A Comprehensive Analysis of China’s Medical Equipment Market
Chinese medicine extends far beyond herbal remedies, traditional practices, and acupuncture. The truth is China boasts a reputation as the world’s second-largest medical equipment market. With such a status, the Chinese medical equipment market invites a deeper exploration to uncover what it offers for international companies interested in entering the Chinese market and doing business in China.
This comprehensive article delves into the dynamics of this burgeoning market, shedding light on the following aspects:
- The Chinese Medical Equipment Market Size
- The Chinese Medical Equipment Sub-Markets
- Growth Drivers
- Growth Directions
- Supportive Government Measures
- Opportunities for International Medical Equipment Manufacturers & Exporters
The Chinese Medical Equipment Market Size
As was just established, China’s medical equipment market has emerged as a global powerhouse, second only to the U.S. As early as 2020, the market research firm – Frost & Sullivan – highlighted that China’s local medical device industry accounted for nearly 25% of the global market.
In 2022, the Chinese medical device market reached a remarkable US $142.4 bn, maintaining a seven-year CAGR of 17.5%. Statista forecasts China’s medical equipment market total revenue to add up to US $36.38 bn in 2024, with an anticipated CAGR of 8.3% until 2028, leading to a market volume of US $50.
Source: Statista
The Chinese Medical Equipment Sub-Markets
China’s massive medical equipment market can be divided into several distinct categories, reflecting the diverse range of products and applications.
Medical Equipment by Type
Within this group, we can identify various device types, such as cardiovascular devices, general medical devices, home healthcare devices, orthopedic devices, surgical and infection control devices, and others.
Among these products, cardiovascular devices stand out as the best-performing sub-sector, projected to reach a market volume of US $4.15 bn by the end of 2024. Some of the factors contributing to cardiovascular devices’ growing market share are high smoking rates, obesity, and the aging population—all of which increase the prevalence of cardiovascular diseases and the associated treatment procedures.
Medical Equipment by Function
Within this division, we can point out the three best-performing sub-sectors: diagnostic and monitoring medical devices, surgical devices, and therapeutic devices.
The diagnostic and monitoring device segment is at the top of this category, expected to achieve a revenue of US $3.25 bn in 2024 and a steady CAGR of 6.17% by 2028, propelling a market volume of US $4.13 bn. The hype surrounding medical diagnostic and monitoring devices can be attributed to increasing disposable incomes and the growing public awareness of healthcare and well-being, spiking the demand for advanced medical equipment that can lead to better and more accurate diagnoses. This even extends to personal devices that enable health-conscious individuals to monitor their health regularly.
Medical Equipment by End-Use
In this category, public hospitals emerge as the most prominent purchasers of medical devices. As of 2021, there were 36,570 hospitals and 977,790 primary-level clinics in China, 90% of which were public institutions.
The growing demand for medical supplies by hospitals isn’t explained only by government funding or the vast number of hospitals. Interestingly, the trend of shrinking family size has led to a phenomenon where elderly individuals, who were traditionally cared for by their families, now need to seek alternative sources of medical support. As specialized public services for this population have been abated over the years, the demand for specialized medical equipment and services is nowadays on the rise.
The Chinese Medical Equipment Market – Growth Drivers
Demographic Shifts
China’s aging population and declining fertility rate are significant drivers for the medical equipment market. As life expectancy increases, elderly citizens require extended social support and healthcare coverage, placing heightened pressure on the healthcare industry and fueling the demand for medical services and equipment.
Increasing Chronic Conditions
The prevalence of chronic conditions is mounting, affecting younger populations more than ever before. This powers the demand for longer-term care, catering to larger crowds.
Increased Spending Power
Rising incomes and improving living standards have increased local expectations for high-quality healthcare. Thus, the demand for high-end medical equipment has expanded beyond the upper class to middle-class circles, from the large tier-one and two coastal metropolises to smaller cities.
Equalized Distribution of Medical Resources
While the availability of healthcare resources in China has significantly improved over the last two decades, there is still an apparent discrepancy in the distribution of medical resources across different areas of the country. Efforts to achieve a more equal redistribution of healthcare services nationwide and fill shortages in several regions are driving growth in the medical equipment market.
The Chinese Government Ambition
The Chinese government’s agenda to modernize the healthcare system plays a major part in growing the medical equipment market. This ambition is reflected in increased investments in the sector and the implementation of incentivizing policies and regulations aimed at supporting the development and sales of medical equipment.
The Chinese Medical Equipment Market – Growth Directions
We can identify three major market trends when analyzing the Chinese medical device market’s outlook. Their common denominator is the focus on high-end, technology-driven innovation that aligns with China’s broader vision of digitizing the economy.
1. Digital Healthcare Technologies:
This includes wearable devices, 3D printing, robotics, remote monitoring systems, and telemedicine platforms. Specifically, in 2023, China’s wearable medical devices market size was estimated to be US $1.08 bn, and it is anticipated to experience a CAGR of 28.5% between 2024 and 2030.
Such digitized technologies empower patients to conveniently and consistently monitor their health status, obtain personalized healthcare guidance, and engage in remote consultations with healthcare providers.
source: grandviewresearch.com
2. Growing Focus on Precision Medicine:
As genomic research and personalized healthcare progress, the leading treatment approach is shifting toward creating medical devices customized to individuals’ genetic profiles. These devices encompass genetic testing tools, targeted therapy equipment, and personalized monitoring systems. Precision medicine emerges as a promising strategy to enhance healthcare results and lower total healthcare expenses through optimized care.
3. Expanded AI Adoption:
So far, only 47 AI medical devices have been approved for listing in China. These devices span various medical domains, such as cardiovascular, brain, eye, lung, orthopedic, oncology, and others, and are concentrated mainly in Shanghai, Guangdong, and Shandong provinces. Nevertheless, this market is poised for substantial growth, as intelligent upgrading and transformation are seen around China as the only way to develop the local medical device industry.
Notably, in 2020, Chinese medical AI startups won a 33% share of global venture capital funding. Zooming in on domestic investment in medical AI, CB Insights shows that between 2017 and 2021, funding and investments in China’s medical AI sector saw an impressive CAGR of 86%, reaching a cumulative total of US $3.7 bn. Projections indicate a robust growth trajectory for China’s AI in the healthcare market, with an anticipated CAGR of 52.8% by 2028.
source: www.cmde.org.cn
Supportive Government Measures
The Chinese government is actively working on multiple fronts to encourage and empower the development of the local medical equipment market:
Government-Led Programs:
- “Healthy China 2030”: Released in 2016, this initiative outlines the government’s strategic objectives for healthcare development, targeting a market value of RMB 16 trillion (approx. US$2.4 trillion) by 2030.
- “Internet + Healthcare”: Launched in 2018, this initiative facilitates medical practice supported by digital tools. After COVID-19, it expanded to include telemedicine.
- 14th Five-Year Plan for Aging and Elderly Care: Issued in 2021, it addresses challenges in elderly care services, aiming, among other things, to foster industry innovation.
- 14th Five-Year Plan for National Health: Building upon the goals of Healthy China 2030, this plan sets health targets for 2025.
Legal and Regulatory Policies:
Certain regulatory requirements around the manufacturing and distribution of medical devices have been simplified. For instance:
- Several documents exempt from approvals/filings.
- The approval duration period is shortened from 30 to 20 business days, facilitating the application process.
Financial Incentives:
- Expansion of The Catalog of Industries Encouraged for Foreign Investment: The 2022’s version of the Catalog expanded to include high-priority healthcare sectors and medical devices like dental implants, hearing aids, and cochlear implants.
- Preferential Tax Policies: From January 1st, 2023, 13 new medical devices, including intracranial thrombectomy stents, vascular stent raw materials, artificial joints, and X-ray tomography detectors, are subject to lower import tax rates. Read more on import-export tariff rates in China.
Read more about Tax Incentives in China.
Opportunities for International Medical Equipment Manufacturers & Exporters
While China has made it a mission to solidify its position as a global technology and innovation leader, including in the field of medical devices, this particular market still remains heavily reliant on imports. According to the American International Trade Administration, in 2021, imports of medical devices comprised 75% of China’s market, with the US capturing 27.2% of these imports, totaling US $5.62 bn. Top of Form
Dependence on global imports is particularly notable for high-end and technologically heavy medical equipment. As of April 2023, 217 innovative high-end medical devices had received approval, some of which relied significantly on imports. This creates an opportunity for international companies operating in these sectors to capitalize on this market gap and start establishing a presence in China.
What Does the Chinese Medical Equipment Market Have to Offer?
International companies with relevant, innovative solutions in the field are presented with advantageous market conditions:
- Staggering size and impressive growth trajectory
- Favorable government policies and financial incentives
- Access to a vast consumer base
- Additional benefits for companies who relocate their manufacturing to China
Considering all of the above, the Chinese medical equipment market introduces a wealth of opportunities for doing business in China and thriving in its lucrative markets. From establishing a foothold through import and trade in China to setting up manufacturing in China – international firms can choose the business model that best works for them. Ultimately, either approach can serve as a gateway to substantial growth and success in this evolving industry.
At PTL Group, we are here to help. With over 20 years of experience assisting global firms in establishing presence in China, and empowered by professional global and China-based teams, we have the resources to support your business endeavors in the country. Get in touch today to explore how we can facilitate your entry and growth in the prospering Chinese medical equipment market.
