From Budding to Overtaking: Three Stages of Development in China's Medical Device Industry

RetrospectionOver 70 years, China's medical device industry has undergone a transformation from nothing to a rich and well-equipped sector, and is now making strides towards internationalization.

Founding of the People's Republic of ChinaOver the past 70 years, China's medical device industry has experienced a remarkable journey, from its humble beginnings to catching up with and even surpassing others.

In the early days of the People's Republic of China, there were onlymore than 70 manufacturers of traditional medical instruments such as surgical knives, scissors, forceps, and lathes, as well as maintenance companies. The medical device industry was still in its infancy. Reform and opening up not only brought new opportunities to the entire Chinese economy, but also injected immense vitality into enterprises. With the continuous advancement of reform and opening up, rising national income led to consumption upgrades. China's medical device industry gradually overcame its initial scarcity, exhibiting a complete product range, continuously enhancing innovation capabilities, and experiencing increasing domestic and international market demand.

In the future, with the further development of more comprehensive and in-depth regulatory policies and product innovation, China's medical device industry will undoubtedly take new steps in terms of domestic production, high-end technology, Brand, and internationalization.

01. Rapid Development

Compared to developed countries such as the US, Europe, and Japan, China's medical device industry started later and was technologically backward, with the market dominated by low-to-mid-range products. However, since its inception, China's medical device industry has developed rapidly, and its development can be broadly divided into three stages:

The first stage of development, from the establishment of the People's Republic of China to the reform and opening upIn the 30 years since the establishment of the People's Republic of China, China's medical device industry began in its infancy and gradually developed into an independent industry through continuous exploration.

In the initial years after the founding of the People's Republic of China, the country faced the task of national reconstruction. At that time, there were onlymore than 70 manufacturers of traditional medical instruments such as surgical knives, scissors, forceps, and lathes, as well as medical equipment maintenance and repair companies. There were fewer than 2000 employees. During the period of transformation and adjustment in the 1950s and 1960s, China's medical device industry experienced significant development, going from nothing to something, making a significant contribution in the early days of the People's Republic of China.

①In the early 1980s, Xinhua Medical Factory area

②In the 1990s, the Neusoft CT R&D team

In the autumn of 1952, China's first 200mA X-ray machine, named "National Day No.1," was jointly developed by Shanghai Medical Instruments Factory and Shanghai Precision Medical Instruments Factory, marking a breakthrough in the industrial development and manufacturing of China's medical imaging equipment. In the following years, Shanghai Precision Medical Instruments Factory cooperated with Fudan University to develop China's first closed medical X-ray tube, promoting the development of X-ray machine industry.

In 1963, China's first mass-produced Type A ultrasonic instrument was developed in Shantou, opening the way for independent research and development of China's ultrasonic diagnostic equipment and establishing the "Shantou Ultrasound" brand. In 1964, the CTS-5, the only Type A medical ultrasound diagnostic product in the country at that time, was successfully developed in Shantou and sold more than 30,000 units in the following 20 years.

In 1965, China successfully developed its first generation of domestically produced caged-ball artificial heart valves. On June 12 of the same year, it was used clinically for the first time, successfully performing China's first artificial heart valve replacement surgery, marking a new stage for China's valve surgery.

In just a few years, the birth of multiple "firsts" proved China's determination and strength in the exploratory stage of the medical device industry. UntilIn 1978, the number of medical device Manufacturers in China increased to 430, the number of employees increased to 100,000, and the types of products also increased significantly, laying a solid foundation for the development of the industry after the reform and opening up.

The second stage of development: from the reform and opening up to the 18th National Congress of the Communist Party of ChinaIn the 35 years since the reform and opening up, China's medical device industry has developed rapidly, becoming a mature industry with a more complete range of products, continuously improving technological innovation capabilities, and meeting the diverse needs of consumers.

This favorable development momentum began with the Third Plenary Session of the Eleventh Central Committee of the Communist Party of China. At the meeting, relevant government departments made preliminary reforms to the management system, considering the characteristics and existing problems of the medical device industry, and placing the medical device industry under the jurisdiction of the State Administration of Traditional Chinese Medicine. During the period of enterprise adjustment, the Administration proposed inDecember 1980, six policy opinions on designated medical device enterprises and their inclusion in the light industry system. In 1984, medical devices were the first industry nationwide to implement large-scale industry management, with the State Administration of Traditional Chinese Medicine unifying the identification, approval, standard appraisal, quality supervision, advertising approval, variety elimination, macroeconomic control, and planning and statistics of medical devices.

At the same time, China has also strengthened its investment in research and development in the medical device industry, providing substantial support in terms of funding, technology, and personnel for medical device research and development and innovation.In 1979, the national key project of cranial CT was launched at the Shanghai Medical Instrument Research Institute. The project team had about 200 people, including personnel from collaborative units from all over the country, such as Tsinghua University and Factory 5703. The prototype was crucial to the research of CT. At that time, the first cranial CT in China was imported from Japan by Huashan Hospital. The State Council instructed the Ministry of Transport to purchase it at a high price of US\$600,000. On May 30, 1983, China's first large-scale X-ray tomographic cranial scanner passed technical appraisal, making China the fourth country in the world capable of producing cranial CT. From the time a British company created the first head CT in 1972, it had only taken more than 10 years. By 2011, China's R&D expenditure in the medical device industry reached 138,439.2 million yuan, and the number of researchers was 78,785. Compared with 2010, R&D funding increased by 113%, and the number of researchers increased by 89%.

With the acceleration of China's health system reform, the status of the medical device industry in the national economy has also been steadily rising. Guided by the new medical reform policies, the central and local governments have increased investment in the primary medical service system and infrastructure. Among them, more than 20,000 large hospitals across the country need to upgrade their medical equipment, and the number of township and village hospitals that need to upgrade medical equipment ismore than 300,000. Whether it is to meet the needs of filling gaps or upgrading, it will inevitably stimulate the rapid growth of China's low-to-mid-range medical device products and technologies.

Data shows thatIn 2010, the total output value of China's medical device market exceeded 100 billion yuan, ranking second in the world. In 2011, it reached 135.41 billion yuan. In particular, the output and output value of some low-to-mid-range medical device products are ranked first in the world. Domestic products such as Wego, Shuangge, Kanglai De, Lanfan Medical, Sanshin Medical, and Jiangxi Hongda not only occupy most of the domestic market share, but also hold a significant position in the international market.

①China's first mass-produced medical Type A ultrasonic diagnostic instrument CTS-5

②中国第一台X光机

除此以外，全国形成了以珠江三角洲、长江三角洲及京津环渤海湾三大区域为代表的医疗器械产业聚集区和制造业发展带。其中，以深圳为中心的珠江三角洲（包括珠海、广州等地）集群发展尤为迅猛，主要以研发生产综合型高科技医疗器械产品为主。例如监护设备、超声诊断、MRI 等医学影像设备，和伽玛刀、X刀等大型立体定向放疗设备、肿瘤热疗设备等，直接反映了现代医疗器械的新技术。

第三个发展阶段：十八大以来，党和国家对医疗器械发展高度重视，在优化监督管理体制的同时鼓励企业创新。我国的医疗器械产业正朝着国产化、高端化、品牌化、国际化方向发展。

来源：Evahare Medrech，中国医疗器械行业发展蓝皮书，东兴证券研究所

十八大以来，随着人民生活水平的提高和人口老龄化进程加快，国内医疗卫生机构装备的更新换代需求继续扩大，医疗器械消费市场持续扩增。

截至2017年11月底，全国实有医疗器械生产企业1.6万家。据医械研究院测算，2018年中国医疗器械市场规模约为5304亿元，同比增长19.86%。医疗器械行业面临着巨大的发展机遇。而随着“十三五”医改规划开展，行业监管日趋严格、耗材两票制试点扩大、集采降价政策推成出新、医保控费成常态，医疗器械行业变革加剧，风险与机遇并存。在这个大环境下，医疗器械企业需要提供更全方位的产品、技术和服务，医疗器械产业的整体竞争能力也在不断增强。而能否推出创新产品成为医疗器械企业发展中的关键一环。

02.创新升级

近几年，相关政策的密集发布在为产业创新升级敞开大门。2015年，国务院在发布的《中国制造2025》规划中将“生物医药及高性能医疗器械”纳入制造业发展的10 大重点领域，鼓励国产企业加强创新，攻坚克难。2017年5月，科技部办公厅发布《“十三五”医疗器械科技创新专项规划》，提出医疗器械朝国产化、高端化、品牌化、国际化方向迈进，致力于推动医疗器械科技生产的跨越式发展。2018年，创新器械优先审评审批、上市持有人制度、创新器械优先纳入集采目录等政策不断出台试行，医疗器械创新正式进入发展快车道。

国内不少医疗器械企业开始研发自主知识产权产品，通过引进、消化、吸收、再创新等策略在中高端医疗器械市场上占据一席之地。首当其冲的便是心血管介入器械、骨科植入等高值耗材以及大型高端设备。

2013年，葛均波院士团队成功完成我国首例由国人自主研发的完全可降解聚乳酸支架的植入。这些支架的成功研发与应用，标志着我国支架研发水平已经站在了国际前沿，同时也代表着我国心血管界在冠心病介入治疗的”第四次革命”到来。2014年，微创发布了全球第一且唯一的药物“靶向”洗脱支架系统—火鹰，实现了本土企业在国际心血管疾病治疗领域的重大技术突破。随着近年来技术不断发展和国家对心血管领域的大力支持，心血管介入器械市场已基本实现进口替代，其中冠脉支架市场中，国产产品市场份额更是占据 70%以上。

作为医疗器械行业中最大子行业之一的骨科医疗器械近几年也有了不错的发展。我国骨科植入类市场销售规模由2014年的139亿元增长至2017年的225亿元。随着进口替代的逐步推进，国产企业的市场份额也在不断提升，其中威高2017年骨科营收8.7亿元，在中国国产市场排名第一。

在大型高端设备的创新大战过程中，联影医疗逐渐走进公众视野。2011年3月正式成立，这家医疗器械企业在短时间内实现了影像设备的全线覆盖和核心技术的全线突破，其自主研发的产品覆盖五大产品线，包括磁核共振MRI、CT、DR、核医学影像、直线加速器等，逐渐成为挑战通用电气等国外行业巨头的主干力量。同时，联影医疗又是十三五国家重点研发计划“数字诊疗装备研发专项”中牵头承担科研项目数最多的企业之一。其开发的世界首台全景动态扫描PET-CT设备uEXPLORER，能够4D实时动态呈现全身器官代谢过程。

随着医疗器械产业整体创新能力的提升，产业整体竞争能力也在不断增强。截止2018年12月31日，我国A股市场总计有52家医疗器械上市公司。其中，2018年就有4家医疗器械公司新上市，分别是迈瑞医疗、振德医疗、明德生物和爱朋医疗。除A股上市外，也有很多优秀的医疗器械公司选择在港股上市。包括威高股份、微创医疗、普华和顺、先健科技、中生北控、春立医疗。此外，近几年中国企业在美国医疗行业的并购数量及金额不断呈上升趋势。“出海”并购的战略目标也日益明确—扩充产品种类、获取先进技术、增强研发能力，对国内的医疗器械企业而言，这是技术突围的途径之一。

2014年1月，微创医疗正式完成对美国Wright Medical 公司关节重建业务及其相关资产的收购，总交易金额为2.9亿美元（约合18亿元人民币）。通过收购，微创一跃成为了全球第六大髋关节和膝关节重建业务的国际化骨科公司，迅速获得了全球化的销售网络，在整合海外资源能力上也得到了极大补充，为公司走向国际化迈出了重要关键的一步。2017年上半年，微创骨科业务收入达到了1.09亿美元，占比50.05%。

2017年9月，威高股份56亿元收购美国爱琅引发广泛关注，此举被认为是中国企业寻求在美国医疗领域立足的一系列交易的延续。威高将借助其现有销售及市场推广网络，将爱琅业务扩展至国内的二、三线城市。当时威高高科技含量、高附加值产品能占到85%以上，预计2020年，这一比例能达到90%以上，因此爱琅的医疗器材产品技术是威高看重的。

中国医疗器械企业通过提高自主创新能力、Strengthening one's own capabilities and enhancing international market influence through "going global" mergers and acquisitions plays a vital role in improving the overall level of China's medical device industry. It is reasonable to believe that with the introduction of the new medical reform plan and the "Healthy China 2020" health development strategy, as a key link in the country's strategic emerging industries, China's medical device industry will continue to make solid progress in its development.