Scaling New Heights: How China's Trillion-Yuan Medical Device Market Can Break Through to the Next Level

“By the end of 2023, China had more than 32,600 medical device manufacturers, which is 1.5 times greater than the combined total of the United States (8,900), the European Union (3,200), and Japan (2,200). However, the number of enterprises does not align with the market sales scale. On one hand, the average sales scale of Chinese medical device companies is relatively small, with an average annual sales revenue of RMB 38 million last year; on the other hand, fewer than 10 companies achieved annual sales exceeding RMB 10 billion, indicating a certain gap compared with overseas giants such as Siemens, Philips, and Abbott,” said Wang Baoting, former Vice President of the China Association for Drug Administration Research and former Director of the Medical Device Regulation Department under the former State Food and Drug Administration, at the 2024 China-Hospeq Conference held in August.

In recent years, driven by factors such as national centralized procurement and policy-level incentives for innovation, the previously fragmented, disordered, scattered, and substandard landscape of the medical device industry has improved. In terms of approved innovative medical devices, as of September 13, China had approved 296 innovative medical device products, with a large number of domestically first-of-their-kind medical devices actively entering both domestic and international markets.

However, as previously mentioned, despite the large number of medical device enterprises in China and nearly 300 innovative medical devices having received approval, the market has not experienced the rapid growth that was anticipated. As the medical device industry undergoes innovation and enters a new stage of high-quality development,How to further expand the market size of medical devices and shift from the original logic of “domestic substitution” to “domestic innovation” is an urgent question that the entire industry needs to address.

At the “Forum on Medical Device Innovation and Industrial Ecosystem Development” held during the 30th China International Medical Equipment Fair & Technical Exchange Conference (2024 China-Hospeq), hosted by the International Exchange and Cooperation Center of the National Health Commission, stakeholders across the upstream and downstream industrial chain, investors, and representatives from government and enterprises engaged in in-depth discussions. These exchanges shed light on how to unlock and foster new quality productive forces to drive high-quality development in the medical device industry, thereby advancing the construction of a robust industrial ecosystem and promoting innovative growth.

The journey of a medical device from research and development to final market launch is exceedingly long, with many innovations failing midway. Wang Guangzhi, Dean of the School of Biomedical Engineering at Tsinghua University, noted that few examples successfully transition from the laboratory to genuine commercialization of scientific achievements. This is largely because developing an innovative medical device requires a multidisciplinary team integrating medicine and engineering, as well as addressing multiple challenges such as obtaining clinical approval and achieving market launch.

The hurdles that innovative medical devices must overcome in clinical practice can be described as the “Triple Gate.”

The First Hurdle: How to Effectively Grasp the True Pain Points in Clinical Practice.

“The origin of innovative medical devices has always been the most pressing question for us. Throughout the history of medical device development, the vast majority of innovative medical devices have stemmed from physicians’ identification of clinical pain points, which in turn drives innovation in the field. Clinical pain points are precisely the source of device innovation,” stated Wang Yi, Deputy General Manager of Shanghai Bofang Medical Technology Co., Ltd.

The identification of traditional clinical pain points has often relied on researchers conducting one-on-one interviews with physicians in hospitals. By collecting and organizing these insights, companies determine their directions for innovative R&D. However, this approach presents two major challenges: it is time-consuming and labor-intensive, and it is prone to identifying pseudo-pain points rather than genuine clinical needs. In contrast, big data mining and analysis can help uncover authentic clinical pain points. “By analyzing patents through big data based on search results, we can identify clinical pain points and define innovative products accordingly. We then provide technical navigation for the core technological challenges associated with these products, ultimately formulating a comprehensive technical solution for the innovative product. This constitutes the entire innovation and R&D pathway.”

Bofang Medical partnered with Jianxin Medical to conduct cluster analysis on over 170,000 clinical invention patents. By categorizing data according to anatomical sites and diseases, they indexed key information such as medical device classifications, indications, and technical efficacy, thereby providing an in-depth analysis of technological development trends and pain points within specific subfields. This tagged data enables users to better identify clinical priorities. For instance, by uncovering clinical pain points in urology, such as thermal injury during the treatment of ureteral stones, Jianxin Medical incubated and developed an innovative dual-frequency ultrasonic lithotripsy system based on these insights.

Wang Yi also mentioned that analyzing different applicants in patent data can help companies better grasp real clinical pain points and make decisions. For example: if a patent is jointly applied for by hospitals, universities, and research institutes, due to the weak marketization capability of these applicants, companies can quickly engage in cooperation to address clinical pain points; if a patent is jointly filed by medical institutions and enterprises, it is highly likely that a prototype of the product already exists, so third-party companies need to take risk avoidance measures.

The Second Hurdle: How to Better Achieve the Integration of Medicine and Engineering.

After identifying clinical pain points, engineering teams must collaborate with physicians to develop solutions. While this process may appear straightforward, it harbors numerous underlying challenges.

Dean Wang Guangzhi of the School of Biomedical Engineering at Tsinghua University illustrated this point using refractory epilepsy as an example. Craniotomy for refractory epilepsy involves significant trauma, prompting clinicians to call for minimally invasive surgical options. Relevant research teams discovered that imaging technologies could enable precise localization of intracranial lesions, thereby facilitating the construction of personalized models of intracranial structures and vascular distributions. With specialized software, electrodes can be guided directly to the lesion area without damaging intracranial blood vessels. Initially, however, the procedure was too complex for clinicians to accept, hindering its widespread adoption. By better addressing clinicians’ pain points through subsequent product engineering and integrating a visual intelligent assistant, the team finally helped doctors overcome the challenge of “limited visibility.” As clinical needs evolved once again, with physicians raising concerns about intraoperative maneuverability within the confined space of the operating room, the team ultimately resolved these surgical challenges through iterative improvements.

Building on implanted electrodes, the team developed a magnetic resonance-guided laser ablation system. Approved for marketing in 2023, this system is China’s first commercially available brain laser ablation system, representing a significant breakthrough in the field of visualized minimally invasive treatment for brain diseases.

The engineering team demonstrated a strong understanding of the physicians’ needs in the aforementioned case. However, in practice, innovation is often hindered by mutual misunderstandings between clinicians and engineers. The shortage of interdisciplinary talent represents a major challenge facing current medical device innovation. “Promoting the healthy development of the industry involves addressing a series of issues. We need to foster an ecosystem that encourages interaction and integration among academic research, clinical practice, and R&D applications, while simultaneously cultivating talent and driving validation, evaluation, approval, regulation, manufacturing, and clinical adoption based on actual needs,” stated President Wang Guangzhi.

The Third Hurdle: How to Better Apply Products in Clinical Practice.

Feng Jingyi, Incoming Chair of the Chinese Society of Medical Engineering under the Chinese Medical Association, noted that advances in artificial intelligence, robotics, and 3D printing are continuously driving progress in the healthcare sector. There is a growing number of innovative medical devices with independent intellectual property rights, including those that are first-of-their-kind in China or globally. The clinical application value of medical devices is steadily increasing. However, some innovative device products have not been well accepted in clinical practice.

She pointed out that the key lies in whether effective needs analysis was conducted in the early stages. “It is not limited to the level of product innovation, but rather points to the effectiveness of application scenarios. Application scenarios determine how far innovative medical device products can ultimately go.”

Liu Lijun, Vice President of the China Technology Exchange, pointed out that the R&D pathways and cycles for medical devices are typically lengthy. During this process, some companies may shift their original R&D intentions, and clinical needs may also evolve. Furthermore, changes in market promotion strategies driven by policy shifts in the healthcare sector may prevent certain innovative products from ever reaching clinical application. This necessitates that companies view hospital adoption and market launch as the ultimate goals, rather than merely obtaining product registration certification. Liu Yazhi, Deputy General Manager of China Medical Devices Co., Ltd., also stated that securing NMPA registration is only the beginning. There are numerous critical stages in market circulation, including whether the product is included in the National Reimbursement Drug List (NRDL), whether it is subject to centralized procurement, how physician training is conducted, and how channel promotion is implemented. Many innovative enterprises possess strong R&D capabilities but lack commercialization expertise.

From a corporate perspective, sustained profitability is essential for the continuous iteration and improvement of products. In this process, it is necessary for companies to further expand the clinical applications of their products where feasible. For instance, while the total market size for cardiac patches is fixed, expanding into indications in other therapeutic areas can help secure greater market share. For universities, greater consideration should be given to whether technologies have broader application scenarios and whether they can be cross-applied to the medical field.

“However, for physicians, surgical procedures will proceed as scheduled regardless of whether innovative medical devices are available or whether the products still have certain defects. The needs and concerns of physicians may not have been adequately articulated,” mentioned Feng Jingyi. She noted that by leveraging a platform centered on clinical evaluation, resources from enterprises, universities, and hospitals can be better integrated. This enables clinicians to provide more effective feedback to companies, facilitate clinical integration, and accelerate product translation, potentially even promoting products through clinical application promotion centers. She emphasized, “We need to base our efforts on clinical evaluation and drive the implementation of innovative achievements through application demonstrations, thereby addressing the challenges in the ‘last mile’ of medical-engineering collaboration and achievement translation, and ultimately achieving a closed loop of innovation.”

Perhaps we must return to the initial question: Given our vast array of innovative medical device products and the large number of medical device enterprises, why has our market not experienced the comprehensive boom that was anticipated?

The answer is, to some extent, related to the quality of innovative medical device products.

On one hand, the production process of medical device products faces challenges related to manufacturing consistency.

Leng Xiaojun from Changzhou Kangdi Medical Stapler Co., Ltd. noted that many innovative enterprises adopt the strategic principle of “prioritizing speed in the short term, cost in the medium term, and quality in the long term.” By focusing on rapid product development and subsequent fast iterations, these companies place greater emphasis on the initial phase of innovation (from 0 to 1), thereby neglecting the critical processes of mass production and scaling (from 1 to 100, and from 100 to 1,000).

This is also related to whether the product is registration-oriented or market-commercialization-oriented. After some medical device products are approved, manufacturing difficulties or defect proneness may arise in the production phase due to flaws in early-stage product design. Furthermore, rapid subsequent updates and iterations may result in manufacturing processes failing to meet production requirements. In addition, as many medical device companies have limited production volumes when launching their products to the market, they may prefer in-house manufacturing or outsourcing to third-party manufacturers. Due to cost and other considerations, the low production volume makes it difficult for these companies to secure high-quality manufacturing capabilities.

Liu Zongchang, Secretary of the Board of Directors of Foxconn Industrial Internet Co., Ltd., pointed out that overseas medical device manufacturers are currently driving intelligent transformation, with many enterprises leveraging digital technologies to achieve precise material supply and thereby enhance production efficiency. To better support domestic medical device manufacturing, Foxconn is replicating the experience and craftsmanship accumulated in the production of electronic devices such as mobile phones into the manufacturing of high-end medical devices through its subsidiary, FII Yukang. As a third-party service provider, it aims to serve more innovative medical device companies and help them resolve challenges in production and manufacturing.

Typically, manufacturing processes require extensive time to validate producibility and other factors. Leveraging AI capabilities and accumulated expertise, Foxconn Yucan can significantly reduce the costs associated with process feasibility validation, even offering one-stop services ranging from process development to automated equipment design. Addressing the challenges faced by many innovative medical device companies—such as diverse product pipelines and low-volume production—Foxconn Yucan is also working to further reduce heavy asset investments in equipment through its tailored solutions. Furthermore, by implementing robust quality management systems and ensuring regulatory compliance, it helps improve product yield rates, thereby truly supporting production consistency for innovative medical devices.

On the other hand, it is about how to better address supply chain issues in the manufacturing of medical devices.

Consistent and stable product quality requires not only robust manufacturing capabilities but also strong support from a high-quality supply chain.

Liu Yazhi noted that the competitiveness of medical device products should be evaluated from multiple dimensions, including reliability, ease of use, and cost-effectiveness. For some devices, “cost-effectiveness” remains questionable due to bottlenecks in critical components or core technologies. Chen Peng, Deputy General Manager of Shanghai Aohua Endoscopy Co., Ltd., also emphasized that innovation should not be limited to products alone; it should extend to supply chain innovation. Through coordinated development, this approach can further reduce innovation costs and enhance overall efficiency. Undoubtedly, this will require continued efforts from industry practitioners.

Addressing this issue, Yang Zhiqiang, Deputy General Manager of the Medical Device Industry Development Department at Sinopharm Group, added, “The traditional medical device supply chain faces several major challenges: first, inaccurate demand forecasting, which relies heavily on historical data and experience; second, low efficiency in information sharing, as the lack of data exchange between upstream and downstream enterprises significantly hampers collaborative efficiency; additionally, business coordination is difficult and processes are lengthy. Furthermore, inaccurate inventory management and high supply chain volatility make cost control challenging and hinder compliance assurance. As regulatory requirements for compliance become increasingly stringent, the traditional medical supply chain can no longer meet the needs of high-quality industry development.”

The rapid development of China’s medical device industry, coupled with the expansion of product lines on the production side, demands a more agile and efficient supply chain. Digital and intelligent transformation has thus become key to enhancing core competitiveness. The digital transformation of the medical device supply chain can effectively break down information silos and further empower enterprises to achieve product traceability, data-driven decision-making, and more.

Furthermore, the promotion of innovative medical device products requires patience and time.

The confusion over why innovative products fail to rapidly gain market traction is, to some extent, attributable to our lack of confidence and patience in such innovations.

Chen Peng stated, “Innovation is not merely about transforming the product itself or changing physicians’ clinical practices; more importantly, it requires substantial post-marketing clinical data to demonstrate that the product or new technology is more effective, safer, more reliable, and more cost-effective compared with previous products. It takes time for innovative products to become blockbusters.”

The launch of a large number of innovative medical devices has laid the groundwork for an explosive market surge, while whether they become blockbuster products depends on various factors, including corporate marketing strategies.

However, waiting is not our only option. To better facilitate market acceptance and validation of products, participants also suggested increasing investment from “national teams” in relevant fields to fulfill their roles in technological innovation, industrial leadership, and security support, thereby accelerating the market recognition of innovations.

From clinical practice to product commercialization, every stage underscores a fundamental truth: innovation cannot succeed in isolation. Only by collaboratively building an ecosystem and advancing together can we effectively address the current challenges facing the industry and further transition from “domestic substitution” to “indigenous innovation.”

Currently,The industry is joining forces to address the current challenges we face.

For instance, Liang Junhua, a director at Glory Medical Co., Ltd., highlighted the critical role of the surgical environment in ensuring patient safety and procedural quality. Currently, the development of operating rooms is progressively transitioning from digitalization and integration into an era of intelligence, with integrated operating rooms further enhancing utilization rates. In the process of integrating operating room systems, greater collaboration among medical device manufacturers is required to provide hospitals with more rational solutions for surgical equipment and devices.

For another example, from an investment perspective, precise data facilitates better investment guidance. Cheng Xiangkuan, Deputy General Manager of Qingchuang Huiyi (Qingdao) Technology Co., Ltd., stated that the company is currently integrating a full-chain database. By leveraging multi-dimensional data covering manufacturers, distributors, supply chains, service chains, and financial investors, they are developing multiple modules—including investment and finance, innovation indicators, industry mapping, supply/service chains, and regulatory standards—to help identify high-potential sectors through differentiated insights and further empower resource integration across the medical device industry. “Our goal is to create an integrated online-offline ecosystem providing end-to-end services for the entire industrial chain, driving industrial innovation and investment through data leadership,” pointed out Cheng Xiangkuan.

Feng Qingyu, founder of Qingdao Jianxin Medical, emphasized that “product definition is the soul, the team is the cornerstone, the supply chain is the bottleneck, and specialized technology is the catalyst.” He noted, “Currently, no company has a fully complete R&D team; collaborative innovation is essential. We do not lack innovative products; what we lack are innovative products with stable and consistent quality. The focus of innovation efforts should be on the backend.” Jianxin Medical is currently exploring diversified collaborations to better help industry practitioners improve innovation efficiency. “In this process, only through close cooperation among all parties in the industry can we accelerate the realization of domestically produced innovations.”

Although the road ahead for the medical device industry remains long, we should not lose confidence. As Wang Baoting mentioned at the conference, the overall market size of medical devices has surpassed one trillion yuan over the past few decades; policy support has been unprecedented; and both the quantity and quality of innovative medical devices have been continuously improving. Innovative medical devices such as PET-CT scanners, artificial hearts, biodegradable coronary stents, and heavy-ion tumor therapy systems have been continuously approved and launched on the market.

In August last year, the State Council’s executive meeting reviewed and approved the “Action Plan for High-Quality Development of the Pharmaceutical Industry (2023–2025)” and the “Action Plan for High-Quality Development of the Medical Equipment Industry (2023–2025),”Special emphasis is placed on enhancing the resilience and modernization of the pharmaceutical industry and the medical equipment sector, while further cultivating a more favorable ecosystem that encourages and supports innovation in the medical device industry.

Currently, the industrial ecosystem is also taking a holistic approach to medical device products from the perspective of enhancing overall industry efficiency and quality, covering the entire lifecycle from research and development, manufacturing, and distribution to clinical application; and it encouragesStrengthen policy coordination across the entire industry chain—including production, academia, research, and healthcare—and enhance collaboration with universities., and further strengthen areas with weak resources.

We have reason to believe that, with further tapping into new quality productive forces, the medical device industry will transition from domestic substitution to indigenous innovation, providing clinicians with more user-friendly and higher-quality products, thereby further benefiting the general public.