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China Medical Devices Industry Development Report and Prospect Analysis 2022


Release time:

2023-01-31

China's medical device industry has grown from scratch, from lagging behind to catching up, through several stages of start-up, rapid development and high-quality development, and has now grown into a mature industry with a complete range of products and outstanding technical capabilities that can meet the needs of consumers at different levels.

01 Introduction to the medical device industry

China's medical device industry has grown from scratch, from lagging behind to catching up, through several stages of start-up, rapid development and high-quality development, and has now grown into a mature industry with a complete range of products and outstanding technical capabilities, which can meet the needs of consumers at different levels.

According to the Regulations on the Supervision and Administration of Medical Devices and the Supervision and Administration of Medical Device Operation promulgated by the relevant departments, China implements classification management of medical devices according to the degree of risk, and makes clear provisions on product registration and filing, production and operation of medical devices of different classifications. The specific table is as follows.

According to the latest statistics from the Drug Administration, as at the end of September 2021, there were 28,000 actual medical device manufacturers in the country. Among them, 16,400 enterprises could produce Class I products, 13,700 enterprises produced Class II products and 2,140 enterprises produced Class III products. There are a total of 1,029,200 enterprises operating in the second and third categories of medical devices nationwide, among which, 684,400 enterprises only operate in the second category of medical device products, 81,600 enterprises only operate in the third category of medical device products, and 263,200 enterprises are engaged in the second and third categories of medical device business at the same time.

02 Analysis of the current development of the medical device industry

In recent years, China's medical device market has maintained rapid growth and now accounts for nearly 20% of the global medical device market, which is driven by three major factors: an aging population, growth in disposable income of residents and release of demand for medical services, and is moving in the direction of internationalization and high-end.

According to the China Medical Device Industry Blue Book (2021), the market size of China's medical device industry shows a year-on-year rising trend from 2016 to 2021. Among them, China's medical device market scale reached 840 billion in 2020, up 32.47% year-on-year, a more significant growth. With the normalisation of the epidemic, the demand for medical anti-epidemic materials has dropped significantly, and although the growth rate of China's medical device industry is affected in 2021, it is still stable in a growth trend. Statistics show that the market size of China's medical device industry still reached RMB 964.1 billion in 2021, an increase of 14.77% year-on-year. With the further improvement of medical device industry related policies and the release of consumer demand, the medical device industry is expected to maintain growth in the coming years, and is expected to break the "trillion" mark in 2022.

On the supply side of the market, investor enthusiasm has continued to grow. 37 new medical device companies were listed in 2021, a record high, bringing the total number of listed companies to 143 and the total market value to 2,588.3 billion yuan. Data from the Drug Administration showed that as of the third quarter of 2021, the number of manufacturing enterprises in China's medical device industry totalled 28,000, an increase of 9.88% over 2020.

On the demand side of the industry, the number of healthcare institutions has been steadily increasing. The main demand for China's medical device industry is mainly from various types of healthcare institutions, including hospitals, primary healthcare institutions, professional public health institutions and other institutions. According to statistics from the Health and Welfare Commission, the number of healthcare institutions in China showed an upward trend from 2015 to 2021. By the end of 2021, the total number of healthcare institutions in China was 1.03 million, an increase of 8,013 over the previous year.

From a comprehensive perspective, China's medical device industry has formed a relatively mature industrial chain.

Upstream industries mainly include: electronics manufacturing, machinery manufacturing, biochemistry, materials and other industries. The investment in the basic disciplines associated with them and the R&D investment in related medical device technologies directly affect the development and direction of the medical device industry as a whole, and are the cornerstones of the development of the medical device industry.

The midstream industry is product development and manufacturing, which mainly includes: various medical equipment manufacturers. At present, domestic manufacturing enterprises are relatively weak in mastering core technologies and are mainly concentrated in the field of low-value consumables and low-end medical devices.

The downstream industry is mostly for medical and health institutions, mainly including: various hospitals, medical check-up centres, etc.

03 Medical device industry development prospects

1) Encourage innovation, domestic substitution of imports becomes the mainstream trend

Continuous innovation is a powerful hand to maintain the vitality of the industry and enhance the competitiveness of enterprises. Enterprises should continuously increase investment in research and development, enhance innovation capabilities and optimize business models.

On December 21, 2021, the "14th Five-Year Plan" for the development of the medical equipment industry was released, clearly placing diagnostic and testing equipment, treatment equipment, monitoring and life support equipment, Chinese medical treatment equipment, maternal and child health equipment, health care and rehabilitation equipment, active implant interventional devices, seven areas as the key development areas for medical devices in the next five years. Domestic enterprises are encouraged to strengthen innovation and overcome difficulties. At the same time, the trend of domestic substitution of imports is becoming more and more obvious, and the state is encouraging priority procurement of domestic equipment and lowering the barriers to entry for high quality domestic products.

At present, IVD in vitro diagnostics, passive implantable devices and nursing devices have basically achieved domestic substitution, and it can be speculated from the scale of financing that medical imaging and cardiovascular devices will become the starting point of domestic medical device products in the future. Under this industry pattern, enterprises should adjust their positioning in time to achieve multiple innovations in technology, products and service models.

2) Strengthen regulation and enhance safety requirements of the industry

Medical devices are a matter of life and health safety. The latest data from the State Drug Administration shows that in 2021 alone, a total of 15,294 medical device cases were investigated and handled nationwide, with a total value of 232,796,200 yuan, fines of 343,558,200 yuan, confiscation of illegal income of 11,362,400 yuan, 53 unlicensed operations were banned, 6 dens of counterfeiting and counterfeiting were destroyed, 41 production and business suspensions were ordered, 6 licenses were revoked, and 28 cases were referred to judicial authorities The number of cases of counterfeiting and counterfeiting has increased. In addition to the frequent occurrence of various medical accidents, the call to strengthen supervision and eliminate safety hazards has become more and more urgent.

In 2014, the relevant departments issued the Regulations on Supervision and Administration of Medical Devices, which regulated the whole process from registration, production, operation and use. 2017, the revised version of the Regulations on Supervision and Administration of Medical Devices was introduced, further refining and clarifying the responsibilities of the regulatory departments, which especially added the supervision of large medical equipment. 2018, the State Drug Administration issued the "2018 Crackdown on Illegal Operation and Use of Medical Devices Notice of special rectification work program for illegal operation and use of medical devices", with further strict supervision.

3) Consolidation intensified, the process of industry concentration accelerated

With the implementation of the "13th Five-Year Plan" medical reform, the medical device industry is facing changes. In particular, the implementation of policies such as the "two-ticket system", "business reform", "Golden Tax III" and "industry rectification", as well as the new version of the "Regulations on Supervision and Administration of Medical Devices", have led to the increase in the number of medical devices. In particular, the implementation of policies such as the "two-ticket system", "business reform", "Golden Tax III" and "industry rectification", as well as the new version of the "Regulations on Supervision and Administration of Medical Devices", which impose higher requirements on registration, production, procurement, acceptance, storage and distribution, have made compliance and centralisation a mainstream policy direction in the industry and accelerated the process of industry concentration.

In the manufacturing sector, domestic leading enterprises have stepped up their layout, either by innovating and upgrading around niche areas or by focusing on the whole industrial chain to release efficiency, and a new round of reshuffling in the manufacturing sector has quietly begun. In the distribution field, the progress of concentration is more obvious, most enterprises face the risk of elimination, and the situation of the head enterprise "all-you-can-eat" is becoming more and more prominent.

In the new market environment, companies should take their core products as the basis and expand into other areas to further enrich their service scenarios and optimise their business management. For example, in the middle of the industry chain, device manufacturers can expand their product lines horizontally while also developing their business vertically, choosing the downstream of the industry chain to expand into product-related services.