More and more firms are looking to expand into China’s medical device market. To help exporters understand opportunities in China, an Office of Industries Working Paper “U.S Medical Devices and China’s Market: Opportunities and Obstacles” authored by Mihir P. Torsekar was released June 2014 by the U.S International Trade Commission.
According to the working paper, China’s medical device market is currently the second largest in Asia and the world’s third largest behind the U.S and Japan. Market growth is driven by China’s urbanization, expanding economy, burgeoning middle class, the increased public investment in healthcare, the aging of the population, and the increasing incidence of heart disease, diabetes, and other lifestyle-related illnesses.
Production of medical devices in China is generally inadequate to meet the country’s demand for high technology medical devices. Instead, Chinese firms often focus on producing class-one devices, such as hospital consumables and surgical gloves, or low-technology class two-devices such as black and white ultrasounds. As a result, China heavily relies on U.S. producers to supply the mid-to-high end of the country’s medical device market.
For example, Mindray, China’s largest indigenous medical device manufacturer produces lower-end ultrasounds that are primarily used by tier-one hospitals for screening while more advanced diagnosis is generally performed using imported devices.
Also, during the past two years, leading U.S medical device manufacturers have acquired local Chinese firms. So far, Stryker Corporation acquired China’s leading producer of spinal products for $764 million, Medtronic acquired a Chinese orthopedic implant manufacturer for $816 million, and Johnson & Johnson bought its first Chinese medical device manufacturer Guangzhou Bioseal Biotech.
The working paper presents some of the challenges and obstacles to greater market access such as:
- Difficult regulations to understand can result in significant time lags and duplicative procedures
- Securing a reliable distributor
- Lack of transition time to adjust to changing standards
- Determining the price for medical devices
- Dealing with China’s provincial lending process
- Dealing with inconsistent reimbursement policies that can vary across provinces, cities, and hospitals
- High tariffs as relative to other leading markets
The working paper forecasts that despite the challenges, there is potentially significant opportunity for U.S. firms to export medical devices to the market in China. For the Working Paper No.ID-036, go to www.usitc.gov/research_and_analysis/staff_products.htm.
To meet the challenges in doing business in China, the American Telemedicine Association (ATA) at www.americantelemed.org is going to hold its first telemedicine technology exhibition in China at the Binhai International Convention and Exhibition Center in Tianjin, outside of Beijing, on October 28-30, 2014. Over 5,000 practitioners, researchers, scholars, healthcare administrators, and venture capitalists will be in attendance.
In addition, ATA will also host a full-day American-Chinese Telemedicine forum on Sunday September 7, 2014 at their Fall Forum to be held in Palm Desert California. The forum co-sponsored by the American International Telemedicine Council will discuss the existing clinical and business landscape of telemedicine in China and how to establish key partnerships.