Diagnostic Imaging Equipment in China – A changing Industry

The market for diagnostic imaging equipment in China has been expanding at a rapid pace during the last decade, driven by a variety of factors, such as: a shift towards preventive healthcare models as well as investments in healthcare set by the government’s “New Medical Reform Plan” which has been ongoing since 2009.

As a result of the government investments in healthcare, lower tier rural hospitals will be supplied with updated equipment, new hospitals will be built (increasing demand even further), higher tier hospitals will be able to upgrade their equipment and smaller less wealthy hospitals will be able to purchase imaging equipment and offer the related services for the first time.

Although the resulting demand is good news for both international and domestic producers of diagnostic imaging equipment like CT, MRI, X-ray and nuclear medicine systems, international manufacturers will find it more difficult to complete due to recent changes in the industry.

Although traditionally, complex imaging equipment was imported, today, numerous local producers have earned a place in the market by manufacturing equipment at more competitive prices than the international market leaders. This fact compounded by recent government interventions to encourage domestic purchases will make business considerably more difficult for international players.

In May of 2014 the Chinese “Planning and Information Division”, announced government plans to proceed in a direction that would favor the use of locally manufactured products over international ones. This will be accomplished through health ministries which will encourage the use of local products in Chinese hospitals.

In December 2014, relevant authorities released a list of local manufacturers that were evaluated for efficiency and quality; and that would be favored under the new laws as follows:

Digital X-Ray (DR) Producers are:

  • Beijing DDIT
  • Beijing HuaRunWanDong
  • Beijing ZKML
  • Shandong Kada
  • Shandong Shinva
  • Shanghai United Imaging
  • Shanghai XinHuangPu
  • Shenyang Neusoft
  • Shenzhen Angell
  • Shenzhen Anke
  • Shenzhen Landwind
  • Shenzhen Mindray
  • Shenzhen Sontu
  • Zhuhai Hokai

Color Doppler Ultrasound Producers are:

  • Shantou SIUI
  • Shenyang Neusoft
  • Shenzhen Emperor
  • Shenzhen Landwind
  • Shenzhen Mindray
  • Shenzhen SonoScape
  • Wuhan ZonCare
  • Wuxi Chison
  • Wuxi Haiying

Automatic Biochemical Analyzer Producers are:

  • Beijing BioChem
  • Changchun DiRui
  • Guilin URIT
  • Jiangsu Sinnowa
  • Jiangxi TeCom
  • Shanghai KHB
  • Shenzhen Landwind
  • Shenzhen Mindray
  • Shenzhen Rayto

The international market leaders that are most often sought out are GE, Philips and Siemens. Much of the equipment produced by these market leaders in compatible with “picture archiving and communication systems (PACS)”, which has been a bonus for many hospitals. The international firms also have the economic strength to offer maintenance and service packages along with flexible payment conditions allowing them to remain competitive.

The initial result of these dynamics has been that both domestic and international players have ended up “specializing” or targeting different sections of the market. For example, many local manufacturers produce basic, low price x-ray and ultrasound equipment that is affordable to smaller rural hospitals, while the larger more prestigious hospitals tend to seek more innovative and modern “brand name” CT, MRI and PET/CT equipment.

Despite these initial results, international players have noticed the high potential in the rural hospital market, while the domestic firms are increasingly competing in the high-end equipment terrain that has traditionally been an international firm niche. It will be interesting to see how the market practices progress.

Another recent trend in the market has been an increase in mergers and acquisitions between both domestic and international firms.

In terms of international players acquiring domestic firms:

  • Stryker has merged with Trauson
  • Medtronic has merged with Kanghui
  • Biosensors ha merged with JW Medical
  • Zimmer has merged with Montagne

On the other hand, the following domestic firms have made the following mergers:

  • Mindray has merged with Datascope, Ulco, Zonare
  • Fosun has merged with Alma
  • MicroPort has merged with Wright
  • Naton Medical has merged with Inion
  • HuaRunWanDong has merged with Aurora
  • Neusoft has merged with Aerotel
  • Lepu Medical has merged with Comed
  • Jinjiang Electronic Science & Technology has merged with Cardima

It will be interesting to see how the medical diagnostic equipment market evolves during the next few years.

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About Zhen Nie

Zhen is in charge of Asian Operations at TforG, with more than 6 years of experience in project management and business consulting for local and international companies. She works in a continuous basis with an extensive network of Key Opinion Leaders and Health Policy makers in Asian markets. She graduated at the University of Antwerp and has a Master Degree in Finance. Tel: +32 3 201 64 24 Mobile: +32 485 89 98 84 Email: z.nie@tforg.com