Driven by a new round of policy dividends, the medical equipment market has ushered in unprecedented development opportunities.
Since the State Council issued the "Action Plan for Promoting Large-scale Equipment Renewal and Consumer Goods Trade-in" (hereinafter referred to as the "Plan") in March this year, according to incomplete statistics, as of June 12, 23 provinces and cities including Beijing, Liaoning, Jiangsu, Chongqing, Hubei, and Fuzhou have issued specific plans for iterative updates of equipment in the field of health care. In addition to the update of medical equipment such as medical imaging, radiotherapy, telemedicine, and surgical robots specified in the national documents, some regions have also added inspection and examination equipment and intensive care equipment to the implementation plan.
The plan also emphasizes that it is necessary to strengthen the construction of a high-quality and efficient medical and health service system, and promote the iterative upgrading of medical and health institutions' equipment and information facilities.
According to agency data, medical equipment is the largest area of medical device market share in mainland China, with a market size of 573.7 billion yuan in 2022, accounting for about 59% of the overall medical devices, and is expected to maintain a year-on-year growth of 10% in 2023. With the implementation of the medical equipment renewal plan in various places, the replacement demand for mainstream medical equipment such as CT, MR, XR, ultrasound, endoscope, and hemodialysis machine will increase significantly, and the market potential is huge.
With the successive introduction of medical equipment renewal plans in various provinces, the scale of relevant investment and cost allocation are becoming clearer, which also indicates that the battle for the 100 billion market in the field of medical equipment has begun, which will have a profound impact on the procurement strategy and trend of medical equipment in the future.
01 Who will pay?
Two months after the release of the plan, the National Development and Reform Commission held a press conference, at which it announced that it would set up up a re-loan of up to 500 billion yuan for scientific and technological innovation and technological transformation to support the renewal and upgrading of medical equipment and other related industries. The loan interest rate is 1.75%, with a term of 1 year, which can be extended 2 times, and each extension period is 1 year.
In addition, in order to accelerate the implementation of the policy, the National Development and Reform Commission also encourages local governments to take action and introduce a series of support policies such as loan interest discounts, trade-in subsidies, and consumption vouchers based on the actual local situation.
The provinces represented by Guangdong Province have taken the lead in announcing the scale of investment in medical equipment, and have a relatively clear quantitative guidance for the implementation of equipment updates.
On June 12, the official website of the Guangdong Development and Reform Commission issued the "Announcement Before the Approval of the Feasibility Study Report of the Equipment Renewal Project in the Medical and Health Field of Guangdong Province" (hereinafter referred to as the "Announcement"). According to the "Announcement", a total of 2,171 sets of equipment are planned to be purchased for the equipment renewal project, involving about 5.393 billion yuan. The source of funds is about 2.421 billion yuan invested by the central government, and the rest of the funds are raised by the users themselves, and the provincial, municipal, and county (city, district) finances and local government special bonds are solved.
According to the "Work Plan for Promoting the Iterative Upgrading of Equipment and Facilities in the Health Field of Guangdong Province" issued by the Guangdong Health Commission, by the end of 2024, the goal of updating 6,000 units of medical imaging, radiotherapy, remote diagnosis and treatment, surgical robots and other equipment in medical and health institutions will continue to grow.
It can be seen that the source of funds for equipment renewal is composed of central investment, self-raising by units, local finance and local government special bonds. According to the analysis of industry insiders, the medical equipment renewal plan of various provinces can also be called the national debt plan, and previously, the equipment purchase project was mostly funded by local governments. As part of the national debt, this large-scale equipment renewal is equivalent to applying to the central government for funding, so the financial pressure on local governments will be much smaller.
This year, the mainland issued 1 trillion yuan of ultra-long-term special treasury bonds, focusing on six major areas such as accelerating the realization of high-level scientific and technological self-reliance and self-reliance, and added 3.9 trillion yuan of local government special bonds. At present, local governments and institutions are actively preparing for the application of ultra-long-term special treasury bond projects, which will be used for equipment renewal and technology research and development in 17 sub-sectors, including medical care.
02 Domestic and foreign manufacturers aim at new opportunities
The National Development and Reform Commission pointed out that the promotion of equipment renewal and consumer goods trade-in needs to be market-led, with the government as the guiding force, and at the same time encourage all kinds of market operators to actively participate. This also indicates that competition in China's medical device market will intensify.
Among the multinational enterprises, the three giants of "GPS" have also aimed at the large-scale equipment renewal policy, and each has launched a "trade-in" program.
In March this year, GE took the lead in launching a new upgrade of 16 products and solutions, emphasizing the localization, high-end, intelligent and green attributes of equipment. Subsequently, Philips also launched a program called "Rejuvenating with Heart", which covers many fields such as magnetic resonance, CT, vascular machine, ultrasound, in-hospital monitoring, sleep apnea and enterprise informatization. Not to be outdone, Siemens Healthineers offers 14 diversified rejuvenation solutions for medical institutions at all levels, covering a wide range of fields such as diagnostic imaging, clinical care, ultrasound diagnosis, digitalization and enterprise services. According to the data, at present, the whole product line of imaging equipment of Siemens Healthineers has been localized, and the localization rate of its supply chain has exceeded 80%.
Judging from the plans launched by these companies, the strength is extraordinary. Pu Zhengrong, vice president of Siemens Healthineers Greater China, was even more blunt in an interview with the media, saying, "The proposal of the 'trade-in' policy is good news for the entire medical market, especially for companies like ours that have been rooted in China for many years. ”
In recent years, multinational companies have stepped up their efforts to "localize", but they have not been able to completely reverse the decline in their performance in China. Judging from the first quarter financial report of "GPS", the performance of China has declined collectively.
According to GE Healthcare's financial report for the first quarter of 2024, revenue in the Chinese market was US$597 million, down 11% year-on-year. Philips Healthcare's orders from China decreased by 3.8% in the same period; The financial report of Siemens Healthineers in the first quarter of the natural year shows that its global business revenue is about 5.85 billion US dollars, a year-on-year increase of 3%, but the business revenue in China is 640 million US dollars, a year-on-year decrease of 14%, becoming the only market in the world where Siemens' performance has declined.
In addition, the policy of replacing old medical equipment with new ones is generally regarded by industry insiders as an important opportunity to promote the upgrading of domestic biomedical industry resources. In this process, the rise of domestic medical equipment will play an important role in this round of updates and benefit significantly, which will also further affect the product sales of foreign brands in the Chinese market.
However, although domestic medical equipment companies have begun to participate in global competition in high-end product lines and have advantages in price, in order to ensure that they seize the opportunity in this round of large-scale equipment updates and promote technological breakthroughs and application innovations, the key links are independent and controllable.
At the same time, domestic medical equipment manufacturers are also looking forward to the new opportunities brought by this round of large-scale equipment updates, and hope that the relevant policies can be further refined, and the specific operating rules such as discount standards can be clarified.
Xue Min, Chairman of United Imaging Group, emphasized in the series of special reports on "A New Round of 'Trade-in' of the Old for the New" that the core technology of high-end equipment should not only be independent and controllable, benchmarking against international standards, but also strive to cover the whole line of products, take clinical application as the guide, and orderly promote source innovation in equipment, application, workflow and other aspects. In July last year, jointly developed by the Shenzhen Institute of Advanced Technology of the Chinese Academy of Sciences, United Imaging Healthcare and other units, China's first domestic nuclear magnetic resonance instrument was successfully mass-produced.
In addition, Mindray also expressed a positive view on the trade-in policy in a recent institutional survey. Mindray said that with the encouragement of national policies, the procurement demand for medical equipment is expected to be released to a certain extent. Mindray will also actively respond to national policies and guidelines and launch the "Equipment + IT + AI" solution to provide comprehensive support for the digital and intelligent transformation of hospitals with informatization, automation, and intelligence.
In June, Kaikai Medical launched a "trade-in" program covering ultrasound medical imaging, endoscopic diagnosis and treatment, minimally invasive surgery, cardiovascular intervention and digital medicine. Kaikai Medical said that China's medical equipment demand market is ready to go, and the new demand volume will add impetus to the high-quality development of domestic medical equipment, realize the independent and controllable high-end medical equipment, and continue to grow the coverage rate of high-quality medical resources.
It can be seen that at the moment of industry competition, the "trade-in" policy has been placed on higher expectations by the market and enterprises, and will provide a strong impetus for the accelerated application of innovative technologies and industrial transformation and upgrading of the entire medical equipment industry.
03 How to go on the road of equipment procurement in the future?
In May this year, the National Development and Reform Commission issued the "Pre-notice on Doing a Good Job in the Renewal of Equipment in the Medical and Health Field in 2024", one of the core points of which is to propose that the renewal of medical equipment at the municipal level and below will in principle adopt the method of provincial centralized procurement, and the relevant provincial departments will approve and organize procurement.
At present, the centralized procurement of medical consumables has become the mainstream trend of the development of the industry, and some provinces, cities and groups have also begun to try the centralized procurement of medical equipment. However, regarding whether the centralized procurement of equipment will be rolled out nationwide, and combined with the trade-in policy of medical equipment, will the future equipment procurement be more inclined to centralized procurement or trade-in? These issues have become the focus of attention in the industry.
From the perspective of equipment procurement needs, the trade-in policy does meet the requirements for the quality of medical equipment. Judging from the trade-in programs launched by major enterprises, high-end, intelligent and green have become the keywords of "renewal solutions". In addition, the hospital will also conduct corresponding feasibility studies when purchasing equipment to ensure that the new equipment can meet clinical needs and has a good cost performance. More importantly, large-scale equipment updates also meet the market's demand for "volume" and meet the requirements of "volume procurement".
But in any case, medical institutions expect to allocate better medical equipment at a more reasonable price, and large-scale medical equipment can often be used for more than 10 years, so it is particularly important to ensure the effective use of funds and strengthen the supervision of equipment procurement in the critical period of medical equipment upgrading.
In short, promoting large-scale equipment renewal may solve fundamental problems such as funding and mechanism in the process of medical equipment upgrading. This is undoubtedly an important policy opportunity for medical device companies. As for the future direction of equipment procurement, whether it is centralized procurement or trade-in, it will be gradually clarified according to the needs of the market and the guidance of policies.
Source: Yiou Talks
![Medical sold for semiconductors?[fig]](data:image/gif;base64,R0lGODlhAQABAIAAAP///wAAACwAAAAAAQABAAACAkQBADs=)