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China is expected to become the world's second largest medical technology market in 2020
2022-09-30
The Boston Consulting Group, a global management consulting firm, released its latest report "Winning the Fast-changing Chinese Medical Technology Market" in Beijing on October 29. The report pointed out that the Chinese medical technology market will maintain a compound annual growth rate of 14% from 2013 to 2020, and the market size is expected to jump to the second place in the world in 2020, increasing to 55 billion US dollars. With the continuous advancement of the reform of the medical system, the pattern of China's medical technology market will undergo fundamental changes. Local enterprises continue to rise and have taken the lead in many medical technology products.
The report pointed out that under the impetus of medical reform, the entire Chinese medical system has undergone major changes. Key trends include: Regulatory policies are encouraging companies to innovate and create a level playing field; price pressures are intensifying; Medicare reimbursement coverage is expanding while hospital budgets are tightening; the hospital landscape is changing, with smaller hospitals taking on more responsibilities; government regulation of sales and marketing remains strict, etc.
The report reveals the three most important changing trends of China's medical technology market in the future: First, the scale of the mid-end market is expanding and its importance is becoming increasingly apparent. Taking CT products as an example, from 2013 to 2020, the compound annual growth rate of the high-end market and low-end market is expected to reach 13% and 5% respectively, while the mid-end market will be as high as 18%; second, local enterprises rising. Local companies are already leading the way in many medtech products. With the government's strong support for the technological innovation and quality improvement of local enterprises, these enterprises will also occupy more market segments such as high-end products; thirdly, the sales and distribution mechanism of medical technology products will change. With the development of the basic medical care system and private hospitals, hospital customers are increasingly dispersed geographically, which will require manufacturers to build a diversified sales and marketing network for effective coverage.
The lead author of the report and senior partner of Boston Consulting Group, Huang Peijie, said that in the face of the ever-changing Chinese medical technology market, both multinational and local companies must change with the times, and need to adopt differentiated strategies. For example, the current product lines of multinational companies tend to focus on the high-end market, while local companies focus more on the mid-to-low-end product market. To win in the fast-growing mid-market, multinational companies need to re-examine their product portfolios and consider whether they can acquire mid-market products through local product development or mergers and acquisitions. Local enterprises should shift their focus from low-end products to mid-end products, and gradually transition from relying mainly on cost advantages to compete to rely on cost, quality and even innovation to win.
To this end, Boston Consulting Group suggests that both multinational companies and local companies should make timely and necessary adjustments to their business models in order to seize the opportunities arising from market changes. In the face of increasingly powerful local competitors, multinational companies not only need to fight to defend their leadership in the high-end market, but also actively expand their business networks in the fast-growing mid-market. Local enterprises should "go to the next level" and enhance their competitiveness in the mid-to-high-end market and even some high-end markets through product development, skill enhancement and talent training.
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