- China’s overall localization rate of medical equipment is only about 30%, with the remaining equipment relying on imports. Domestic med-tech companies are mostly positioned in the low-to-medium market.
- As reflected in many high-level policies including the 14th Five-Year Plan, China’s government is pushing for domestic technology breakthroughs in med-tech, hoping to move China’s medical device sector up the value chain.
- By 2021, 29 provinces have published policies to preferentially select domestic equipment for public procurement. Provinces like Zhejiang and Guangdong introduced import whitelists for medical devices. Public hospitals within the respective province are restricted from procuring imported medical devices that are not included on the list. Zhejiang radically decreased the number of medical devices permitted for import in 2021 by 65% compared to 2019.
- MIIT also launched the Five-Year plan for medical devices, promoting med-tech digitalization, e.g. for remote diagnosis and online hospitals, as a new area to innovate where China still can profit from first-mover advantages. The plan focuses on integrated innovation of 5G, big data and 3D printing in medical equipment.
- With this type of policy support, domestic med-tech players are expanding into the medium and high-end market via partnerships or acquisitions. For instance, Mindray obtained access to the high-end ultrasonic market by acquiring Zonare, a leading US player, with a consideration of $100 million.
- MNCs importing to China in the field of med-tech face significant challenges under the evolving policy landscape. To secure market share in China, they need to consider localization of production, partnerships, and emphasis on digitalization.
Sinolytics is a European research-based consultancy entirely focused on China. It advises European companies on their strategic orientation and concrete business activities in China.