Under its “Made in China 2025” plan, the Chinese government seeks explosive growth in biomedical and high-end medical device manufacturing.

Grace Fu Palma, China Med Device

In 2015, the China State Council issued a 10-year manufacturing plan called “Made in China 2025.” The  goal is to elevate the “giant but weak” Chinese manufacturing industry into one of the most powerful manufacturing countries in the world in next 10 years.

The plan includes:

3 steps

1. The first 10-year plan (2015–2025) is to become a powerful manufacturing country.
2. The second 10-year plan (2025–2035) is for China manufacturing industry to reach the middle level of the world’s advanced countries.
3. The third 10-year plan (2035–2045) is to be the leading powerful manufacturing country in the world.

5 major projects

1. National manufacturing innovation center construction;
2. An industrially strong foundation;
3. Green manufacturing;
4. High-end equipment manufacturing innovation;
5. Intelligent manufacturing.

10 major focus areas

1. Biomedical and high-performance medical devices
2. A new generation of information and communications technology
3. High-end CNC machines and robots
4. Aerospace equipment
5. Marine engineering equipment and high-tech ships
6. Advanced rail transportation equipment
7. Energy saving and new energy vehicles
8. Electrical power equipment
9. New materials
10. Agricultural equipment

In the case of the biomedical and high-end medical device industry, the Chinese government plans to propel explosive growth over the next decade.  From 2004 to 2014, the compound growth rate of China medical device industry was 25%, much higher than the 7%-8% global growth rate. In 2014, China’s medical device market size is $38.8 billion. It is ranked the 2nd in the world, about 7% of the global medical device sales. It shows that the medical device industry is experiencing a rapid development due to the improving living standards and health awareness in China.

From 2004 to 2014, the compound growth rate of China medical device industry was 25%, much higher than the 7%–8% global growth rate. In 2014, China’s medical device market size was $38.8 billion. It is ranked the second in the world, about 7% of the global medical device sales. he medical device industry is experiencing a rapid development due to the improving living standards and health awareness in China.

The medical device industry is rapidly developing due to the improved living standards and health awareness in China.

However, the major products in China’s domestic medical device industry are low-cost and low-tech. By the end of 2013, there were 16,000 medical device manufacturers in China. About 29% of them were Class I medical device manufacturers, 54% were Class II manufacturers and only 17% were Class III manufacturers. From 2008 to 2013, there were 78,784 low-end domestic Class I and Class II medical devices registered with China’s FDA. Meanwhile, there were only 10,316 high-end Class III medical devices registered with CFDA.

The “Made in China 2025” plan is mainly focused on developing domestic high-end, profitable medical device such as imaging equipment, medical robots, fully degradable vascular stents and other high-value medical supplies. The government will support domestic manufacturers to improve their own R&D capability so that they can achieve manufacturing and technological innovation.

On the flip side, since the Chinese government is incentivizing the domestic medical device industry, medical device manufacturers from outside the country are facing more challenges and barriers. The Chinese government and CFDA may issue more policies to restrict imported medical devices.

Medtech companies from the developed world should find other ways to enter China such as finding OEM partners, licensing technology, establishing factories, etc. Chinese companies across different industries are entering into medical device sectors and are eagerly looking for Western companies to buy or forge partnerships with in order to shorten their innovation and development time to market. Chinese domestic companies have strong financial resources, but they lack the technology. That’s where the opportunity lies for outside companies looking to grow in China.

Grace Fu Palma is founder and CEO of Boston-based China Med Device, a firm specializing in commercialization and funding for U.S. medtech companies entering China.