Medtronic PLC, based in Dublin, is increasing the number of low-cost medical devices sold in the Chinese market, as well as looking for acquisition opportunities in the Chinese market. The move comes at a time when Chinese local competitors are putting more and more pressure on foreign giants in the medical industry .
Omar Ishrak, chief executive of the heart valve technology and other equipment manufacturers, said in an interview that the Chinese market is an important growth market, and there are a large number of patients who can't afford high-end medical services. Therefore, Medtronic plans to add a series of “value products†to this market. He said that Medtronic plans to sell surgical tools, pacemakers, and heart and spinal implants in community hospitals outside of China's large cities, which are priced lower than the company's high-end products.
Ishrak said that Medtronic is looking for opportunities to acquire Chinese medical equipment companies. He did not disclose whether the company had any relevant consultations with local companies.
Ishrak said that Medtronic is very optimistic about the Chinese market. Although the company faces a series of challenges including regulatory adjustments and corruption of the health system, Ishrak said he believes that the Chinese market can bring more returns than its risks. He said that there is no doubt that China will become the largest medical market, which is only a matter of time.
According to Ishrak, Medtronic plans to accelerate annual sales growth in emerging markets from the current 12% to 15% (at constant exchange rates). A Medtronic spokesperson said that sales in the Chinese market accounted for about 5% of its global revenue, and the company's fiscal year ended April reached $20.3 billion. Medtronic did not provide specific sales figures for the Chinese region.
According to data from LEK, a London-based consulting firm, China is expected to soon become the world's third-largest market for medical devices. By 2018, the market size is estimated to reach $18 billion, a 29% increase from 2014. By then, China will slightly exceed Germany, currently ranked third, after the United States and Japan.
However, the medical device market itself is undergoing a dramatic shift. According to McKinsey's data, high-end products dominated the market a decade ago, and now 70% of sales come from mid-range and value products. Helen Chen, head of Aiyikai Consulting's Shanghai branch, said that China's health care reform plan has significantly expanded the scale of facilities and expenditures for lower-end hospitals, while economic growth and urbanization have opened up value. Market.
Chinese leaders are putting pressure on medical companies to push prices down so that more people can enjoy medical services at lower prices. At the same time, Chinese domestic medical companies are gaining market share by selling cheaper equipment. According to data from McKinsey, Chinese drug-eluting stents and drug coating equipment manufacturers currently account for 80% of the market, while multinationals account for 20%. More than a decade ago, multinational companies had a market share of more than 80%. The drug-eluting stent is mounted in the artery to keep the blood flowing.
According to Andrew Chen, head of China's medical technology industry at PricewaterhouseCoopers, Chinese companies are advancing toward the high-end products of multinational companies. Foreign companies are also facing a new regulatory barrier as China releases new regulations requiring imported implantable devices such as implants and life-sustaining devices to undergo clinical trials in China. Previously, companies such as Medtronic could use US or EU test data without having to go through lengthy clinical trials in China.
Ishrak said that the new rules will not affect Medtronic, and Medtronic may expand its production scale in China to meet market demand.
He said that in China, the potential of the local market itself and the output created by the market indicate that this market is worth investing, and there are not many countries in the world.
Medtronic has a medical product supplier, Covidien, and China's orthopaedic implant manufacturer, China Kanghui Holdings; Kehui Medical's surgical products in the Chinese market are selling well.
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