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2017 China's medical device industry development analysis

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  • Time of issue:2017-08-05
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(Summary description)Overall,China's medical technology and medical device market will present the following important development trends in 2017:

2017 China's medical device industry development analysis

(Summary description)Overall,China's medical technology and medical device market will present the following important development trends in 2017:

  • Categories:Industry News
  • Author:
  • Origin:
  • Time of issue:2017-08-05
  • Views:0
Information

  Overall,China's medical technology and medical device market will present the following important development trends in 2017:


  1.Full implementation of the two-invoice system to promote channel reform


  In 2017,the two-invoice system will move from last year’s pilot to full implementation.Large companies will sink their channels,and small and medium-sized agents will be eliminated,merged,and transformed.Under this trend,there will be three major trends in the industry:horizontal acquisition,vertical extension and transformation.


  In terms of horizontal acquisitions,large commercial companies with abundant funds,strong strength,and extensive channels will continue to merge and integrate regional channels and turn channels into providers of supply chain integration solutions,and their performance will usher in an explosion.


  Vertical extension can be divided into three types:the first is the downstream channelization of production-oriented enterprises,that is,the acquisition of distributors by large enterprises,such as Meikang's acquisition of Yitian Biotechnology,and Antu's acquisition of Shengshi Junhui;Circulation companies acquire upstream technologies,such as Runda Medical's acquisition of POCT high-tech barrier product lines;the third is downstream servicing of circulation companies,that is,circulation companies extend to terminal services.For example,Dean Diagnostics continues to actively deploy terminal third-party laboratories.Vertical extension allows companies to have more voice in the upstream and downstream,thereby increasing corporate profitability through synergy.


  Transformation refers to the transformation of business models between medical device manufacturing companies and channel companies.For example,some device distributors are transforming CSOs under the background of two-invoice system,business reform and large-scale rectification;some device agency businesses may or Will transform into a distribution-oriented business.


  In short,the mergers and acquisitions,extensions,and transformations of channel companies will gradually concentrate the channel links.This is the future way out for channel integration under the two-invoice trend.


  2.Hierarchical diagnosis and treatment brings opportunities for domestic equipment


  In 2017,the hierarchical diagnosis and treatment reform will continue to deepen,and will be rolled out across the country.Although the concept of the patient side will not change quickly,the"Spring River Plumbing Duck Prophet",hierarchical diagnosis and treatment will bring the allocation of medical resources to the grassroots.Different from the situation where my country's high-end medical equipment market is monopolized by foreign companies,the vast primary medical market has always been the battlefield of domestic brands.From a policy perspective,the state also encourages and supports primary medical units to use excellent domestic medical equipment.And equipment.We expect that with the inclination of policies and the focus of capital investment,domestic excellent equipment brands,whether they are big brands with channels and products or rising stars with unique technical features,will usher in an explosion in the grassroots field.


  Among them,on the one hand,there is an opportunity for the replacement and upgrading of existing equipment at the grassroots level,and on the other hand,it is an opportunity for equipment that can meet the ever-increasing demand for primary care but is easy to operate.We will focus on basic equipment such as laboratory diagnostic equipment(especially POCT and rapid inspection equipment),household equipment related to chronic diseases,medical rehabilitation equipment,doctor follow-up equipment,ultrasound and other safe and simple imaging equipment.


  3.Device-based third-party services are in the ascendant


  With the continuous deepening of medical reform and the continuous exploration of various emerging models,we believe that more and more institutions and companies will realize that the"mutually beneficial model"that serves and wins with hospitals will be more life-changing than hospitals.,The"subversion model"of grabbing hospital business is more in line with the current medical business environment,under which various device-based third-party service organizations will have a lot to do,and various"Internet+"thinking and models will also be integrated into these services.


  In October 2016,the National Health and Family Planning Commission issued the"Notice on Basic Standards and Management Practices of Medical Testing Laboratories(Trial)",clarifying that medical testing laboratories belong to separate medical institutions and are independent legal entities that independently assume corresponding legal responsibilities.Approval is set up by the provincial health and family planning administrative department.Furthermore,the"Interpretation of Basic Standards and Management Norms for Independently Setting up Medical Institutions such as Medical Imaging Diagnostic Centers"issued by the National Health and Family Planning Commission in January 2017 clarified that medical imaging,inspection,blood purification,and pathology centers are imperative as independent medical institutions.


  From the support of the Health and Family Planning Commission for third-party diagnosis,imaging and pathology,as well as the layout and mergers and acquisitions of large medical companies in this regard,it can be seen that third-party diagnosis,imaging,pathology,logistics,disinfection,and disinfection based on medical devices and equipment Emerging intensive service models such as maintenance and equipment packaging will strongly promote the development of the medical industry.Since these fields are also capital-intensive industries,it is believed that there will be a lot of investment and mergers and acquisitions.


  We see that in the field of third-party inspection,the leading company Jinyu Inspection is about to go public,and rising stars such as Qianmai Medical and Beijing Hehe continue to receive capital support and develop rapidly;in the field of third-party imaging,Yimai Sunshine has obtained Goldman Sachs’Series A investment,Ping An Good Doctor,and the listed company Guangyu Group(002133)are also actively deploying in this field;in the field of disinfection,Laiken Medical and Sinopharm are actively deploying third-party disinfection supply chains;and third-party maintenance companies such as Kunya Medical and Ke Transmedicine listed on the New Third Board and obtained capital investment.


  We have also observed that third-party institutions related to diagnosis,such as third-party inspections and third-party imaging,can not only provide services to hospitals,but also face the broad consumer market.If they can combine products and services such as early screening and physical examination,It will break through the hospital market and create a trillion-level health care market.If it is combined with big data,artificial intelligence and other"Internet+",or with the development of new drugs,it will have an inestimable potential for explosion.


  4.New technology penetrates the field of equipment


  Early screening technology,artificial intelligence,3D printing,medical robots(300024),etc.will bring a subversive revolution in diagnosis and treatment.


  At present,early screening can be divided into two categories:early screening for genetic diseases and early screening for tumors.Early screening of genetic diseases usually refers to prenatal screening and genetic testing to calculate the probability of genetic diseases;early tumor screening refers to early detection of tumors through liquid biopsy,gene sequencing and other means before clinical symptoms.Both are of great significance for improving population quality and tumor survival rate.A few days ago,cancer early screening company Grail received US$900 million in Series B financing,which once again stirred up capital enthusiasm.The importance of early screening is self-evident.In the future,combined with technologies such as artificial intelligence diagnosis,a trillion-level blue ocean market will be born.


  In terms of artificial intelligence diagnosis,the combination of artificial intelligence and medical imaging is a hot topic recently.The number of medical images in China and the United States grew by 30%and 63%respectively last year,while the number of radiologists grew by only 4.1%and 2.2%,respectively.There is a huge gap in the supply and demand of imaging diagnosis.The new trend of artificial intelligence image reading may subvert the future imaging diagnosis and make up for the lack of manual diagnosis in quantity and accuracy.At present,the artificial intelligence diagnosis accuracy of breast cancer developed by scientists from Google Brain and Verily has reached 88.5%,which is better than the accuracy of 73.3%of famous human pathologists.In the future,the breakthrough of more disease types and the improvement of accuracy of artificial intelligence diagnosis will perfectly fit the rapid development and growth of the third-party imaging industry,making the imaging cloud diagnosis platform the ultimate solution for imaging diagnosis.


  3D printing medical devices is another emerging field.The 3D printing industry of orthopedic equipment has been initially put into use in recent years,such as Stryker’s 3D knee replacement,Akcome’s 3D hip joint,and KotelMedia’s 3D key bone printing.Another major application area of​​3D printing is dentistry.Medical giants such as BEGO and Planmeca have produced 3D printing equipment suitable for oral applications.For example,3D Systems and EOS have also been initially introduced into Chinese hospitals.The change of technology will be a definite trend in the development of the device market.


  The global medical robot industry's revenue in 2016 reached approximately 8.5 billion U.S.dollars.It is conservatively estimated that the average compound annual growth rate in the next 5 years will reach 15%,and it will exceed 15 billion U.S.dollars by 2020.Among them,surgical robots will account for 60%,and rehabilitation robots will account for 20%.Among the surgical robots,the Da Vinci robot has successfully completed more than one million complicated operations since its approval.Rehabilitation robots are also gradually entering the market with gradual breakthroughs in technology.According to the University of Michigan Rehabilitation Robot Association,the compound growth rate of rehabilitation robots in the next five years is 37%,which is much higher than other medical robots.In this field,the exoskeleton robots of foreign companies such as ReWalk,Cyberdyne,Hocoma,Woodway,etc.have emerged,and the self-produced medical robots of rehabilitation medical equipment companies such as Dihe Technology,Fourier Robotics,Anyang Shenfang,etc.Gradually put into use.


  At present,these new technology companies in the medical device field are still in the early stages,and they still mainly invest in pre-A rounds and A rounds.This year we expect more and more startup companies and investment events in these fields,and leading companies will also It's just showing up.Technology platform company vs.vertical field company;innovation department of large company vs.small startup company,we will wait and see who will stand out.We believe that platform-based companies look at their migration and landing capabilities,vertical companies look at their channel promotion capabilities,large corporate innovation departments look at their collaboration and resource interaction capabilities,and small startup companies look at their single-point technology explosion capabilities.


  5.Precision medicine gradually matures from concept


  In January 2015,the then-U.S.President Obama proposed the“Precision Medicine Plan”.The term“precision medicine”has gradually become a buzzword in the medical field.With the continuous maturity of NGS,gene editing,DNA capture,and bioinformatics technologies.Precision medicine has gradually evolved from concept to maturity.From the perspective of the diagnosis and treatment process,precision medicine can be divided into early screening,disease diagnosis,and prognosis follow-up.


  Leading companies in the field of early genetic screening have basically taken shape,Berry and Kang are about to land in the capital market,Nuovo Zhiyuan has obtained large-scale financing from SDIC innovation,the gene sequencer NextSeq 550AR produced by Annoroad,and fetal chromosome aneuploidy The body test kit was approved by CFDA for medical device product registration.In the field of early tumor screening,Grail,a cancer early screening company,recently received a US$900 million Series B financing,which once again stirred up capital enthusiasm.The importance of early screening is self-evident.In the future,combined with technologies such as artificial intelligence diagnosis,a trillion-level blue ocean market will be born.And one of the founders of Kunyuan Gene,Professor Zhang Kun and his team released the latest masterpiece on"Nature Genetics",the world's first high-throughput methylation non-invasive detection technology,which can be used for non-invasive early cancer screening and Traceability.In China,the colorectal cancer methylation gene early screening product introduced by Borcheng has also obtained the CFDA medical device certification.These results will set off the industry's enthusiasm.It is expected that a number of domestic startups in this field will also be born.Technically,the development of early screening mainly relies on the development of liquid biopsy,DNA capture and amplification technologies,methylation and other target discovery and other technologies.At the same time,it also needs to accumulate sufficient clinical data and have clear clinical indications.,Can gradually become the gold standard for early screening.


  In terms of disease diagnosis,precision medicine is currently the most widely used in precision medication and follow-up of tumors.Through molecular pathological examinations of tumors,such as NGS,first-generation sequencing,PCR,FISH,CTC,single-cell sequencing and other technologies,explain the patient's personalized situation from the molecular level,so as to formulate accurate clinical treatment plans and understand the prognosis,Combined with targeted drugs,cell therapy and other means to achieve precise and personalized treatment.


  At present,the domestic competition between NGS and ctDNA is fierce,and many companies are competing with each other.After the past two years,the industry is about to usher in a reshuffle period and more brutal competition.We expect that the entire industry will look at the business development and commercialization capabilities of each company in the short term,the service quality,product R&D and certification capabilities and customer stickiness in the medium term,and the accumulation and application of big data,the creation and innovation of business ecology in the long term.Technology development and commercialization.In terms of enterprises,the leading companies such as Shihe Gene and Burning Stone Medicine continue to receive capital attention,and emerging forces represented by Metacode Gene,Mein Gene,Gene Plus,Zhenhe Technology are also catching up with their different entry points..


  6.The momentum of overseas investment and mergers and acquisitions continues to be strong


  Since the end of 2016,investment institutions and large companies in the market have focused on stability in their investment in medical equipment,focusing on stable investment opportunities with sales profits and mature channels,and have begun to actively seek overseas companies with technology Invest to realize the introduction of products and complement the advantages of domestic channels.As the overall cycle of medical device commercialization is faster than that of new drugs,we expect investment institutions,especially US dollar funds,to follow this trend this year and continue to increase investment and even mergers and acquisitions in overseas technology-based medical device companies;and A-share companies Mergers and acquisitions of overseas medical device companies will also continue.Overseas mergers and acquisitions have become an effective way for domestic companies to introduce foreign technology and overseas companies to land in China.


  Since 2016,Jiu'an Medical has acquired eDevice for EUR 93.88 million,adding more medical testing equipment;Zixin Pharmaceuticals acquired Nabsys 2.0 and entered into genetic testing;BOE invested US$50 million in Israeli non-invasive medical equipment company Cnoga;Sannuo Biotechnology has invested US$200 million Acquired PTS Diagnostics in the United States and entered the POCT diagnostic field of the IVD industry.In vitro diagnostics,gene sequencing,and innovative medical equipment,as hot fields with high technical barriers and fast growth,are the must-see areas for leading acquisitions.2017 will be another year when domestic leaders compete to deploy overseas.

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