Pet Medical Device Sector Surpasses Human Medical Equipment Growth, Exceeds RMB 60 Billion in Scale as Giants Like Mindray and United Imaging Accelerate Market Entry

Modern people face significant life pressures, causing many to regard pets as emotional support. Especially during the pandemic, pets fulfilled people's need for companionship, evolving from mere playthings to becoming friends or even family members.

As the main pet-owning population gradually transitions from retirees to younger groups, the concepts of scientific pet care and pet health have gained deep popularity, leading to a continuous increase in pet healthcare demands. According to data from the "2022 China Pet Medical Industry White Paper," the market size of China's pet medical industry is approximately 67.5 billion RMB, accounting for about 22.5% of the entire pet industry, with the proportion of pet healthcare showing an upward trend.

On the other hand, with the trend of chain development in pet medical institutions, small and scattered standalone pet hospitals have begun to exit due to insufficient competitiveness. Behind this, the systematic demand for medical equipment configuration from chain institutions has brought new growth to the pet medical device market, providing a great opportunity for the development of pet medical devices.

Animal healthcare, as a seed business that Mindray focuses on developing, has seen continuous expansion in recent years.

In June, the Shenzhen Development and Reform Commission released the "Announcement on the Selection Plan for Key Industry Projects of the High-End Animal Medical Instrument Manufacturing Base." The intended land user for this high-end animal medical instrument manufacturing base project is Shenzhen Mindray Animal Medical Technology Co., Ltd., a subsidiary of Mindray. The project plans to build a high-end animal medical instrument manufacturing base, with an estimated annual output value of over 12 billion yuan after completion.

In 2020, Mindray established an animal healthcare subsidiary, planning to leverage its technological reserves and product layouts in the three major technical fields of life information and support, medical imaging, and in vitro diagnostics to expand into the animal healthcare market. Animal healthcare has been listed as one of the key seed businesses for future development, with the intention of turning it into a new growth driver.

Currently, Mindray has launched veterinary medical device products such as animal ECG machines, animal defibrillators, animal hematology analyzers, veterinary color Doppler ultrasound systems, veterinary endoscopy systems, and veterinary DR imaging systems, gradually forming a variety of solutions tailored for different types of animals.

After completing the basic product coverage, Mindray is also expanding in depth.

Mindray revealed in its 2022 annual report that the animal healthcare business will establish three technical research platforms based on different animal species. In the field of medical imaging, efforts will be made to further enhance the image quality of the entire product line, conduct research on intelligent functions, and improve the work efficiency of veterinarians. At the same time, further studies will optimize workflow, enhance product quality control, ensuring ease of learning and use.

In the field of life information and support, the focus is on comprehensive scenario-based research for basic vital signs monitoring and fluid management in anesthesia, as well as research on the monitoring of laboratory animals. Continuous improvements are being made to enhance usability across diverse clinical scenarios, bringing more clinical value. In the field of in vitro diagnostics, the emphasis is on researching the detection of blood and body fluid cellular parameters in more species, studies on optical signals and optical path systems, and the development of animal-specific testing reagents. Active efforts are underway to develop new testing methods, providing clinicians with more efficient testing tools and product platforms.

Mindray stated in its 2022 annual report that it would concentrate resources to continuously increase investment in seed businesses such as animal healthcare. Based on the strong belief in the development prospects of these seed businesses, the company has raised the revenue target for the next three years, and related businesses are also expected to gradually grow into a core force supporting the company's long-term development.

As the "big brother" of domestically produced medical devices, Mindray's continuous investment in the field of pet medical devices undoubtedly demonstrates its confidence in the development prospects of the pet healthcare industry.

The continuous expansion of the pet medical market is the key to attracting manufacturers to lay out.

According to Frost & Sullivan, the pet ownership rate in Chinese households was 23.9% in 2022, compared to 70.4% in the United States; in 2021, the average annual expenditure per companion pet in China's first-tier cities was approximately 5,000 RMB, only 59.5% of that in the U.S. in 2022, indicating significant growth potential.

Moreover, in 2022, only 37.4% of dogs in China were over six years old. This percentage is expected to rise to 50.1% by 2027. According to Frost & Sullivan, the same trend applies to cats. As pets grow older, the demand for corresponding medical services will also increase.

With the rapid growth on the demand side, the supply side has also entered a state of explosive growth.

Nearly 100,000 pet medical enterprises have been established in the past six months, according to Qichacha.

Searching for "pet medical" as the keyword on Qichacha, there are approximately 361,000 enterprises in normal operation, of which about 150,000 were established within one year and about 97,500 were established within half a year, showing a significant growth trend.

On the other hand, the rise of pet healthcare, particularly the expansion of chain institutions, has also driven the growth of pet medical devices.

For a long time, pet medical institutions have mainly relied on empirical diagnosis. Coupled with the fact that pets themselves cannot express their feelings, this has led to a consistently high rate of misdiagnosis. The assistance of medical equipment can undoubtedly enable more accurate diagnosis for pets. Comprehensive medical equipment not only enhances the service capabilities and reputation of pet medical institutions but also determines the level of turnover.

Currently, the price of a DR machine used for taking X-rays of pets is about 150,000 to 200,000 yuan, and a color ultrasound machine costs nearly 300,000 yuan. According to data from the "2022 China Pet Medical Industry White Paper," approximately 53% of pet hospitals in China have investment amounts of less than 1 million yuan, making the cost of these devices unaffordable for most standalone pet hospitals.

In recent years, with the gradual expansion of pet chain hospitals represented by New Rainbow, Ray Pet Medical, and Rui Chen Pet Hospital, the brand effect brought by large-scale medical operations has attracted more pet owners. The level of completeness of related medical equipment also influences the choices of this customer base. Therefore, branded chain pet hospitals often try to equip themselves with as complete a set of devices as possible to increase competitiveness.

At the same time, pet owners' investment in pet healthcare is increasing year by year. According to data from the "2022 China Pet Healthcare Industry White Paper," 40% of pet healthcare businesses reported year-on-year growth in annual revenue, with 38.8% of transactions falling within the 500-1000 RMB range, approaching the 40.2% share of transactions in the 200-500 RMB range.

Currently, pet hospitals are mainly equipped with DR and ultrasound devices, while the configuration rates of CT and MRI are very low, indicating room for further development.

According to data from VCBeat, the pet healthcare market size in China has been increasing year by year, rising from 33 billion yuan in 2017 to 60 billion yuan in 2021. The future market size will further expand with the growth of the pet market. Facing such a large-scale market, domestically produced manufacturers have successively entered the field.

With the rising demand for pet healthcare, pet medical devices have emerged as a new blue ocean, attracting numerous companies to enter the market.

Not only Mindray, but in recent years, multiple companies including United Imaging, Lepu Medical, Neusoft Medical, Wondfo Biotech, and Sansure Biotech have entered the pet medical device market, leveraging their accumulated technological innovations and product development experience in the field of human medical equipment and devices.

United Imaging independently developed China's first ultra-high field animal magnetic resonance system, uMR9.4T, which can precisely and clearly display the tissue structure and functional information of living animals. Additionally, they launched an ultra-high-performance whole-body PET-CT for large animals. These two devices are mainly used in research institutes, universities, and pharmaceutical companies.

Lepu Medical Establishes Lepu Animal Healthcare Division, Utilizing Its Core Technologies of Years of Experience in Medical Devices and AI-based ECG Analysis and Diagnosis. Through R&D and Innovation, It Integrates a Range of Products and Technologies under Lepu to Form a Series of Products Across Five Major Product Lines: Surgical Operations, Vital Signs Monitoring, In Vitro Diagnostics, Imaging Equipment, and Interventional Devices. These Offer a Variety of Application Scenarios and Personalized Pet Health Care Services for Veterinary Hospitals and Individual Households.

Companies such as Yirui Technology and Carewell Medical, which mainly focus on digital X-ray detectors, have also extended the application scope of their products to the veterinary medical field. For instance, Yirui Technology's series of general radiography veterinary detectors for medical use support digital X-ray imaging needs for various parts of animals.

In addition, Biolight Meditech, which focuses on medical monitoring equipment, also announced the establishment of an animal healthcare division at the end of last year. Leveraging years of experience in medical monitoring technology, the company is advancing rapidly in its animal healthcare product line, with a core focus on animal monitoring and integrated offerings including animal ultrasound, DR, and respiratory anesthesia.

As pet medical devices become a crucial part of pet healthcare and a hallmark of high-end pet hospitals, the growth rate of China's animal medical device market has surpassed that of human medical devices.

The entry of numerous manufacturers has made this niche track bustling. It is not difficult to find that what they rely on is the accumulation of many years of technical expertise in human medical devices.

According to the prospectus disclosed by Hanyu Medical, its ValveClamp product is the first mitral regurgitation interventional treatment device in China to be included in the special approval process for innovative medical devices. It submitted an NMPA registration application in July 2022 and is expected to complete registration and go to market in 2023.

At the same time, V-Clamp, a product under Hanyu Medical designed for the treatment of structural heart disease in pets, relies on the experience and production capabilities accumulated from the research and development of human medical devices. It draws inspiration from the structure of the human-use product ValveClamp, which has been miniaturized to specifically meet the demands of the pet market as an interventional cardiac device. Moreover, the pet device product V-Clamp has already generated revenue for Hanyu Medical ahead of its human-use counterpart.

Medical devices for pets have the characteristics of shorter R&D cycles and relatively relaxed regulation compared to those for humans.

Generally speaking, the clinical trials for human-use medical devices are divided into animal trials, first-in-human trials, and confirmatory clinical trials. However, the development of medical devices for pets does not need to go through the last two steps, resulting in a shorter overall R&D cycle, and thus the pace of commercialization is correspondingly faster. For device manufacturers with technical accumulation, crossing over to produce animal-use medical devices presents relatively low technical difficulty.

On the other hand, there is currently no clear statement regarding the regulation of medical devices for animals.

In the 2021 version of the "Animal Epidemic Prevention Law," it was clarified that the management methods for veterinary drugs and veterinary devices would be stipulated by the State Council. However, there is still no conclusion on how to coordinate and when to address the issue of regulatory gaps. According to incomplete statistics, China currently has about 27 agricultural industry standards related to veterinary devices, primarily focusing on surgical instruments and consumables. These standards were mainly issued between 2002 and 2009. In other words, there have been no revisions or new standards introduced in the past decade.

Nevertheless, as a medical service targeting individuals as the paying party, pet healthcare naturally requires the establishment of standards to unify technical requirements within a certain scope. Meanwhile, the establishment of standards is also an important sign of industry maturity.

According to data from the China Veterinary Medical Association and the National Standard Information Public Service Platform, there are currently over 60 standards related to pet diagnosis and treatment in China, including 13 recommended national standards, 8 agricultural industry standards, and more than 40 group standards. These standards cover technical specifications for procedures related to pet diagnosis, testing, and treatment.

It is precisely due to the continuous issuance of these technical standards that corresponding pet medical devices have gradually begun to cover areas including imaging equipment, in vitro diagnostics, surgical equipment, and some niche fields.

In addition to the rapidly growing pet imaging equipment, there is also considerable growth potential in other细分 fields.

Since the outbreak of the epidemic, nucleic acid testing has become a well-known and accepted method of detection. Nowadays, this type of testing has extended into the pet market, with services at pet clinics shifting from routine diagnosis and prescription to precision medical treatment models that include IVD and imaging examinations. Pet owners are also more inclined to pay for confirmed diagnoses.

Therefore, numerous IVD companies have begun to make strategic moves. For instance, Dasheng Pet Medical, in which Saintway Biotech holds shares, achieved a revenue of 13.84 million yuan within less than a year of its establishment. In 2022, its revenue reached 22.74 million yuan, marking a year-over-year increase of over 60%.

Like imaging equipment, in vitro diagnostics have also been adapted from human-use devices and extended to the pet field. Such equipment includes test reagents, hematology analyzers, biochemical analyzers, endocrine analyzers, ophthalmic microscopes, and endoscopes. There are no significant technical barriers to adapting these devices for animal healthcare.

Pet In-Vitro Diagnostics Cover a Wide Range of Tests Including Routine Examinations Such as Biochemistry, Liver Function, Kidney Function, Endocrine Testing, Microbial Testing, Single Pathogen PCR Testing, Genetic Testing, Antibody Testing, Allergy Testing, Urinalysis, and Tumor Testing. With the Continuous Expansion of Test Categories, There Remains Significant Room for Future Development. Some High-End Pet Medical Institutions Have Even Established Specialized Departments for Serious Diseases Such as Cancer and Neurological Disorders, Equipped with Corresponding Medical Devices.

China's leading POCT company, Wondfo Biotech, established Wondko, creating dedicated platforms for animals such as an immunofluorescence platform, an animal point-of-care coagulation platform, and a dry biochemical platform to provide rapid testing products and services for pets and economically valuable animals. Wondko has also reached a strategic cooperation agreement with Lasuo Bio to jointly promote the application of POCT and genetic testing in pet diagnostics.

In addition, pet surgical equipment is also an area that has not been fully developed.

For example, Pet Health Technology, a subsidiary of MicroPort Group, released in Q2 this year a product series covering five major categories: pet cardiac disease diagnosis and treatment, pet joint and bone repair, pet urinary products, pet respiratory and digestive system diagnosis and treatment, and pet surgical and surgical consumables. In addition, based on the actual clinical needs of pet healthcare, Pet Health Technology is also developing dozens of additional veterinary medical devices.

Not only B-end, but also C-end demand for pet medical devices is growing.

According to the data from the "2023 China Pet Health Consumption White Paper," more than 85% of pet owners regularly take their pets for medical check-ups, and spending on pet medical devices has become a significant expense for pet owners. The purchase rates for categories such as wound bandages, virus detection cards, pill dispensers, and flea collars all exceed 50%. Additionally, nearly 80% of pet owners expressed a desire for smarter pet medical devices that can monitor pet health, providing data-driven, continuous, and record-keeping tracking of their pets' health status.

In recent years, the proportion of pet medical care in overall pet consumption has been increasing, along with a continuous rise in the scale of pet ownership. Against this backdrop, an increasing number of medical companies are entering the field. With the ongoing participation of domestic medical device enterprises, the pet medical device industry is set to embrace rapid development opportunities. This track, with a scale exceeding 60 billion yuan and continuously growing, is full of potential.