China Industrial Policy Snapshot: Medical Equipment

During the "13th Five-Year Plan" period, China's medical equipment industry has developed rapidly, with its market size has increased from 480 billion yuan (~63 billion EUR) in 2015 to 840 billion yuan (~110 billion EUR) in 2020, with an average annual compound growth rate of 12%. This fast-growing trend is expected to continue, supported by multiple drivers including an aging population, rising incomes, and the continued enhancement of health services in hospitals and clinics throughout China.

However, China's domestic medical devices are still concentrated in mid to low-end products. The localization rate of the medical device industry is still at a low level: Imported brands occupy most of the high-end market due to their technological advantages. In December 2021, the Ministry of Industry and Information Technology and the National Health Commission jointly issued the “14th FYP for the Development of Medical Equipment Industry” to boost the local medical equipment development, which is the first national-level comprehensive development plan in the field of medical equipment.

What visions does China have in medical equipment?

Vision By 2025:

• More advanced industrial foundation of medical equipment
• Significantly improved modernization level of the industrial chain
• Stronger supply of mainstream medical equipment
• More advanced performance and quality of high-end medical equipment
• Form initial comprehensive support capabilities for public health and medical health needs

Vision By 2035:

• R&D, manufacturing, and application of medical equipment achieve the world's advanced level
• Become one of the leading countries of medical equipment innovation
• Able to provide strong support for comprehensive and life-cycle health services

What are the key levers to achieve this vision?

• Optimization and upgrading of the industrial chain: Enhance the supply of basic parts and components, basic software, basic materials, and basic processes required for medical equipment production
• Continuous improvement of technological level: Expand the application scale of medical equipment in the fields of prevention, diagnosis, treatment, rehabilitation, health promotion, and public health
• Significant enhancement of enterprise vitality: Cultivate a group of global leading champion in certain area, as well as a group of "rising stars" enterprises mastering core technology through more dynamic competitive market
• Gradual improvement of industrial ecology: Initially establish a multi-dimensional collaborative innovation model (e.g. medicine + industrial, hospital + factory, doctor + engineer, etc.) to develop new formats such as telemedicine, mobile medicine, smart medicine, precision medicine, and traditional Chinese medicine
• Significant improvement in brand influence: Rapidly improve the reputation of local medical equipment products, promote 6-8 local companies to rank among the top 50 in the global medical device industry

Local innovation will be enhanced in seven categories:

• Diagnostic Testing: Medical imaging equipment; IVD equipment; high-throughput intelligent accurate drug detection equipment; advanced cell analysis equipment
• General Treatment: Precision radiotherapy equipment; intelligent surgical robots; high-efficiency ultrasound, current, magnetic field, laser, interventional and other treatment equipment
• Critical Life Support: New monitoring equipment for brain injury, brain development, cerebral blood oxygen, and brain magnetometry; remote monitoring equipment; medical-grade wearable monitoring equipment and artificial organs
• Traditional Chinese Medicine (TCM) Diagnosis and Treatment: Pulse diagnosis, tongue diagnosis, acupuncture, moxibustion, rehabilitation and other TCM equipment
• Maternal and Child Health: Equipment for disease prevention, diagnosis, treatment, and health promotion; prenatal and postnatal diagnosis and analysis software and equipment; maternity health care, child health care wearable equipment; equipment for critically ill neonatal transfer, rescue, life support, and early screening of infant-related diseases; remote equipment, wireless equipment, customized equipment for maternal and child health
• Health Care Rehabilitation: New nursing and rehabilitation equipment (e.g. robots, brain-computer interface, etc.); intelligent equipment (e.g. intelligent rehabilitation robots, intelligent walking assistance systems, multi-modal rehabilitation wheelchairs, and exoskeleton robot systems, etc.); traditional health care and rehabilitation equipment (e.g. massage, traction, etc.)
• Active Implant Intervention: Implantable cardiac pacing, heart failure treatment intervention, nerve stimulation and other active implant intervention devices; bioactive composite materials, artificial nerves, bionic skin tissue, human tissue in vitro culture, etc.

With the support of targeted policies, China hopes to accelerate the local innovation and supply of domestic medical equipment and hopes to carry out international cooperation in high-end fields to achieve a win-win situation with foreign players

However, foreign players are expected to face fierce localized competition and policy barriers. Keeping track of the latest policy developments and competitor dynamics is crucial for foreign players' future strategic planning under China's current complex market environment.

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For even more detailed analysis, also have a look at our briefing in China's PCR market.