MRI Sales Drop for the First Time in a Decade: Imaging Equipment Makers Forced into Strategic Transformation

Recently, multiple research institutions have successively released the 2023 sales rankings for imaging equipment. The market, influenced by policy dynamics, presents a mixed picture of opportunities and challenges.

The "Notice on the Catalogue for Configuration Licensing Management of Large Medical Equipment (2023)," released in March last year, redefined the configuration tiers for imaging equipment. Under the new policy direction, medical equipment priced under RMB 30 million was removed from the imaging equipment catalogue, while equipment priced under RMB 50 million was included in the procurement lists of ordinary tertiary hospitals. This adjustment directly drove a substantial increase in sales of high-end and ultra-high-end medical imaging devices, such as CT scanners with 64 slices or more and MR systems at 3.0T or above. Notably, sales of 512-slice CT scanners surged by over 100%, injecting strong momentum into the rapid growth of the high-end medical equipment market.

Market enthusiasm persisted into the second half of the year, culminating in the “healthcare anti-corruption” campaign. Under this special rectification initiative, most public hospitals adopted a cautious stance and suspended the procurement of certain medical devices. Throughout the fourth quarter, sales of high-end medical equipment declined by approximately 50%, offsetting part of the growth driven by the configuration permit policy.

In contrast to high-end medical equipment, sales in the mid- and low-end medical equipment market continue to shrink. On one hand, excessive procurement during the first year of the COVID-19 pandemic has left mid- and low-end imaging devices, such as CT scanners with fewer than 64 slices and mobile DR systems, in a prolonged phase of inventory digestion. On the other hand, hospitals are currently prioritizing research and precision diagnosis for neurological and cardiovascular diseases, leading to a widespread preference for purchasing high-end and ultra-high-end medical equipment, which further squeezes the mid- and low-end market.

While there were gains and losses across different sub-sectors, the growth in high-end equipment failed to offset the decline in mid- and low-end equipment. Rough statistics indicate that although the overall sales revenue of imaging equipment maintained an upward trend, the total sales volume ultimately decreased by nearly 10%.

Notably, magnetic resonance imaging (MRI), which had maintained a decades-long upward sales trend, experienced its first major setback in 2023. As the crown jewel of medical equipment, imaging devices are approaching a pivotal turning point in their era.

Based on the data alone, 2023 was a year of vigorous advancement in “domestic substitution.”

Data from medical procurement platforms show that United Imaging Healthcare, GE HealthCare, and Siemens Healthineers dominate the top three positions in CT scanner sales. Neusoft Medical follows closely behind, surpassing Philips for the first time to rank fourth. Wandong Medical, Minfound Medical, and Shenzhen Anke have all achieved notable growth in market share. Particularly in the entry-level segment of CT scanners with fewer than 60 slices, these three companies have outsold Philips, capturing market shares of 6.27%, 4.31%, and 3.43%, respectively, and are gradually taking over the low-end CT market.

In the MRI segment, United Imaging Healthcare maintained its third-place ranking in both sales volume and revenue, while Neusoft Medical and Wandong Medical made significant progress. Notably, Neusoft Medical captured nearly 12% of the market share with its 1.5T MRI systems, and Wandong Medical also benefited from strong performance in this niche segment, pushing its market share above 5%.

However, the impending watershed moment for China’s medical imaging equipment industry does not lie in a widening gap between domestic manufacturers and multinational corporations, but rather in the divergence between high-end and non-high-end manufacturing.

According to Han Donglong, Senior Vice President of Neusoft Medical, the growth potential of China’s mid- to low-end medical imaging equipment market remains subdued. Segments such as CT scanners with fewer than 64 slices and 1.5T MRI systems are saturated with highly homogeneous products, and profit margins have been repeatedly squeezed by price wars, making it difficult for these products to drive breakthrough growth for companies. As a result, equipment manufacturers lacking complete supply chains are gradually exiting the low-end market. In contrast, high-end imaging equipment features significant differentiation and relatively higher profit margins. Although sales of related equipment have been temporarily impacted by policy changes, the long-term upward trend is irreversible, offering companies substantial room for future growth.

Future competition will increasingly concentrate in the high-end market. Under this trend, companies will be compelled to allocate more capital to research and development. Enterprises lacking advanced manufacturing capabilities will gradually lose competitiveness, leading to a further concentration of resources among top-tier manufacturers and a clear divergence between high-end and non-high-end manufacturing enterprises.

A clear divide is beginning to emerge. Han Donglong told VCBeat, “The new competitive landscape requires sustainable, scalable cash flow to support R&D; companies that rely solely on burning cash will find it increasingly difficult to survive in today’s market.”

At present, the vast majority of domestic medical imaging equipment manufacturers are likely to complete their transformation within the remaining time. Leading companies such as United Imaging Healthcare and Neusoft Medical possess healthy cash flows and have established a firm foothold in the high-end market. With the proportion of revenue from high-end equipment continuously increasing, they are well-positioned to navigate market shifts without concern. Meanwhile, Wandong Medical, MinFound Medical, and Shenzhen Anke have achieved profitability by capturing the mid- to low-end market shares vacated by Philips Healthcare and Siemens Healthineers. This has enabled them to allocate greater resources to research and development and gradually penetrate the high-end market. Recently, Shenzhen Anke’s independently developed “4-million-pixel” ultra-high-definition 512-slice CT scanner received regulatory approval.

These enterprises’ transformation strategies focus on adjusting their customer structure and product mix. There is a consensus on optimizing the customer base by prioritizing Tier-3 Grade-A hospitals with strong payment capabilities, and directing R&D efforts toward high-end and ultra-high-end equipment tailored to the needs of precision medicine and scientific research. Adjusting the product mix requires companies to move away from homogenization and achieve differentiation. For instance, enterprises can develop specialized equipment for specific departments or diseases—such as devices for dynamic organ imaging—to vertically align as closely as possible with the requirements of radiology and clinical departments.

The strong performance of established multinational corporations such as GE Healthcare offers valuable insights for domestic companies from a production perspective. Emphasizing the importance of a complete supply chain, the company has built a comprehensive imaging equipment manufacturing supply chain in China, enabling it to maintain low-cost production. This advantage allows it to prevail in price competition across various market segments and effectively respond to market contraction and sustained competitive pressures.

According to Zhang Yihao, CEO of GE Healthcare China, all core components and assembly processes for GE Healthcare’s CT and MR equipment are carried out in China. Two out of every three CT scanners sold globally are produced at the Beijing Hangwei factory, and one out of every two MRI systems sold worldwide is manufactured at the Tianjin factory. In 2023, under its “deep localization” strategy, GE Healthcare reported revenue of $19.55 billion, representing a 6.60% increase, with revenue in Greater China growing by 10.05%.

Some previously mainstream strategies need to be re-evaluated for their value in the new era. United Imaging Healthcare broke the dominance of multinational corporations in the domestic market by achieving comprehensive in-house research, development, and manufacturing of core components, thereby initiating the market-oriented journey of China’s high-end manufacturing. However, not all enterprises possess resources comparable to those of United Imaging Healthcare.

As core imaging component companies such as Chenguang Technology and Chaoqun Testing successively launched their initial public offerings (IPOs), the competitiveness of their products has continued to improve. The high-end medical imaging equipment sector has developed a new business model that allows equipment manufacturers to invest in and collaborate with core component manufacturers, rather than relying solely on in-house research and development. Consequently, equipment manufacturers can compete more cost-effectively by establishing competitive barriers in one or more key components—such as detectors and high-voltage generators—while ensuring that purchased components are highly compatible with their proprietary equipment systems.

Under this model, building a robust and efficient supply chain for high-end equipment and forging close, in-depth partnerships may offer imaging equipment manufacturers a new perspective from a cost standpoint, with even higher priority than the complete in-house production and R&D of core components.

Furthermore, enterprises must prioritize the development of image enhancement and AI-assisted diagnosis and treatment enabled by intelligent technologies. The market for post-processing of medical images is vast; image enhancement applications are poised to become the mainstream solution for upgrading primary healthcare facilities. Meanwhile, AI-assisted diagnosis and treatment have the potential to reshape numerous clinical departments, fostering new business models that transcend traditional device capabilities and propelling companies into a new multi-billion-dollar market.

Perhaps weary of the prolonged strategic maneuvering against long-standing rivals, or perhaps wary of the potential for low growth in the domestic market, nearly all enterprises are attempting business innovation beyond the realm of medical imaging equipment manufacturing.

GE Healthcare is a true pioneer in cross-industry integration. With a mature nuclear medicine product portfolio, GE Healthcare can independently manufacture diagnostic radiopharmaceuticals, radiopharmacy preparation systems, and cyclotrons, as well as a full range of nuclear medicine imaging equipment including PET/CT, SPECT/CT, and PET/MR. This comprehensive capability positions the company at a significant advantage amid the current surge in the radiopharmaceutical sector.

Between 2023 and 2024, GE Healthcare also expanded its footprint in prognosis, nursing care, and interventional procedures by sequentially investing in startups such as Laza Medical (optimization of cardiac interventions) and partnering with companies like AirStrip Technologies (patient monitoring) and Biofourmis (home-based care), thereby extending its services across every stage of the diagnosis and treatment workflow.

Siemens Healthineers’ strategy shares similarities with that of GE Healthcare. In recent years, the company has placed significant emphasis on “full-cycle services” for oncology, stroke, and cardiovascular diseases, achieving notable success. Specifically, Siemens integrates its proprietary health IT systems, diagnostic tools, and imaging equipment to create new hospital-wide solutions, thereby tapping into new markets through innovative business models.

Neusoft Medical leverages the software strengths of the Neusoft Group to maintain a leading position in medical AI. In exploring new scenarios, the company has chosen to collaborate with the Chinese Academy of Sciences on research related to in vitro diagnostics, aiming to further enrich its layout across the diagnostic process.

United Imaging Group has ventured further into cross-industry expansion. Recently, its subsidiary, United Imaging Microelectronics, announced that its hearing aid project would be established in “United Imaging Town.” Reportedly, the project is dedicated to the design, research and development, and production of mid-to-high-end custom hearing aids. It will leverage customized equipment such as high-precision 3D printers for product design and manufacturing, with an estimated annual production capacity exceeding 10,000 units.

In addition to production line expansion, companies such as United Imaging Healthcare and Neusoft Medical have accelerated their overseas expansion in the past two years by leveraging the export advantages brought about by the depreciation of the renminbi.

In the third quarter of 2023, United Imaging Healthcare generated RMB 1.03 billion in revenue from its overseas markets, representing a year-on-year increase of 39.7%, with overseas revenue accounting for 13.8% of the total. Forty-three of its products have obtained EU CE certification, including 12 that have complied with the Medical Device Regulation (MDR); another 43 products have received U.S. FDA clearance. Its sales network covers major developed and emerging markets worldwide. Neusoft Medical is not listed on the secondary market; however, according to Han Donglong, it has established 12 overseas subsidiaries, with its products deployed in more than 110 countries and tens of thousands of units installed.

Beyond the aforementioned cases, enterprises undergoing transformation have a wide array of options; they simply need to tailor their strategies by leveraging their own strengths. As we cross this watershed moment, we hope to see more companies not only survive but also thrive, creating more effective high-end medical equipment that benefits markets both domestically and internationally.