it can also be integrated into medical devices and medical software as an auxiliary diagnostic function; it can also help radiologists perform preliminary medical image processing and generate diagnostic reports; it can also directly provide patients with personalized health management plans, achieving early disease prevention and timely diagnosis; and it can also help customers optimize market strategies and provide optimal pricing schemes for products or services. Among these diverse applications, intelligent diagnosis and treatment and health management are the most important and core application scenarios.Figure

2 Number of Innovative Medical Devices Included in Review and Approved (2014-First Half of 2019)9 Establishment of New Medical Robot Enterprises in China

4. Medical 3D Printing Field

Compared with traditional technologies, the greatest advantage of 3D printing technology is its insensitivity to product complexity. When manufacturing highly complex, freely shaped products such as medical consumables, the cost of 3D printing technology is significantly lower than that of traditional manufacturing technologies.

2 Number of Innovative Medical Devices Included in Review and Approved (2014-First Half of 2019)10 Comparison of Advantages of 3D Printing and Traditional Technologies

Domestic companies have begun to enter the market on a large scale in recent years3D printing field, and investment is very hot. After several years of market cultivation, investment enthusiasm has gradually become rational. At present, the industrial scale has not yet developed, and no leading enterprises like Systems and Stratasys in the United States have been formed. In terms of printing materials, the current 3D printing materials mainly include powders, liquids, and wires. Most domestic companies have production, but metal powders mainly rely on imports. In terms of certification, although the government strongly supports 3D printing companies, it has not relaxed the requirements for the approval of its products. Overall, China is still in its infancy in all aspects of the 3D+ medical field.

1 Key Policy Catalog for Medical Devices in China4 Application of 3D Printing in Medical Biomodeling

III. Summary

China's medical device industry is developing rapidly, with market growth far exceeding the global average. In terms of promoting the rapid development of domestic enterprises, the state is constantly reforming its policies to promote breakthroughs in new technologies, accelerate the rapid development of domestic enterprises, achieve the localization of high-end products, and has achieved numerous results.In key areas such as medical imaging, gene testing, and AI+medical care, China has accelerated its layout, but there is still a significant gap compared with countries such as Europe and the United States, especially in terms of technology, regulation, and approval policies, and continuous updates and breakthroughs are still needed. Overall, the development of China's medical devices will still go through a relatively long period of development. In the future, with the joint efforts of the government, enterprises, research, and capital, it will truly realize "Made in China" for high-end medical devices and promote the new development of the health industry.