Ningwei Medical Oxygen Targets Mid-to-High-End Clients Amid Surging Demand in China's Medical Gas Market

The market growth of medical gases, especially medical oxygen, is traceable.

On the one hand, clinical demand is driving steady market growth, with further increases in the penetration rate of medical oxygen.Especially since the onset of the COVID-19 pandemic, patients with deteriorating conditions have experienced dyspnea due to severe impairment of pulmonary function, leading to acute shortages of medical-grade oxygen in hospitals across various regions. Amidst a substantial surge in demand for medical oxygen, numerous publicly listed companies, such as Heyuan Gas and Jinhong Gas, have strengthened their supply guarantees for medical oxygen. In January 2023, to better safeguard the supply of medical oxygen, the National Medical Products Administration (NMPA) approved the market launch of more than ten medical oxygen products through an expedited review pathway. Subsequently, many hospitals have placed greater emphasis on the planning and construction of medical gas systems. This has also contributed to enhanced public awareness of medical oxygen and increased penetration rates in hospitals.

On the other hand, the industry is entering a stage of compliant, high-quality development, with efficient supply chains for medical gases and other products now better secured.In recent years, the state has strengthened supervision and administration of the medical market, and relevant authorities have cleared out entities lacking the qualifications for the production and operation of medical oxygen. Meanwhile, the entry of compliant enterprises has further constituted the backbone of industry development, meeting the entire market’s demand for oxygen.

Ye Liang, the business head of Nanjing Ningwei Medical Oxygen Co., Ltd. (hereinafter referred to as “Ningwei Medical Oxygen”), also noted, “With the intensifying aging of the population and changes in the global climate environment, these factors are further driving up market demand for medical oxygen.”

In fact, the industry’s sustained and steady growth is partly attributable to the characteristics of medical oxygen: its consumption volume is generally very stable, with virtually no distinction between peak and off-peak seasons. Driven by rising demand in the healthcare market, a number of compliant enterprises have further captured market share by obtaining qualifications for the production and distribution of medical oxygen.

However, how to ensure the quality and quantity of medical oxygen production and supply, while breaking through the current geographical constraints on the development of medical oxygen enterprises, is a major challenge facing medical oxygen companies eager for rapid growth. This is precisely the problem that Nanjing Ningwei Medical Oxygen Co., Ltd., with nearly 30 years of experience in the gas production industry, seeks to address.

It has been nearly 30 years since Nanjing Ningwei Medical Oxygen Co., Ltd. first entered the gas industry. The company has witnessed almost the entire history of the development of China’s gas sector.

As early as 1996, the predecessor of Nanjing Ningwei Medical Oxygen Co., Ltd. established its presence in the medical gas sector. Subsequently, it underwent restructuring,Nanjing Ningwei Medical Oxygen Co., Ltd. has gradually grown from a company with annual sales of only 3.8 million yuan to one with annual sales approaching 100 million yuan.

“At that time, the overall market competition was relatively disordered. Driven by its commitment to promoting standardized market development, Ningwei Medical Oxygen captured approximately 85% of the Nanjing medical oxygen market share by 2007,” mentioned Ye Liang. “As the state advanced the establishment of relevant standards for medical oxygen, Ningwei Medical Oxygen closely followed suit, further initiating compliant operations.”

The decision to enter this field is linked to Nanjing Ningwei Medical Oxygen Co., Ltd.’s assessment of industry development.

“On the one hand, the development of domestic medical technology has driven the demand for medical gases. Among medical gases, medical oxygen is the most widely used in clinical practice. On the other hand, with the aging population and the increasing prevalence of chronic pulmonary diseases, the demand for medical oxygen will further increase. For example, in 2023, there was an explosive growth in the clinical demand for medical oxygen, which was primarily due to disease-related factors. In addition, as public health awareness improves, the market for home medical oxygen, driven by healthcare needs, will gradually expand.”

The medical oxygen market is still growing rapidly.According to data from the National Health Commission of China, there were 1,716 Grade A tertiary hospitals across China in 2022 alone. The market size for medical oxygen in these Grade A tertiary hospitals is estimated to have reached billions of yuan. Furthermore, a large number of hospitals at other grades also exist in the market.

In clinical practice, gases used for medical diagnosis and life-saving interventions are not limited to medical oxygen. Commonly used medical gases include medical oxygen, helium, carbon dioxide, liquid nitrogen, medical nitrous oxide (laughing gas), and certain rare gases. These gases are frequently applied in areas such as blood gas analysis, pulmonary function testing, cardiopulmonary testing, surgical lasers, anesthesia monitoring, respiratory monitoring, medical research, and radioactive tracing.

While targeting the mid-to-high-end market and supplying medical oxygen, Nanjing Ningwei Medical Oxygen Co., Ltd. also takes into account hospitals’ specialized requirements for medical gases.As early as 2016, in addition to medical oxygen, Nanjing Ningwei Medical Oxygen Co., Ltd. expanded its product portfolio to include nitrogen, carbon dioxide, and other gases, utilizing liquid nitrogen to facilitate rapid freezing and preservation of tissue samples during cryosurgery.Currently, it also plans to add other high-value medical gas pipelines and, through technological innovations in cylinder filling materials, better provide hospitals with comprehensive medical gas solutions.

Notably, in 2023, Baoying Gas, a comprehensive gas solutions provider leveraging traditional industrial gases as its foundation and specialty gases for value enhancement, completed the acquisition of Nanjing Ningwei Medical Oxygen Co., Ltd.Through this acquisition, Nanjing Ningwei Medical Oxygen Co., Ltd. is able to leverage Baoying Gas’s financial support and technical capabilitiesetc., as the medical oxygen business segment of Baoying GasFurther accelerate the expansion of the medical gas market and improve our own product and service network.

The retail gas market currently exhibits a relatively fragmented landscape, characterized by the coexistence of a few specialized gas manufacturers and a large number of small and medium-sized distributors. The ability to break through geographical constraints and further expand market reach ultimately depends on product quality and the comprehensiveness of supporting services.

Among these, the most critical factor is undoubtedly the restriction on market entry barriers.

Ye Liang noted that the medical gas sector inherently presents certain barriers to entry. In addition to stringent qualification requirements for personnel—such as credentials in pharmacy and chemical engineering—there are often minimum years-of-experience prerequisites. Furthermore, as the relevant gases are classified as high-risk chemical products, production facilities must adhere to strict compliance standards for production management and operational systems. This necessitates that companies possess substantial financial strength and robust resource allocation capabilities. “It is precisely due to these high entry barriers that manufacturers of medical oxygen are almost exclusively concentrated in first-tier cities. In the current Nanjing market, there are only three suppliers of medical oxygen, and we are one of them.”

A single data point effectively illustrates the market position of Ningwei Medical Oxygen: it is the first company in Nanjing to produce medical oxygen in compliance with the Chinese Pharmacopoeia, obtain the drug approval number “Guoyao Zhunzi H32026670,” and achieve GMP certification.

Secondly, medical oxygen products meet quality standards.

With the continuous advancement of production technologies, gas products manufactured using compliant, high-quality air separation equipment can generally achieve an oxygen purity level of 99.5%, meeting regulatory standards. As one of the most professional medical oxygen manufacturers in Nanjing, the company currently produces approximately 600,000 cylinders of bottled oxygen annually. Additionally, its annual production capacity includes 30,000 cylinders of nitrogen and 20,000 cylinders of carbon dioxide. Its products are supplied to over 120 medical institutions across the city, earning widespread acclaim from both healthcare providers and patients.

Furthermore, there is the improvement of supporting services.

The production, storage, and transportation of medical oxygen must adhere to stricter standards and regulations. In addition to implementing rigorous production standards, Nanjing Ningwei Medical Oxygen Co., Ltd. places paramount importance on the safe storage and transportation of its products, as well as on providing comprehensive after-sales service support.

In terms of transportation, Nanjing Ningwei Medical Oxygen Co., Ltd. once considered engaging third-party partners but ultimately opted for in-house transportation to better manage transport risks. “Our current sales radius for bottled gas is approximately 150 kilometers, while that for liquid oxygen is within 500 kilometers,” mentioned Ye Liang. During transportation, delivery personnel strictly adhere to predefined routes, with real-time tracking and early warning systems enabled through electronic video recording and GPS. Considering that some hospitals store medical gases in the basement level (B1), Nanjing Ningwei Medical Oxygen Co., Ltd. uses small trucks with a load capacity of under 2 tons and proper transportation qualifications to address height restrictions at hospital basement levels.

Support services are not limited to delivery but also encompass subsequent product maintenance, support, and more. Leveraging years of industry experience, Nanjing Ningwei Medical Oxygen Co., Ltd. has effectively addressed these needs. For instance, when a hospital previously encountered issues with its oxygen supply pipelines, Ningwei’s after-sales team arrived on-site within one hour and resolved the problem. Furthermore, in cases of temporary emergency oxygen demand by medical institutions, Ningwei activates relevant contingency plans and provides rapid response and delivery support through its digitalized system.

In fact, to better expand its market, Nanjing Ningwei Medical Oxygen Co., Ltd. is taking a two-pronged approach: on one hand, it is establishing additional factories to enhance medical oxygen supply capabilities in surrounding regions; on the other hand, it is replicating its business model across multiple regions to rapidly penetrate new markets. For instance, the company is currently expanding its operations in Wuhu, Anhui Province, and Ya’an, Sichuan Province. Furthermore, Nanjing Ningwei Medical Oxygen is also pursuing mergers and acquisitions of established enterprises in mature markets to accelerate its market expansion.

And a point that cannot be overlooked is,Nanjing Ningwei Medical Oxygen Co., Ltd. has also successfully established a long-term partnership with Nanjing Ningwei Pharmaceutical Group Co., Ltd., obtaining the sales qualification for medical liquid oxygen.This also enables Nanjing Ningwei Medical Oxygen Co., Ltd. to meet the demands of a broader market by leveraging the procurement and sales of third-party products.

In the current market, the number of domestic professional gas supply service providers continues to grow. For instance, upstream air separation equipment manufacturers, such as Hangyang Co., Ltd., are further extending their operations downstream into the gas supply sector.

Will the Medical Oxygen Market Face Increasingly Fierce Competition?

In response, Nanjing Ningwei Medical Oxygen Co., Ltd. expressed no concern. Ye Liang pointed out that, on one hand, Ningwei has already secured a solid market presence in Nanjing and other regions; on the other hand, its qualification for selling medical liquid oxygen enables it to collaborate with upstream air separation equipment manufacturers—suppliers to the downstream gas supply market—to further expand its market reach.The relationship between the two is not one of competition, but rather more likely a collaborative partnership for mutual benefit.

More importantly, Ningwei Medical Oxygen has its own unique insights into the market.

Beyond current clinical needs, user demand in home settings is growing rapidly across the entire market.For example, a large number of elderly individuals receiving home care tend to use household oxygen cylinders for treatment. Their needs often differ from those of clinical institutions; in the home setting, greater emphasis is placed on long-term usage costs, cost-effectiveness, and timely delivery. Additionally, family caregivers expect to receive comprehensive product training.

In this burgeoning market, Nanjing Ningwei Medical Oxygen Co., Ltd. has established a presence and built an extensive user base.And with Baoying Gasto its medical oxygen business segmentWith support across all fronts, Nanjing Ningwei Medical Oxygen Co., Ltd. has further expanded into the market for medical oxygen demand in home settings.

And this may also create a second growth curve for Nanjing Ningwei Medical Oxygen Co., Ltd.