Local competition is increasing among Chinese medical device manufacturers, who are adopting digital technology advances and technology joint-ventures with their Western counterparts. As local Chinese medical device manufacturers catch up in technological development, they are also competing in high-end equipment manufacturing for devices such as ECG, CT and MRI machines. Other Chinese manufacturers are producing their own drug-eluting stents and sophisticated catheters. However, the lack of a reputable brand name may prevent local manufacturers from competing successfully in the advanced medical equipment markets in the US or Europe. China’s high-end medical device/equipment market is currently dominated by foreign companies, who command more than an 80% market share.
China’s market for key medical devices is valued at about $8 billion, and is expected to grow 15%-20% over the next five years. While the high-end medical equipment market is lucrative in China, key growth areas for general medical devices are in Chinese rural areas and counties. Development of primary healthcare institutions has been given top priority by the government. About 2,000 county-level hospitals and an additional 5,000 clinics are expected to be constructed by the end of 2011, as part of China’s $125 billion healthcare reform.
Although some local medical device manufacturers are moving into the high-tech equipment market, most of China’s medical device manufacturers continue to make low-end Class 1 and Class 2 products. These lower-end manufacturers are seizing the opportunity to deliver affordable medical devices to the vast rural and poorer community hospitals. However, the lower-end medical device market is characterized by intense price competition, poor quality, and low intellectual property rights.