GlobalData said on Tuesday that China’s increasing focus to strengthen its domestic medical devices industry may create a trust deficit and discourage multinational medical device companies to invest in the country. According to the data and analytics company, China is one of the largest medical device manufacturing hubs globally, supplying a range of devices to many countries.
Recently, some local ministries and commissions in China have issued a circular prohibiting all public medical institutions from procuring imported medical equipment without approval, the company stated on Tuesday.
GlobalData forecasts the Chinese medical devices market to grow at a compound annual growth rate of around 6 percent between 2022 and 2030. The company also claimed that an increase in the number of hospitals/labs and the aging population are expected to drive the medical devices market in China.
At present, foreign multinationals dominate the Chinese medical devices market and over 70 percent of the high-end medical devices are imported. The new policy will help domestic Chinese medical device manufacturers to gain market share.
“The new policy will encourage domestic companies but may have a negative impact on the foreign companies, which may like to shift their manufacturing facilities to other APAC countries. On the other hand, these policies may benefit India and we may see an increased foreign direct investment in the field of medical device manufacturing. Some foreign companies may fear losing high-end technologies, and few may now see China as a less attractive destination to manufacture and sell medical devices, whereas some others will be forced to operate as a separate Chinese entity with squeezed profits. It may not be possible for medical institutions to completely replace all high-end imported medical devices with domestically manufactured devices over the next few years and China will continue to be an import-dependent country. Also, the new policy may create a trust deficit and discourage medical device companies to invest in China,” Rohit Anand, Medical Devices Analyst at GlobalData, said in a statement on Tuesday.
GlobalData also claimed that the government wants foreign medical device manufacturers to transfer technologies and their assembly processes to China.
“It also wants foreign companies to manufacture, design, and procure critical components domestically. However, domestic medical device companies have weak innovation capabilities and low R&D investment and hence they will find it difficult to compete with the established foreign companies,” the company stated on Tuesday.