2009 MedTech Snapshot: International: Commitment to Growth and Reform in China

With a $124 billion healthcare reform plan under way, China is expected to have one of the fastest growth rates for medical devices in the world. The government’s three-year reform plan includes building thousands of hospitals and other healthcare centers, creating significant potential for device spending. This reform is part of China’s strategy for universal healthcare by 2020.

December 1, 2009

2 Min Read
2009 MedTech Snapshot: International: Commitment to Growth and Reform in China

There are several multinational companies that are involved in medical device manufacturing in China, including Medtronic Inc., Siemens AG, Philips Medical Systems, Hitachi Medical Systems, and Baxter Healthcare Corp. Companies open manufacturing sites to reach the local market and to take advantage of production costs that are lower than in home countries, according to Espicom Business Intelligence (Chichester, UK). According to Espicom’s report, “China’s domestic manufacturing capability has developed strongly and is no longer limited to items on the lower end of the technology scale.”

Despite China’s medical device market potential, it is still a very complex and hard-to-penetrate market due to several factors. There is poor infrastructure outside of major cities, and it is the hospitals in the larger eastern cities of Beijing, Tianjin, Shanghai, Guangzhou, and Chongqing that purchase the expensive and modern equipment. These areas also see more economic growth and have the ability to spend more on healthcare due to higher incomes than other parts of China.

Other challenges for manufacturers doing business in China include regulatory differences between local governments, and language barriers (there are several dialects of Mandarin Chinese). Foreign companies face direct selling restrictions, which limits them to using a distributor to sell products or establishing a joint venture with a Chinese company or a wholly owned venture. The market in China presents a challenge for both native and foreign companies, but it is moving forward and is expected to achieve rapid growth in the coming years.

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