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Beijing Weili New Century Science & Technology Development Co. Ltd.
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22
2014
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12
China Will Become the World’s Second Largest Medtech Market by 2020.
Author:
Global management consulting company The Boston Consulting Group launched the latest report Winning in China’s Changing Medtech Market in Beijing on October 29th.The report pointed out that the pace of growth will continue to be healthy, at about 14 percent annually between 2013 and 2020, and China’s medtech market is expected to emerge as the second largest in the world by 2020, increased to USD 55 billion. With the continuous propulsion of healthcare reform, fundamental changes will happen to China’s medtech market layout and local companies continued to rise and have taken a lead in many medtech products.
The report pointed out that under the impetus of medical reform, the whole Chinese medical system has undergone major changes. The main trends include: regulatory policies encourage enterprises to actively innovate and establish a fair competitive environment; Price pressure is increasing; The coverage of medical insurance is expanding, but the hospital budget is tightening. The pattern of hospitals is changing, and small hospitals are taking on greater responsibilities; The government's supervision of sales and marketing is still strict and so on.
The report also disclosed three biggest changes in light of China’s medtech market in the future: First, a larger and more important midmarket. For example, the projected compound annual growth rate for the premium and low ends of the CT imaging market from 2013 to 2020 is 13% and 5%, respectively—but 18% for the midmarket segment; second, local companies will expand their reach. Local companies are already leaders in many medtech categories. With governments’ strong support in upgrading their technology innovation and quality, local enterprises will cover more market share in premium end products segment; third, the sales and distribution machine will be revamped. With the growth of the basic healthcare system as well as private hospitals, customers are becoming more physically dispersed. This will call for diversified sales and marketing coverage by manufacturers.
Huang Peijie, the lead author of the report and a senior partner of Boston Consulting Group, said that in the face of the ever-changing medical technology market in China, both multinational corporations and local enterprises have to change with time and adopt differentiated strategies. For example, at present, the product lines of multinational corporation tend to focus on the high market, while local enterprises focus more on the low-end products market. In order to win in the fast-growing middle market, multinational corporation need to re-examine their product mix and consider whether they can obtain midmarket products through local product development or mergers and acquisitions. Local enterprises should shift their focus from low-end products to mid-end products, from mainly relying on cost advantages for competition to relying on cost, quality and even innovation to win.
Therefore, The Boston Consulting Group recommends that both multinational corporations and local companies need to adopt their business models in order to tap the opportunities created by the changes sweeping the market. Multinational corporations must defend their leadership position at the premium end of the market against increasingly stronger local rivals, while at the same time expanding their reach in the fast-growing midmarket. Local enterprises should "go up one storey higher" to improve their competitiveness in the middle and high-end markets, even some high-end markets through product development, skill enhancement and talent cultivation.
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