• By lukez
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• Posted May 27 , 2018

2018 Forecast and Outlook in Medical Device Industry in China!

According to the data from the State Food and Drug Administration, the medical device market in 2017 continues the high growth trend of recent years. From 2011 to 2016, the compound annual growth rate (CAGR) is 20.7% in medical technology and medical device industry in China. This figure is far higher than the global average CAGR, which is about 3%.

In 2016, the market size of medical care and medical equipment in China is about 370 billion Yuan (RMB). It is estimated that the market size will reach about 600 billion Yuan by 2018. Imaging equipment, in-vitro diagnostics (IVD) and high value-added supplies are the top three among the medical device market, accounting for 19%, 16% and 13% of the total market size, respectively.

Policies, markets and new technologies are still the three major factors that affect the development of China’s medical device industry. The full implementation of the grading clinic brings more opportunities for domestic medical equipment. The implementation of the two-invoice system will further promote mergers, acquisitions and transformation within the industry, the continuous upgrading of industrial structure and the development of customised medical devices and high value-added products and will further intensify the competition in the medical device market in 2018. Early screening technology, artificial intelligence, 3D printing, medical robots, graphene and the development of new material technologies have revolutionised the medical market.

From the perspective of per capita medical expenses, the current per capita cost in China is only US$ 6, while the average per capita cost in developed countries is more than US$ 100. China’s medical technology and equipment market have tremendous rooms for growth. In addition, China has entered the era of population aging since 2015 and the proportion of people over the age of 65 has been increasing year by year.

With the improvement of people’s living standard and the society’s emphasis on medical health, the total number of hospital visits and medical treatment in China has increased by 35% during the recent five years. Therefore, no matter from the diagnosis and treatment methodologies, or from the consumer level, China’s medical device market will continue to maintain explosive growth. In this issue, we have invited a number of medical industry experts and business managements to analyse the development trend and hot trends of the medical device industry in the next few years.

Size of Subdivision Industries and Hot Spot Forecast

“Based on the data from 120 leading companies in the healthcare industry, global medical technology sales will reach US$ 440 billion by 2018 with CAGR of 4.4%”- Evaluate Med Tech.

In 2018, IVD products will be the largest sale area in the medical technology with sales of US$ 54.5 billion, which is surpassing cardiology products and diagnostic imaging products.  The fastest growing category is Neurology with CAGR of 6.1% and the total sales are expected to reach US$ 7.3 billion in 2018. Orthopaedics is the slowest growth category with CAGR of 3.1%.

Evaluate Med Tech predicts that Medtronic will have the largest sales in the medical technology in 2018 and Roche will be a leader in IVD market with US$ 9.9 billion in annual sales and a market share of 18%; Medtronic will remain the world’s No. 1 in heart relevant products with global sales of US$ 10.4 billion and a market share of 21%; Johnson & Johnson will dominant the orthopaedic market in 2018 with a market share of 30%; Siemens will continue to be the world’s largest diagnostic imaging company with worldwide sales of US$ 119 billion, accounting for a market share of 26%; Novartis will become the leader in ophthalmic companies with global sales of US$ 9.2 billion; Essilor will rank the second with sales of US$ 9 billion and the growth rate of the ophthalmology market will reach a record high with CAGR of 5.7%.

Expansion in Medical Plastic Market; High-Performance Plastics will Further Replace the Metal

“Breakthroughs in materials technology are constantly refreshing the perception of plastic materials and the global market for medical plastics is expected to reach US$ 336 billion by 2025.” – Grand View Research, a U.S. market research firm.

Today, more and more surgical instruments, implants, medical devices and the like, have started to adopt or partially adopt plastic as a raw material except traditional disposable medical products such as disposable consumables. Although traditional metal products continue to dominate medical devices, their performance and user experience are lost to plastic products. 2017 is a year that medical plastic is to shine and the more high-performance plastic is bound to further replace metal in the future.

As early as 2013, Direct Flow Medical, US developed all-plastic heart surgery appliances. In patients with severe aortic stenosis who cannot undergone cardiopulmonary bypass surgery, surgeons often adopt transcatheter aortic valve replacement (TAVR) when aortic valve replacement is performed. However, this procedure may lead to aortic regurgitation (AR), also known as aortic insufficiency.

AR is a leak in the aortic valve of the heart that can cause blood to flow in the wrong direction, leading to serious complications. All-plastic devices made in Direct Flow Medical minimise the risk of AR and make it possible to design the gold standard valve of the heart because the metal parts of this device have been replaced by polymer materials.

“We studied a myriad of different chemical materials and eventually chose a water-soluble epoxy-based resin backbone that incorporates an organic limiting iodine additive that does not allow radiation to penetrate. The polymer framework is 30 times safer than a metal frame. “Randolph Chitwood, Director of Surgery, Direct Flow Medical, explained. He also said: “The real breakthrough was finding the right blend of amines that allowed us to develop products that met all the features. “

Mr. Jeff Hrivnak, global business manager for Solvay Healthcare, said in an interview: “There are two next trends in medical plastics. The first is to test health-care materials with more restricted measures. With the increased risk of cross-contamination and gradually strengthening regulatory oversight, hospitals on disinfection of medical apparatus and equipment will be more frequent and disinfectant capacity is also growing. Thus, high chemical resistance of materials will also be required, which is the advantage of specialty materials. We are helping medical device companies to upgrade their products, thereby enhancing the quality of equipment products and service life.

Another trend is design innovation. At present, many medical devices are still made of metal. In many fields, plastic will inevitably replace bulky metal materials. Compared with the old-fashioned and standardised design of metal products, plastic components greatly enhance their design freedom and product aesthetics. The material itself is comparable to the rigidity of the metal and looks more beautiful. Plastic products with a variety of colours are easy for people to distinguish one from another. Multi-functional and lightweight plastic instruments can bring a better doctor experience. The most important on the whole is that high-volume injection moulding costs are also reduced which is benefit to the patients and which is also a huge advantage for plastic materials used in medical equipment.”

Speaking of the benefits of plastic over metal, Jeff cites a few specific examples: “For example, the surgical instruments and trays made by our Radel® PPSU are fully snap-in closures made of very light and tough materials and are easy to clean and will not rust to cause bacterial nourishment. The whole device can be repeated steam sterilisation and still retains the original mechanical properties. A variety of transparent colour selection is to facilitate surgical distinction.

For another example, the joint implants currently are made of metal material. Firstly, metal has very high strength which is much higher than the body’s own bone. Therefore, the body weight is fully supported by a metal implant, while the bone at the periphery of the implant will not be stressed. Over time the bone loss happens and causes prosthesis loosening and other issues, the academic name is stress shelter. With Zeniva® PEEK material, which is close to the bone modulus of human body, the bone has to bear the body weight and has exercise opportunities, thus, the function will not lose. In addition, Zeniva® PEEK materials are inherently bio-inert, more abrasion-resistant and fatigue-resistant than metallic materials, which increase their life in use and improve the quality of life for their patients. “

 Haemodialysis Has 150 billion Market Space

“In 2016, National Health and Family Planning Commission approved the establishment of an independent haemodialysis centre as an independent legal entity and proposed to encourage the haemodialysis centre to develop chain centres and grouping. Private capital is welcomed. In 2018, private haemodialysis centres may flourish. “- Mr Liu Zongyu, Executive Director of Egg Shell Research Institute.

At present, there are about 330,000 patients in dialysis register among 2 million patients with end stage renal diseases (ESRD) in China and only about 300,000 are on haemodialysis. The actual annual dialysis costs are 75,000 yuan/patient/year and the current haemodialysis market size is about 22.5 billion Yuan. However, if 2 million patients with ESRD all received haemodialysis treatment, haemodialysis centre would have 150 billion Yuan theoretical market space. Even a treatment rate is 90%, the market has nearly 5 times room to grow.

At present, there are 3,637 haemodialysis centres in China, mainly in large-scale public hospitals. The number of patients with ESRD on haemodialysis   will increase significantly after the coverage of serious illness and health insurance increases. About 3,000 haemodialysis centres are not enough for a large patient population who need to have haemodialysis in China and it is estimated that 30,000 haemodialysis centres are needed in China. A huge gap cannot be resolved by continuing to expand haemodialysis centres in public hospitals to meet the need. The remaining large amount of market space will be occupied by private institutions; however, this part of the market is still in its prehistoric era and there is an urgent need to open it up.

In addition, the expansion of haemodialysis centres to a large number is also conducive to the dialysis machines, dialysers, dialysis supplies, dialysis drugs, such as dialysis industry chain. Although dialysis machines currently are dominated by foreign brands such as Fresenius, the localisation of other haemodialysis supplies and drugs is gradually increasing.

However, the policy liberalisation of haemodialysis centres does not reduce the control over safety risks. Government in the Haemodialysis Centre Basic Standards and Management Practices (for Trial) has made stringent requirements in safety and infection prevention and control.

3D Printing Began to Enter the Market 

“In the next 3 to 5 years, 3D printing will enter the explosion of industrialisation with the ultimate development in industrial (metal) 3D printing and biomedical 3D printing.” – Mr Luo Jun, CEO, World 3D Printing Technology Industry Association and Executive Chairman, China 3D Printing Industry Union

3D printing technology from the beginning of the proofing test has now entered the market stage after several years of sedimentation and the development. In the medical field, the dental industry has begun mass production of 3D implants such as dental crowns, implants and mobile braces. 3D printing technology will enter the field of aerospace and will participate in mass production of more medical devices in the future.

At present, the main technologies of 3D printing include: slot curing technology, material extrusion technology, powder bed melting technology, material jetting technology, adhesive jetting technology, stacking technology and direct energy curing technology. Domestic hotspot is powder bed melting technology. Medical 3D printing materials are mainly engineering plastics and metal materials. For example, Concept Laser, which entered the Chinese market in 2011, currently has about 90 printers in China, covering a wide range of industries including dentistry, moulds and automobiles etc.

Of these, more than 60 printers serve the dental industry. Concept Laser is technology driven with the patented LaserCUSING® process. Powder laser-based metal laser melting technology opens up entirely new possibilities for configuration of components and enables large-scale production of small batch and highly complex components without the aid of moulds.

Mr Luo Jun believes that 3D printing technology will eventually become an important tool of production from the auxiliary means of production, but the key is to find a comparative advantage rather than blindly thinking of subversion. Traditional production is to solve the problem of bulk and 3D printing is to solve the needs individually and customised. This is exactly what Industry 4.0 needs.

The Future of Medical Device Industry in China

The six core areas for future medical devices in China are IVD, high-value consumable materials, medical imaging centres, oncology centres, medical robots and home appliances.

Immune diagnosis, molecular diagnosis and POCT will be the focus of future IVD development. Heart and orthopaedics are the core profit sources of high value supplies. China is in an aging society. The incidence of osteoporosis in people over 50 years old is as high as 60% with fractures, osteonecrosis, disability and so on. Therefore, there is a huge demand for orthopaedic implants. As the fourth largest medical imaging market in the world, China is expected to reach a market size of US$ 5.5 billion in 2018. The national policy encourages the establishment of a third-party independent medical imaging centres, which provide more opportunities for equipment manufacturers.

For the tumour treatment market, we do not have enough domestic Gamma Knife, which price is 10 times lower than imported machines. This gap brings a strong price competitiveness for domestic equipment. The most representatives of medical robots will be surgical robots and rehabilitation robots. The family medical appliances with health care, conditioning and chronic pain relieve have a bright future.

 Four Major Development Trends in Medical Industry 

1. Industry merger & acquisition, integration and platform

Medical device subdivision has many areas, but it is very easy to touch the ceiling. The majority of market segments is in the billions of dollars and the platform will be the mainstream development. Roche, Medtronic and other international giants have expanded through mergers & acquisitions. Domestic mergers & acquisitions have substantially increased from the mergers & acquisitions of similar products,  mergers & acquisitions of industrial chain to platform acquisition. The tide of industry integration has arrived and new leading enterprises will continue to emerge.

2. Extension from the device products to service 

“Product + service” business model: pure production and marketing enterprises will be difficult to survive in the future. Only these companies who continue to provide better services can continue to grow. Diane Diagnosis is a typical case of service-oriented transformation.

3. Product innovation and breakthrough at a single point

Innovation at a single point is to promote equipment companies to occupy the market segments. For example, Solexa, the founder of the second-generation sequencer, has been focusing on reversible sequencing since 1998 and was acquired by Illumina for US$ 600 million in 2007 and is still the company with the highest percentage of global sequencer.

4. Intelligent and Internet in medical devices 

Internet medical + smart devices: big data platforms and smart devices (including wearable devices and medical robots) will be the future direction for the development of medical device services. The future trend will be that medical equipment manufacturing enterprises expand their business to medical information, health big data and chronic disease management platforms.

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