Government investments boost China’s medical device market
Sally Ye
Loans from the government encourage hospitals to upgrade their medical equipment.
As part of its economic stimulus package, the State Council (China's highest state authority) announced a loan incentive policy of CNY1.70 trillion (US$246.40 billion) in September 2022. The package is intended to upgrade and renovate equipment in government buildings, universities, and hospitals. A total of CNY200 billion (US$29 billion) was set aside for medical facilities.
Chinese hospitals are encouraged to upgrade their medical equipment through discounted loans with a two-year interest rate of only 0.7%. Since 2020, the country's zero-COVID policy has hampered hospital operations. Patient visits and surgical procedures have been drastically reduced (compared with 2019, patient visits declined by 11.2 per cent in 2020 and are estimated to decline by 30 per cent in 2022). This low interest rate would significantly reduce purchase costs for cash-strapped hospitals, particularly small public and private hospitals.
Medical device manufacturers, who benefited greatly from the government initiative, praised the loan incentive policy. The initiative, according to GE Healthcare, propels China's medical device market. Mindray, China's largest medtech company, estimates that loans subsidized by the government will account for CNY20.0 billion (US$2.9 billion) of its sales revenue.
County-level hospital investments drive medical capacity upgrades.
The Chinese government has set aside funds and urged county hospitals to upgrade their equipment. County hospitals are the backbone of China's health-care systems, serving more than half of the country's population. Since 2009, improving the medical capacity of county hospitals has been a critical component of Chinese health reforms.
County medical facility upgrades will significantly boost the country's medical device market. In China, there are 17,294 hospitals spread across the country. The 1000-county Project aims to address the county's lack of healthcare resources and better meet the needs of people in less-developed areas.
As a result of the COVID-19 case surge, intensive care unit capacity has increased.
The National Health Center (NHC) of China has urged hospitals treating COVID-19 patients to convert 10% of their hospital beds to ICU beds. With the widespread pandemic outbreak, demand for ICU-related medical devices such as ventilators, life monitors, infusion pumps, and defibrillators is expected to skyrocket.
Construction of medical infrastructure continues apace.
Improving healthcare access is a key goal of China's 14th Healthcare Five-Year Plan (2021–25). China has increased its investment in medical facilities significantly. According to Omdia, China's healthcare equipment market will reach US$600 billion between 2021 and 2025.
Omdia insight
China's aging population, rising expectations, and under-resourced health-care systems are the main factors driving the country's medical device market growth. In comparison to most OECD countries, the country's medical resources (including hospital beds, medical staff, and medical equipment) remain deficient.
The Chinese medical device market is expected to grow at a nearly 10% annual rate until 2025. The Chinese government, according to Omdia, will continue to invest in the health sector. According to the report, healthcare will become an economic driver of increasing importance for China.