China's High-value Medical Supplies Localization Process Accelerated

High-value medical supplies are mainly relatively low-value medical supplies, according to the division of departments, can be divided into cardiovascular, orthopaedic, ophthalmology, oral medicine, neurology and orthopaedic departments required intervention already, as well as implants and artificial organs and other high value-added consumables. Although china's high-value medical supplies overall level and the international advanced level there is still a gap, but with the technology drive, capital input and policy guidance, in recent years, China's high-value medical supplies have entered the process of localization fast track.

The market outlook is optimistic.

In recent years, China's medical device market ushered in a huge development opportunity. Data show that in 2019, China's medical device market size of about 628.5 billion yuan, an increase of 18.5% year-on-year. Among them, high-value medical supplies is the second largest market segment, the market size of about 120 billion yuan, growth rate of about 15%. Medical equipment sales are relatively low frequency, low-value consumables sales of added value is not high, and high value medical supplies higher value-added, more profit margins, therefore, the development of this field is more optimistic.

In terms of financing, there will be 235 financing projects in the domestic medical device sector in 2019. Among them, high-value medical supplies financing 56, accounting for 23.8% of all financing projects, medical device sane field has disclosed the amount of financing of a total of 107 projects, the total amount of financing of 9.665 billion yuan, high-value medical supplies area financing amount accounted for 17%; Thus, capital is increasing investment in high-value medical supplies.

From the listed companies, at present, China has a total of high-value medical supplies related to 20 listed companies (to the main board and Hong Kong stocks), of which, in the last 3 years listed high-value medical supplies companies 11, about 55%. This also means that the process of domestic substitution of high-value medical supplies is accelerating. At the same time, with the implementation of centralized procurement, price negotiation and innovation incentives, high-value medical supplies market will continue to maintain high-speed growth.

Midstream research and development efforts to be strengthened.

High-value medical supplies industry chain is divided into upstream raw material supply links, midstream research and development and production links, downstream circulation links and demand market links, due to high eras of high-value medical supplies industry gross margin, the normal fluctuations in upstream raw material prices will generally not have a greater impact on the profit level of the midstream, while downstream circulation links and demand market links will have a certain impact on midstream research and development and production links.

Taking cardiovascular high-value medical supplies as an example, the main raw materials upstream of the industrial chain in this field include metal materials, polymer materials, pharmaceutical coating materials, etc. For the midstream research and development link, at present, China's cardiovascular high-value medical supplies in the field of research and development investment is relatively insufficient, there are still some core key technologies have not yet made a breakthrough, 95% of the domestic pacemaker market is still occupied by the United States, Abbott and other foreign giants. But at the same time, China has made a certain breakthrough in cardiovascular stent, heart valve and so on, the domestic substitution is obvious. Cardiovascular high-value medical supplies industry chain downstream of the circulation link is mainly for dealers, because there are more number of medical device dealers at home and abroad, so the circulation link will exist a certain degree of competitive intensity, high product quality, well-known midstream production enterprises will have pricing power on downstream distributors. In addition, the downstream demand market mainly to general hospitals, specialized hospitals, the market expansion space is larger.