Medical technology, or MedTech for short, are products and services that monitor and improve people's physical well-being. They are used in every stage of our lives: from ultrasound scans during pregnancies, to band-aids for treating cuts, from MRI scans in hospitals to finding the right pair of reading glasses.
Because MedTech is such a broad term, it is often divided into three general categories:
Medical devices that are used for disease prevention, diagnosis, monitoring and treatment. Such technologies include high-tech products such as pacemakers but also more simple tools such as thermometers or syringes.
In-vitro diagnostics describe non-invasive tests on biological samples (for example blood or urine) that are generally used to determine someone's health status. An example thereof is coronavirus testing, which typically tests samples of saliva for the SARS-CoV-2 virus.
Digital health products and services that use information communication technologies (ICTs) to improve health and lifestyle. This includes all sorts of digital devices. One example are health apps used for tracking steps.
The MedTech industry has become one of Europe's most diverse and innovative sectors. This can be seen in the high number of patents filed by MedTech companies, as well as in data on trade flows and employment statistics. It is estimated that over 730,000 employees are directly involved in MedTech in Europe generating a value-added of over 160,000 euros per employee. With a size of 120 billion euros, the European Medtech market is thus the second-largest in the world after the US.
Opportunities of the Chinese MedTech Market
China might have a comparatively smaller market with 68 billion euros, it yet bears significant growth opportunities. In recent decades, the Chinese MedTech industry has grown at a remarkable pace, driven by rapid urbanization, rising disposable incomes and significant demographic changes. The industry has been further strengthened by the Chinese government which has launched strategic policies to improve healthcare infrastructure at lower-tier facilities and non-urban areas. On the other hand, patients are becoming increasingly aware of treatment options and their availability and the number of well-trained and skilled medical staff is growing across the country. All of these factors have boosted demand for medical care, favor the adoption of various medical devices and support the MedTech market in the country.
China's more advanced MedTech markets are often dominated by large foreign manufacturers which can demonstrate a proven track record in developed economies, such as Europe and the United States. Patients and medical staff tend to associate foreign products with higher quality. If patients have the necessary financial means to afford using a foreign device over a comparatively cheaper domestic alternative, they are likely to choose the foreign one. This might result from the fact that foreign MedTech companies have already conducted clinical trials in their home countries and have the necessary resources to introduce their products to markets in China quickly and on a large scale. Such first-mover advantages allowed multinationals to capture a sizable share of Chinese MedTech markets in the past.
Foreign MedTech companies are expected to benefit from China's strategic goals in the future. Substantially improving health services and expanding the health care industry are at the heart of the "Healthy China 2030" initiative adopted in October 2016. By 2030, the country wants to reach a standard of health that is on par with industrialized nations. Foreign MedTech companies can play a role in the country's strategic ambitions by leveraging their advanced medical equipment and technical know-how. Other initiatives target manufacturers on a more regional level. Authorities in the Guangdong-Hong Kong-Macau Greater Bay Area support the development of the pharmaceutical industry and medical technology in the Pearl River Bay. Their joint program intends to transform the Greater Bay Area to an internationally leading hub for pharmaceutical and MedTech products by 2035. Medical products sold in Hong Kong and Macao are already approved by the National Medical Products Administration (NMPA) throughout the province. Multinationals will likely receive regulatory approvals for their products more easily in the Greater Bay Area compared to other parts of China.
Challenges of the Chinese MedTech Market
However, new regulatory requirements for licensing, registration and sales also pose challenges to foreign manufacturers planning to enter the market - particularly for small and medium-sized MedTech providers. They express government efforts to localize the MedTech supply chain in China. Thus, entrants can expect growing competition from domestic manufacturers. COVID-19 is likely to increase localization efforts further since the pandemic revealed the country's dependency on global supply chains for medical products. Mainly local companies will be beneficiaries, multinationals may yet see the implementation of policies intended to facilitate manufacturing in China. Locally made products have enjoyed preferred market access in the past and regulations could become stricter for products that are perceived as crucial under national strategic plans.
... is that opportunities can be seized and challenges can be overcome with a trusted partner by your side. SILREAL has vast experience in consulting organizations on matters relating to Medtech. For example, SILREAL received public contracts for the import of personal protective equipment from China to Germany during the coronavirus pandemic.
SILREAL is deeply embedded in the Chinese and European MedTech spaces, can identify and communicate with the ideal partners for your current or future business pursuits, and can ensure that your business succeeds in the Chinese market. Contact us today.
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Our Experience with MedTech Consulting
Performing a go-to-market analysis on behalf of the start up incubator arm of a leading global insurance company focusing on insurtech, digital health and mobility .
Implementation of a market-entry strategy on behalf of a Chinese medTech company in the area of dermatology.