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What are the positive aspects of the medical device industry as policies continue to come to the fore?


Release time:

2023-01-31

With the spring breeze of favorable policy continues, the medical equipment sector has a more obvious rebound trend. From the news: "for hospitals and other equipment acquisition and renewal and renovation of new loans, the implementation of a phased incentive policy, the central financial subsidies 2.5 percentage points, the term of 2 years, apply for interest subsidies as of December 31 this year." This means that the pressure on hospital funds eases, then medical equipment and pharmaceutical companies will have faster payback, and pharmaceutical companies have more funds to equip new equipment and drugs, which belongs to be a direct benefit to pharmaceuticals and suppliers.

With the spring breeze of favorable policy continues, the medical equipment sector has a more obvious rebound trend. From the news: "for hospitals and other equipment acquisition and renewal and renovation of new loans, the implementation of a phased incentive policy, the central financial subsidies 2.5 percentage points, the term of 2 years, apply for interest subsidies as of December 31 this year." This means that hospitals' financial pressure eases, then medical equipment and pharmaceutical companies will have faster paybacks and pharmaceutical companies will have more funds to equip themselves with new equipment and drugs, which belongs to be a direct benefit for pharmaceuticals and suppliers.

In recent years, promoted by China's policies related to encouraging the development of the pharmaceutical industry, some foreign companies have actively invested in the pharmaceutical manufacturing industry, and relevant production and R&D projects have landed. Foreign pharmaceutical companies have accelerated their localisation strategies, shifting from R&D to manufacturing and even supply chains to localisation, promoting the optimisation and upgrading of the pharmaceutical industry chain in China. They are represented by numerous international medical device giants that have localised high-end devices, such as Siemens and Boston Scientific.

The Health Care Commission has proposed to allocate sufficient beds for treatment according to the size of the local population, and to strengthen the construction of ICUs (Intensive Care Units), and requires that ICU beds reach 10% of the total number of beds.

Judging from the situation in these 2 years, ICU can greatly improve the survival rate of critically ill patients and buy time and opportunities for further treatment for critically ill patients. At present, the construction of ICUs in hospitals at all levels in China generally suffers from a lack of beds and a lack of medical and nursing staffing.

Riding the bull to see the bear found that the number of beds available for treating critically ill newly crowned patients in the intensive care medicine department ranges from 3.08 to 9.26 beds per million population, as measured by the current number of ICU beds in China. Accelerating ICU construction may become the focus of the epidemic disposal chain and determine the speed of adjustment of the rigidity of front-end prevention and control measures, which is expected to lay the foundation for the adjustment of front-end prevention and control of epidemic handling.

Shenzhen equipment renewal and renovation loans totaling 148 million yuan were signed and loans totaling 105 million yuan were issued, involving new infrastructure, digital transformation of industry, health and other fields, with a total investment of 1.36 billion yuan. The proposed use of financial subsidised loans to upgrade and renovate medical equipment. The central government subsidised interest rate of 2.5% for a period of two years. The direction of the use of the loan clearly suggests the purchase of medical equipment related to diagnosis and treatment, clinical testing, critical care, rehabilitation, scientific research and transformation.

All localities and departments should further increase the service of foreign trade and foreign investment work, in good anti-epidemic drugs and medical equipment approval and supervision on the basis of speeding up the review and approval of drugs and medical equipment, strengthen the quality supervision of anti-epidemic products, and solidly promote the key foreign investment projects in medicine to land and put into operation.

Riding the bull to see the bear found discounted loans to stimulate medical equipment golden window, policy support overlaid with domestic infrastructure will stimulate strong demand. For a long time most of China's high-end medical devices rely on imports, in recent years the discussion on the localization of medical equipment procurement has never stopped, some provinces and cities have issued pilot policies, in response to potential changes in China's market procurement trends, many foreign companies are also taking the initiative to consider the original imported products to localized production.

The direction of medical device companies is related to the heavy drop in valuation, in fact, the importance of the epidemic for more than 2 years for pharmaceuticals speaks for itself, however, medical device companies increase profits, the company's share price is constantly falling, which has caused a logical misfire. Plus 3 quarterly pharmaceutical companies have shown substantial growth in performance, which is also a major reason for institutional funds to enter the field again.

For ordinary investors or not a swarm to chase up, once high "blowing" experience is forgotten? Even if the bullish should also be low intervention, the market still lacks confidence in pharmaceutical stocks, the temporary rebound is not a real reversal, after the attention of the national policy for the medical device industry changes.