Super-Healthy Growth Expected for Medical Electronics in China

The Chinese government’s massive investments in the country’s health industry will spur strong growth in sales of medical electronics equipment in the nation from 2009 to 2013, iSuppli Corp. predicts.

Revenue from sales of medical electronics gear in China will rise by 18.2 percent in 2009 to reach $3.9 billion, up from $3.3 billion in 2008. This strong growth will continue during the following years, with revenue rising at a Compound Annual Growth Rate (CAGR) of 21 percent to reach $8.6 billion in 2013.

China’s Medical and Health System Reform Regulation, released in April, calls for central and local governments to invest 850 billion RMB—or $124.1 billion—in the medical and health industries. According to the Ministry of Finance of China, about $81.8 billion will be used to extend social medical insurance, with the remaining $42.3 billion to be allocated as subsidies to reform hospitals.

Demand is expected to rise for medical services, driven by extended social medical insurance and improved diagnoses and treatments. This will result in continued increases in medical equipment purchases by governments for primary hospitals.

The investment department of the United Bank of Switzerland (UBS) calculated that one-third of the subsidy to hospitals, or $14.1 billion, will be used to purchase new medical equipment in primary hospitals. Even when accounting for lag time to implement the policy, this $14.1 billion will push the medical equipment industry to expand by 20 percent annually. Consequently, the annual growth rates for the medical electronics market are projected to amount to more than 25 percent during next three years.

Furthermore, 4,000 billion RMB, or $583.9, in investment on creative research and the development of the medical electronics industry also was added into China’s national stimulus plan.

Imaging equipment, including ultrasonic, MRI, X-Ray and CT systems, accounted for $861 million, or 26.1 percent, of China’s overall medical electronics business in 2008, making it the largest single segment for the year.

Consumer medical electronics, mainly portable devices like blood-pressure monitors, represent the current focus for most medical electronic equipment vendors. Revenue from this segment amounted to $154 million in 2008.

Sales of patient monitors will maintain their strong growth during the coming year, rising at a CAGR of 18.5 percent from 2008 to 2013.

The market for complex, high-end medical electronics systems is dominated by large international firms, due to the high barriers of technology and investment. Comprised of small, start-up firms, the domestic Chinese medical electronics industry must focus on performing outsourced services, or they must become miniaturized and simplified versions of their international peers.

This trend is being fueled by the fact that the market’s focus is shifting from large cities to second- and third-tier regions where low-end and mid-range medical electronic equipment is becoming more affordable.

Such a development, in turn, is spurring sales of portable electronic medical devices. Since portable devices focus on individual customers and small medical institutions, they require less functionality and accuracy, but more flexibility. Thus, the small size, low weight and minimal power consumption of these portable devices result in very high demand for the products.