Multi-Regional Initiatives Create New Opportunities for Innovative Medical Enterprises
It is well known that the healthcare industry is heavily influenced by policy. Seizing opportunities and aligning closely with policy directions can enable enterprises to achieve twice the results with half the effort; however, missing these windows of opportunity and acting against the trend may lead to elimination from the market.
In recent years, "supply chain" has become a high-frequency term in policies related to the medical device industry.
On the one hand, multiple national-level policies have been successively issued, emphasizing the need to enhance the competitiveness and security of industrial and supply chains.In May 2024, the Ministry of Industry and Information Technology and two other departments jointly issued the “Guidelines for Improving Supply Chain Management in Manufacturing Enterprises (Trial),” which calls for enhancing the resilience and security of corporate supply chains, accurately identifying indirect upstream supply risks, and anticipating downstream market risks transmitted through reverse channels.
Previously, the General Office of the State Council also issued the “Guiding Opinions on Actively Promoting Supply Chain Innovation and Application,” designating “enhancing global supply chain security” as one of the key tasks. It pointed out that a national supply chain security plan should be formulated and implemented, a global supply chain risk early-warning evaluation index system established, the global supply chain risk early-warning mechanism improved, and the capability for preventing and controlling global supply chain risks enhanced.
In addition, the Ministry of Commerce and seven other departments issued the Notice on Launching the National Demonstration Program for Supply Chain Innovation and Application, as well as the Specifications for the National Demonstration Program for Supply Chain Innovation and Application.
On the other hand, local governments continue to release supply chain-related policies, aiming to enhance the autonomy and controllability of supply chains and build distinctive industrial clusters.
For example, Shenzhen released the “Three-Year Action Plan for Accelerating Supply Chain Innovation and Development (2023–2025),” which aims to map out supply chains for strategic emerging industry clusters, encourage supporting enterprises in industrial and supply chains to cluster in Shenzhen, build a globally competitive supply chain ecosystem, and cultivate a group of leading supply chain core enterprises that are at the forefront nationwide and on par with international standards, centered around advanced manufacturing industry clusters.
Suzhou City has released the "Three-Year Action Plan for Strengthening and Supplementing the Biopharmaceutical and Health Industry Chains," aiming to further enhance the autonomy and controllability of industrial and supply chains. The plan seeks to coordinate efforts in addressing weaknesses and reinforcing strengths by launching breakthroughs in key core technologies for vulnerable segments of the industry, while continuing to refine operations in areas of competitive advantage to boost core competitiveness.
In addition, many local governments, including those of Weihai City and Xinxiang City, have also issued policies related to the industrial and supply chains of medical devices.
From the numerous publicly available policies, it is evident that the state attaches great importance to industrial supply chain work. It has repeatedly emphasized the need to optimize and stabilize industrial and supply chains, stressing that they must not fail at critical moments.
Why Is Such Great Importance Attached to Industrial and Supply Chains?This is because a major economy requires an autonomous and controllable supply chain. Currently, when domestic companies procure critical components such as overseas chips, wires, electrodes, and materials, they may face disruptions due to chip production halts or the inability of foreign suppliers to deliver goods under the influence of industry giants.
For example, during the development of its ICD products, Wushuang Medical experienced five instances within four years where key bare dies for high-voltage modules were discontinued or suppliers ceased deliveries. Fortunately, nearly all critical components in Wushuang Medical’s high-voltage modules have now been replaced, granting the company true autonomy in R&D and production. Nevertheless, significant “chokepoint” challenges persist in other niche sectors, including upstream raw materials and excipients, core components, manufacturing equipment, and analytical instruments, requiring domestic enterprises to address them one by one.
Enterprises are the primary entities responsible for enhancing supply chain management, and they also hold the key to its success. Therefore, the development of medical device industry supply chains across various regions presents another opportunity for innovative medical device enterprises.
However, seizing such opportunities is no easy feat. Innovative enterprises must clearly identify the advantageous industrial clusters and policy guidance directions in different cities, and make rational selections based on their own characteristics. In doing so, they can leverage the benefits of industrial clustering while enjoying a range of preferential policies.
To date, cities including Beijing, Shenzhen, Suzhou, Shanghai, Nanjing, Tianjin, Taizhou, Wuhan, and Weihai have all intensified their efforts to develop the medical device supply chain, thereby enhancing the resilience and security of the industrial and supply chains. In terms of implementation pathways, these regions have adopted measures targeting the upstream, midstream, and downstream segments of the supply chain, respectively.
First, guide the local medical device industry to extend upstream and address weaknesses in the upstream supply chain.。
For example, Suzhou needs to strengthen upstream segments such as raw materials and excipients, core components, production equipment, and analytical instruments; Shenzhen should support its leading manufacturing enterprises in expanding into the upstream supply chain by providing professional services such as collaborative R&D and crowdsourced design; Weihai City should encourage its leading enterprises to integrate resources and drive affiliated companies to conduct key technological breakthroughs, thereby promoting the domestic substitution of critical materials; the Department of Raw Materials Industry of the Ministry of Industry and Information Technology issued the “Notice on Organizing the ‘Open Competition Mechanism’ for Innovation Tasks in Biomaterials (First Batch),” to advance collaborative innovation and tackle key challenges across the biomaterials supply chain.
It should be noted that due to differences in foundational conditions of the industrial chain and the development landscape, various regions have distinct priorities for breakthroughs in their upstream supply chains. Specifically, in terms of sub-sectors, Suzhou plans to focus on developing technologies and products such as high-end biological reagents, biological raw materials, culture media, viral vectors, bioreactors, chromatography resins and equipment, centrifuges, filters, large-scale separation and purification technologies, automated control systems, medical electronic components, and key basic materials.
Shenzhen plans to focus on achieving breakthroughs in key technologies and core components for high-end medical imaging equipment, novel in vitro diagnostic devices, biomaterials and implantable devices, high-performance ventilators and extracorporeal membrane oxygenation (ECMO) machines, and minimally invasive surgical endoscopes, as well as medical robots. The city will prioritize tackling challenges in the overall system design of large-scale medical equipment and key components, along with precision machining and manufacturing processes. Furthermore, it aims to achieve independent R&D capabilities and production processes for upstream raw materials, including high-performance piezoelectric composites for ultrasound transducers, bone implant materials, and raw materials for implantable devices.
These upstream supply chain segments that have yet to be broken through represent not only pain points for China’s medical device industry and key areas of policy focus, but also opportunities for innovative medical device companies. Enterprises in the corresponding technical fields that establish operations in cities aligned with these specialties may achieve twice the results with half the effort, thereby accelerating their development.
Second, cultivate and attract core enterprises in the supply chain to build a supply chain ecosystem.
For example, Suzhou plans to concentrate its efforts on attracting and cultivating a group of chain-leading enterprises and high-level medical institutions, leveraging the influence of industry leaders to drive the development of the entire industrial chain. Chain-leading enterprises are those that hold a dominant position within the industrial chain and exert significant influence over the resources and applications of most other enterprises in the chain. They are characterized by large output scale, high levels of innovation, prominent core competitiveness, and broad market prospects.
In terms of investment attraction, Beijing, Shanghai, and other regions have proposed intensifying efforts to attract Fortune Global 500 companies, the top 100 global industry leaders, the top 50 domestic industry players, the top five enterprises in niche sectors, and key upstream and downstream supporting enterprises. They encourage leading domestic and foreign companies to establish regional headquarters or R&D centers, thereby enhancing core headquarters functions such as R&D, marketing and settlement, and international trade.
In terms of cultivation, Weihai City supports “chain-owner” enterprises in vertically integrating upstream and downstream companies domestically and abroad through equity participation, mergers and acquisitions, and cooperation, thereby fostering a mutually beneficial industrial ecosystem. Shanghai is accelerating the cultivation of leading enterprises and single-product champions in key areas such as the industrial chain, supply chain, and value chain. This includes manufacturing-, R&D-, and sales-oriented “chain-owner” enterprises, promoting the industry’s advancement toward the high end of the value chain and facilitating its transition from “participant” to “leader.”
Furthermore, various regions have adopted supply chain-oriented investment promotion strategies to further supplement, extend, and strengthen their industrial chains. For instance, Haoran Special Plastics, an upstream supplier of Guanhuai Medical, facilitated initial cooperation intentions between the Management Committee of Weihai Lingang District and Guanhuai Medical. In March 2024, both parties signed the "Framework Agreement on Cooperation for the Polyethersulfone (PES) Membrane Material Production Project."
It is reported that Guanhuai Medical is the only high-tech enterprise in China to have established a full industrial chain layout for “membrane” materials and filters, exerting considerable influence on upstream and downstream companies in industries such as hemodialysis.
Finally, advance the downstream extension of the supply chain and improve the industrial support system.
For example, Suzhou plans to strengthen its downstream pharmaceutical supply chain, develop big data platforms for circulation and trade, and establish smart healthcare service platforms, with a focus on building modern supply chain platforms that leverage digital tools to integrate upstream, midstream, and downstream operations. Shenzhen, meanwhile, is extending its supply chain downstream by offering services such as remote diagnosis, maintenance and repair, technical training, full lifecycle management, and information value-added services.
Furthermore, regions across China have vigorously advanced the development of public service platforms to promote industrial support services and accelerate the strengthening of supply chains.Among them, Suzhou will prioritize the development of third-party service platforms for medical translation, medical waste disposal, intellectual property protection, and CRO/CDMO/CMO services; Shenzhen will vigorously introduce and establish outsourced R&D and manufacturing service providers for medical devices, as well as industrial public service platforms such as laboratory animal service platforms, inspection and testing platforms, and translational medicine centers.
In addition to focusing on the upstream, midstream, and downstream segments, various regions are also developing the medical device industry supply chain from the perspectives of supply chain finance, digitalization, and globalization.
In Supply Chain Finance, in April 2024, the National Financial Regulatory Administration, the Ministry of Industry and Information Technology, and the National Development and Reform Commission jointly issued the Notice on Deepening Financial Services for the Manufacturing Sector to Facilitate the Advancement of New-Type Industrialization, proposing to strengthen financing services for core enterprises in supply chains and promote coordinated development among upstream and downstream enterprises in the industrial chain through accounts receivable financing, bill financing, warehouse receipt financing, and order financing.
At the operational level, Shenzhen has established a municipal-level industrial chain Party committee—the CPC Shenzhen Medical Device Industry Innovation Chain Committee—integrating resources from government functional departments, research institutions, medical institutions, medical device industry associations, industrial parks, investment firms, leading enterprises, and authoritative experts, thereby connecting the entire chain encompassing industry, academia, research, healthcare, capital, government, and management.
Since its establishment, the Industrial Chain Party Committee has built a comprehensive platform for exchange and cooperation across the entire industry chain by organizing roadshows, exhibitions, and roundtable summits on industry-academia-research collaboration. To date, the committee has helped companies such as Zero One Life, Redelin, Lifetech Scientific, and Weiqi Pharmaceutical secure over RMB 100 million in investment. It also facilitated connections between enterprises and more than 20 investment institutions and over 40 independent investors at the Nanshan District Innovative Medical Device Exhibition and Seminar on High-Quality Development of the Medical Device Industry.
It is reported that cities such as Chongqing, Wuhan, Yichang, Hefei, and Yantai have all released work plans for innovative supply chain finance to broaden financing channels for small, medium, and micro enterprises (SMMEs) and accelerate their development. It should be noted that while the development of supply chain finance enables small and micro enterprises to more conveniently access financing or loans based on orders, these enterprises must also prioritize risk control management and avoid losing their way in the pursuit of rapid expansion.
In terms of supply chain digitalization, the Ministry of Industry and Information Technology, the Ministry of Transport, and the Ministry of Commerce issued the “Guidelines for Improving Supply Chain Management Levels in Manufacturing Enterprises (Trial),” which proposes accelerating the digital transformation of enterprise supply chains, formulating effective digital supply chain strategies, strengthening the development of supply chain management systems, and enhancing capabilities in the digital application of supply chains.
Among them, Weihai City will advance the construction of an “Internet + Healthcare” platform, creating an integrated industrial internet big health platform that encompasses product trading, logistics and distribution, manufacturing, medical services, health services, and financial services. Xiamen City will focus on digital innovation in key areas, developing a range of smart digital application scenarios to provide digital and intelligent transformation services for the entire industry, thereby enhancing value chain and supply chain efficiency. Chongqing’s Banan District will support leading enterprises in extending their chains by deploying industrial internet platforms, driving small and medium-sized enterprises across the industrial chain to undergo synchronized digital transformation.
As of now, Hubei Province successfully launched its first provincial-level pharmaceutical supply chain platform in April 2024—the Hubei Jiuzhou Pharmaceutical Supply Chain Digital Integrated Service Platform. The platform features modules for pharmaceutical and medical device trading services, industrial financial services, industrial factor services, comprehensive traditional Chinese medicine (TCM) materials services, centralized procurement of industrial materials, and internet-based medical services. It integrates information from upstream pharmaceutical and medical device manufacturers with downstream market entities such as pharmaceutical companies, pharmacies, and clinics, providing one-stop services across the entire industry chain.
It is reported that during the initial trial operation period, 339 public medical institutions at Level II and above in Hubei Province submitted their annual budgeted intended procurement amounts for drugs, consumables, equipment, and services on the platform, with a total intended amount reaching RMB 49.81 billion. Following its official launch, the platform will respond rapidly to market demands at low cost, facilitate the swift delivery of innovative outcomes to end consumers, significantly reduce medication costs for the public, and markedly improve the accessibility of all categories of pharmaceuticals.
With the digitalization of supply chains, innovative enterprises will significantly reduce their operating costs, enhance operational management efficiency, and improve their competitiveness.
In terms of supply chain globalization, the "Guidelines for Improving Supply Chain Management in Manufacturing Enterprises (Trial)" proposes that enterprises should orderly integrate into the global supply chain network, jointly build and share international logistics infrastructure, and enhance global supply chain coordination capabilities.
In this regard, Shenzhen has mapped out key global supply chain resources and industrial advantages: Southeast Asia’s industrial processing and assembly capabilities along with agricultural products; Europe and the United States’ mid-to-high-end industrial intermediates, emerging technologies, and consumer goods; and the mineral and energy resources of the Middle East and Africa are all considered advantageous supply chain assets.
Amid the broader trends of industrial relocation and global supply chain restructuring, Shenzhen supports supply chain enterprises in establishing overseas procurement centers or acquiring essential factor market resources for participating in global supply chains through investments and mergers and acquisitions of foreign companies, thereby building overseas supply chain systems.
Meanwhile, Shenzhen also encourages enterprises to enhance their overseas supply chain service capabilities. It is recommended that supply chain service providers seize the opportunities presented by “enterprises going global” and “supply chains going global,” by establishing overseas distribution bases alongside multinational corporations, industrial intermediate goods manufacturers, and brand owners. These providers should offer integrated cross-border solutions—including marketing, brand promotion, channel distribution, after-sales services, and financing—for specialized, refined, distinctive, and innovative (“SRDI”) enterprises and their products.
What opportunities have these supply chain-related policies brought to which enterprises? A few cases illustrate this.
First, accelerate the development of innovative enterprises and address concerns regarding commercialization.. For example, the upstream segment of medical imaging has consistently been a key focus of policy and market attention. In April 2024, the National Key R&D Program’s special project “Research and Application of CT Slip Rings Based on Wireless Power Transfer Technology,” led by United Imaging Healthcare, was officially launched. This project aims to achieve the domestic production of slip rings, a core component of CT equipment.
Furthermore, upstream markets such as biomedical materials, core components of medical devices, and medical electronic components have received significant attention from local governments. On one hand, local governments provide direct financial support to relevant enterprises through the “open competition mechanism” (Jiebang Guashuai), helping innovative companies accelerate their development. On the other hand, by facilitating connections, local governments promote engagement and collaboration between supply chain enterprises and innovative firms, thereby enhancing the security and resilience of industrial and supply chains while supporting the commercialization of innovative enterprises.
Additionally, with support from local governments, innovative enterprises can also leverage supply chain finance to secure loans from financial institutions based on purchase orders, thereby alleviating cash flow pressures and accelerating growth.
Second, accelerate the global expansion of medical enterprises and build a global supply chain.Since late 2022, government departments in various regions of China have actively organized local enterprises to form delegations for overseas market expansion. In August 2023, the Weihai Municipal Bureau of Commerce, in collaboration with the Municipal Medical Device Industry Association, organized a delegation of 13 medical companies to participate in an exhibition in Thailand, achieving intended transaction amounts exceeding RMB 30 million. In December 2022, the “Shenzhen Medical Device Exhibition Delegation” and the “Shenzhen Intelligent Manufacturing Exhibition Delegation,” organized by the Shenzhen Municipal Bureau of Commerce, successfully secured intended orders worth USD 87 million.
Third, supply chain digitalization will reduce operational and management costs for related enterprises and enhance their market competitiveness.. In the past two years, the medical device market has become increasingly competitive, with falling product prices forcing companies to further cut costs. At this juncture, enterprises that adopt supply chain digitalization at an early stage will gain a competitive edge in the market more quickly.
In fact, the opportunities brought by supply chain policies are far more extensive; other potential opportunities remain to be explored and experienced by innovative enterprises.