The sudden outbreak of the COVID-19 pandemic has united all of China’s medical resources, creating a powerful synergy. While many industries have been hampered by the pandemic, related sectors have, in fact, “turned misfortune into fortune,” seizing opportunities for rapid growth.
In the long run, the prolonged presence of the pandemic may usher in a unique “golden decade” for China’s medical device industry.
In particular, products related to respiratory care, testing and rehabilitation, emergency prevention and control, intensive care unit construction, and health protection have seen a surge in demand as the market expands and services reach grassroots levels.
In recent years, GuChuan United has successfully assisted numerous medical device manufacturers in establishing operations in industrial parks across the country, driving continuous increases in industry concentration. Through hands-on experience, our investment promotion team has conducted in-depth research into the medical device sector, gaining a thorough understanding of its development trends and dynamics.
Robust Downstream Demand
But Domestic Supply of High-End Medical Devices Is Insufficient
The medical device industry chain comprises three segments: upstream (manufacturing of device components), midstream (R&D, manufacturing, sales, and services of medical devices), and downstream (the healthcare sector and household users). While the industry chain appears straightforward, its downstream scope is extremely broad, encompassing various hospitals, health screening centers, medical centers, and household customers.
Since 2017, the number of healthcare institutions in China has grown rapidly. As of October 2020, the total had reached 1,025,543. This growth in the number of healthcare institutions has driven demand for medical devices, significantly accelerating the development of the medical device industry.
However, due to relatively backward basic sciences and manufacturing processes, China faces a critical shortage of high-end medical devices precisely when they are most needed. The industry suffers from prominent issues such as weak technology, insufficient reserves, low production capacity, and an inability to meet demand, resulting in a heavy reliance on imports.
High-end products account for 25% of China’s medical device market, with foreign companies dominating 70% of this segment. Particularly in fields with high technical barriers—such as medical imaging equipment and in vitro diagnostics—the R&D and production of domestic medical devices remain concentrated in the mid-to-low-end segments.
Due to insufficient R&D investment, domestically produced high-end medical devices lag significantly behind international giants in terms of technological advancement and stability. Furthermore, domestic products suffer from shortcomings in supporting infrastructure, often rendering certain devices unusable due to on-site limitations.
Policy Benefits Gradually Unfolding
Kawaguchi & Associates Supports the Development of the Medical Device Industry
Since 2016, the government has continuously introduced practical and effective policies and measures to further regulate the market, encourage investment and technological innovation, and provide guidance for the development of the medical device industry.
The benefits of these multifaceted industry policies have created a favorable environment for domestic enterprises to catch up, and domestic medical devices are gradually enhancing their competitiveness, presenting significant development opportunities for leading companies in corresponding medical device sub-sectors.
Driven by the Beijing-Tianjin-Hebei integration strategy, since 2015, GuChuan United has assisted medical device manufacturers such as Demax and Kaijite in establishing operations in the Wuqing Development Zone in Tianjin, contributing to the orderly relocation and clustering of the industry.
▲ Demax established a subsidiary, Saike Kel, in the Wuqing Development Zone, specializing in the R&D and production of cardiovascular interventional devices, neurointerventional devices, and molecular screening equipment, thereby driving the transformation and upgrading of China’s medical device industry to a certain extent.
In 2017, Guchuan United facilitated the establishment of MicroPort Medical, a global leader in the cardiovascular device industry, in the Wujiang Economic and Technological Development Zone in Suzhou. Attracted by this unicorn company, more than 100 biopharmaceutical-related enterprises have now settled in Wujiang, and a city dedicated to medicine and health is rising.
▲ In 2020, news that the average price of coronary stents in centralized procurement had dropped from 13,000 yuan to 700 yuan drew widespread attention. Domestic brands led by MicroPort Medical, alongside foreign companies such as Boston Scientific, Abbott, and Medtronic, formed the main contingent in this round of centralized procurement bidding.
Since 2020, the collaboration between GuChuan United and the Nanjing Gaochun Economic Development Zone has grown increasingly close. Medical device manufacturers such as Planmeca (Finland), Lingze Medical, Lanruan Medical, Nandao Technology, and Anjian Technology have successively established operations here. Under the leadership of the Yangtze River Delta industrial cluster, these companies continue to achieve breakthroughs in technology and management standards.
In recent years, a cluster of medical device companies in the Bohai Rim region has been rapidly emerging, with Shandong in particular showing vigorous growth momentum. In 2020, GuChuan United assisted Tiangong Medical and Sysmex (a Japanese-owned company) in establishing operations at the Jinan China-Europe Manufacturing International Enterprise Park, demonstrating significant potential in the field of digital medical equipment.
Acceleration of Domestic Substitution
The Industry Enters a New Phase of Development
As the population continues to age, the global medical device market is growing steadily, and China’s medical device industry is also poised to enter a new phase of development.
Market Size Exceeds 750 Billion Yuan
Huge Growth Potential
As health awareness continues to rise, demand for medical devices is steadily increasing. Coupled with supportive policies, this has driven continuous growth in China’s medical device market.
In 2019, the market size of China’s medical device industry reached 634.1 billion yuan, an increase of approximately 19.6% compared to 2018. Due to the impact of the COVID-19 pandemic, the market is projected to exceed 850 billion yuan in 2021.
In terms of market segments, medical equipment still accounts for a significant share of China’s medical device market, followed by the high-value medical consumables market, represented by the vascular intervention and orthopedic implant sectors.
Surge in the Number of Manufacturers
Guangdong and Jiangsu Emerge as Key Hubs
Driven by rapidly growing market demand, the number of medical device manufacturers in China has surged. According to statistics from the Zhongcheng Medical Device Big Data Platform, by the end of 2020, the number of medical device manufacturers in China reached 25,440, representing a year-on-year increase of nearly 40%.
In terms of regional distribution, as of the end of 2020, Guangdong had a total of 4,553 medical device manufacturers, accounting for the highest market share among all provinces, municipalities, and autonomous regions nationwide. Jiangsu, Shandong, and Zhejiang followed closely behind, having gradually established industrial clustering advantages.
Increased Investment in R&D
Domestic Substitution Becomes the Main Trend
On May 10, 2021, the Guangdong Provincial Medical Insurance Bureau issued the "Letter Regarding the Co-handling Opinions on Representative Proposal No. 1116 from the Fourth Session of the 13th Guangdong Provincial People’s Congress." The document explicitly states that in the coming years, in addition to accelerating the substitution of imported medical devices with domestic alternatives, Guangdong Province will also vigorously support the procurement and development of domestically produced medical consumables.
At the same time, a number of outstanding enterprises have emerged in recent years, investing significant human and material resources into the R&D of high-end medical devices. This has led to continuous technological breakthroughs in domestic medical devices, and domestic substitution of imports has begun to emerge as the logical trend of the industry.
During the 14th Five-Year Plan period, the development of industrial clusters is a top priority for economic work across all regions. For the government, attracting high-quality projects that align with the region’s leading industries is the primary goal of investment promotion; enterprises are also becoming increasingly cautious in their decisions regarding site selection and investment, requiring a systematic evaluation of factors such as policies, markets, and talent.
With 12 years of deep expertise in investment promotion , Guchuan United’s precise grasp of industry trends and dynamics has become a key factor in earning the mutual trust of both government and business sectors. Over the years, our continuous collaboration with domestic and international medical device manufacturers—facilitating their establishment in regions best suited for their development—serves as a testament to this.
Moving forward, GuChuan Alliance will approach investment promotion with groundbreaking innovative thinking to foster industrial clustering and accelerate the commercialization and implementation of research outcomes, thereby further accelerating the pace of domestic substitution.
