China Medical Device Companies' Q4 2022 Overseas Value Index Ranking: Insights and Product Overview

In September 2022, the inaugural China Medical Device Enterprises’ Overseas Expansion Value Index was released. In the more than three months since its publication, the market landscape has undergone further evolution, and the world, after three years of grappling with the COVID-19 pandemic, is gradually entering the post-pandemic era. In this post-pandemic context, how Chinese medical device companies can seize new opportunities for overseas expansion has become a critical issue for the industry.

The COVID-19 pandemic, which lasted for three years, sustained high global demand for medical devices used in epidemic prevention and control, providing Chinese medical device companies with unprecedented opportunities to expand into overseas markets. A classic example of this trend is the explosive revenue growth experienced by companies specializing in in vitro diagnostics (IVD) and reagents. Benefiting from efforts to prevent and control the epidemic, China’s medical device import and export volume has reached a new level compared to pre-pandemic figures, evolving into a market valued at over one trillion yuan.

In light of China’s “liberalization” policy introduced in December 2022, the pandemic-driven “bonus” is no longer expected in the foreseeable future. Nevertheless, the wave of Chinese medical device companies expanding overseas, catalyzed by the pandemic, remains in its early stages: apart from IVD products, the overseas markets for mid-to-high-end medical devices still represent a blue ocean full of opportunities for Chinese enterprises. This is particularly relevant at present, as centralized procurement has become normalized in China, severely squeezing profit margins in the domestic medical device market.

——Volume-based procurement (VBP) is short for centralized bulk purchasing, under which the government sets unified prices for pharmaceuticals and medical devices covered by national health insurance based on procurement volumes. Generally, VBP prices are significantly lower than market prices. For instance, in the case of coronary stents within the medical device sector, VBP prices once fell by more than 96% compared to market prices (with the market price at RMB 13,500 and the VBP price at RMB 469).

Meanwhile, against the backdrop of developed nations seeking cost-effective products to optimize public healthcare expenditure, and developing countries enhancing healthcare coverage and affordability, the overseas market offers vast opportunities and substantial profit margins. In light of both domestic and international trends, it is not only highly promising but also imperative for Chinese medical device enterprises to expand globally. Going global is not merely a survival strategy in the domestic market; it is a long-term approach to scaling up and strengthening competitiveness, as well as an essential path to building a sustainable “moat” for the enterprise.

—Following China’s announcement to “reopen,” the Shenzhen Municipal Bureau of Commerce organized a delegation of nearly 100 Shenzhen-based enterprises from the medical device and technology sectors to attend high-profile international exhibitions and engage in business exchanges across multiple countries. At the MEDICA trade fair in Düsseldorf, Germany alone, the delegation secured orders exceeding USD 45 million.

Successful global expansion is the key to victory for China’s medical device industry as it strives toward its second trillion-yuan milestone. To better assist domestic medical device companies in seizing overseas opportunities, breaking down cognitive barriers regarding foreign markets, and advancing to higher positions in the global value chain, PureCert has distilled the critical steps of best practices for medical device exports. Focusing on 434 A-share and HKEX-listed companies related to medical devices, and leveraging the GRIP medical device big data platform along with macroeconomic, industry, and corporate data, PureCert has incorporated expert opinions and insights from industry research. By analyzing product registration data, clinical trial data, and patent data, and combining these with the overseas revenue of the companies under study and the market size of medical devices in their target destinations, PureCert has reconstructed the Global Expansion Index rankings.

Based on the GRIP medical device big data platform, as well as other macroeconomic, industry, and corporate data, the Overseas Expansion Value Index for the fourth quarter of 2022 was constructed. This index adopts a multi-dimensional and multi-level approach, analyzing both supply-side and demand-side perspectives by leveraging corporate product registration, clinical trial, and patent data, while also incorporating factors such as the degree of alignment between corporate products and target market demands.

● Product Registration

A prerequisite for entering a target market is achieving local product registration. Medical device registration data holds significant importance for evaluating a company’s market prospects, as it reflects the technologies and products available to the company in the market and represents its potential to generate profits in the target market. Therefore, product registration data is indispensable when assessing a company’s capability to expand overseas. The index compilation incorporates product registration data from countries and regions such as the United States, the United Kingdom, Australia, the European Union, Japan, South Korea, Brazil, Russia, Canada, and Singapore, conducting a comprehensive evaluation of companies across dimensions including registration status, registration validity period, registered product type, product risk classification, and registration volume.

● Clinical Trials

Clinical trial data serve as the most reliable benchmark for assessing the quality, safety, and performance of a medical device, demonstrating whether the device is safe and effective in real-world clinical applications. Therefore, clinical trial data from medical device companies can reflect the quality of their products, thereby enabling an assessment of their market prospects. Leveraging data provided by the Clinical Engine module of the GRIP Medical Device Big Data Platform, the index compilation screens for clinical trial records related to the studied enterprises. It evaluates the potential for commercializing corporate R&D outcomes by considering factors such as trial registration date, trial phase, number of volunteers recruited, classification and blinding methods, as well as the difficulty and value of the clinical trials.

● Patent Data

Patents are a critical intangible asset for enterprises and serve as a key indicator of their overall strength. The index compilation process collects data on patents granted to target companies both domestically and internationally, including metrics such as application date, grant date, and patent type. Based on the specific categories of the patents, a comprehensive evaluation of both quality and quantity is conducted. By further incorporating patent lifecycle and vitality, a composite measure of the company’s patent strength is derived.

● R&D Investment

For medical device companies, R&D investment is a key benchmark for assessing technological innovation and research and development capabilities. The greater the investment and the more comprehensive the R&D efforts, the more competitive the resulting products will be, and the brighter their market prospects. The index compilation evaluates companies’ R&D strength based on factors such as R&D expenditure, research directions, R&D quality, commercialization of R&D outcomes, and the composition of R&D teams.

● Overseas Revenue and Destination Market Size Data

Obtain the latest disclosed financial data of domestic medical device companies and related listed companies, with a focus on revenue from overseas operations, to assess the current value of their global expansion. Combine this with market size data for medical devices in target regions to estimate the scale of new overseas markets, and evaluate the alignment between company products and local demand to determine the future value of international expansion.

1. Main List of the Global Expansion Index

(1) Main List for Q4 2022

(2) Profiles of the Top 3 Companies on the Main Rankings

Headquartered in Shenzhen, China, the company operates more than 40 overseas subsidiaries across over 30 countries in North America, Europe, Asia, Africa, and Latin America. Its main product portfolio spans three key areas: Patient Monitoring & Life Support, In Vitro Diagnostics (IVD), and Medical Imaging.

Mindray Medical is a global leader in providing medical devices and solutions, primarily engaged in the research and development, manufacturing, marketing, and servicing of medical equipment. The company operates more than 50 subsidiaries overseas and has established branches in over 30 provinces, municipalities, and autonomous regions across China. With a global workforce exceeding 14,000 employees, international staff account for more than 11%. Mindray’s products are exported to over 190 countries and regions worldwide, with nearly half of its revenue generated from overseas markets; North America and Europe constitute its primary international markets.

In the first three quarters of 2022, the Company achieved operating revenue of RMB 2,329,583.07 thousand, representing a year-on-year increase of 20.13%. Currently, the Company’s products cover three major sectors: Patient Monitoring & Life Support, In Vitro Diagnostics (IVD), and Medical Imaging. It boasts the most comprehensive product portfolio among its domestic peers and holds a commanding market share in each of these segments.

MicroPort was founded in 1998 in Zhangjiang Science City, Shanghai, China. It is an innovative group specializing in high-end medical devices, with major production and R&D bases established in Shanghai, Suzhou, Jiaxing, and Shenzhen (China); Irvine, Memphis, and Boston (United States); the outskirts of Paris (France); the outskirts of Milan (Italy); Aachen (Germany); Oxford (United Kingdom); Santo Domingo (Dominican Republic); Mumbai (India); and San José (Costa Rica), forming a global network for R&D, manufacturing, marketing, and services. The company employs over 12,000 people from more than 30 countries, has filed over 8,200 patents domestically and internationally, and offers more than 400 products covering over 200 types of diseases.

For several consecutive years, MicroPort’s R&D investment has accounted for more than 15% of its main business revenue, ranking first among high-value consumables companies, with absolute R&D spending far exceeding that of its peers. In addition to its three major vascular intervention businesses, the company has also expanded into orthopedics, cardiac rhythm management, surgical robots, heart valves, general surgery, electrophysiology, and ECMO (commonly known as artificial lung).

MicroPort has launched over 400 products, covering twelve major business clusters: cardiovascular and structural heart disease; electrophysiology and rhythm management systems; bone and soft tissue repair technologies; aortic and peripheral vascular diseases; cerebrovascular and neuromodulation science; surgical critical care and robotics; endocrine management and assisted reproduction; urological, gynecological, digestive, and respiratory diseases; plastic surgery and medical aesthetics for the ears, nose, mouth, eyes, and body; in vitro diagnostics and in vivo/in vitro imaging; technologies for treating solid tumors in vivo; and insomnia, depression, and rehabilitation medicine. Its products have entered more than 20,000 hospitals in over 100 countries worldwide.

Tianjin Andon Medical Electronic Co., Ltd., established in 1995, is a publicly listed company specializing in the research, development, and production of health-related electronic products and smart hardware. It is also an innovative technology enterprise dedicated to building a personal health management cloud platform based on the mobile internet model of “smart hardware + mobile applications + cloud services.”

The Company was listed on the Shenzhen SME Board (Stock Code: 002432) on June 10, 2010. In the same year, it transitioned toward mobile internet and established its independent innovative brand “iHealth,” launching a mobile-connected blood pressure monitor compatible with Apple iPhones. With strong support from Apple Inc., the product gained access to Apple’s online official website and offline direct retail channels. The Company has subsequently introduced a range of personal health wearable devices covering blood pressure, blood glucose, blood oxygen, ECG, heart rate, body weight, body fat, sleep, and exercise monitoring. It also received a $25 million strategic investment from Xiaomi Technology, becoming a partner in the Xiaomi ecosystem.

The Company has successively established subsidiaries in Silicon Valley (USA), Paris (France), Beijing, and Singapore, and acquired eDevice, a leading French mobile health enterprise providing device connectivity and remote monitoring services for patients with cardiac pacemakers, for RMB 700 million. In 2017, Andon Health participated in establishing an overseas M&A fund and acquired the U.S. mobile health company Care Innovations (“CI”) in the same year. The Company is recognized as a pioneer, participant, and leader in the global mobile health industry.

Andon Health has cumulatively obtained CE certification from the European Union for 245 products and FDA certification from the United States for 91 products. In addition, multiple blood pressure monitors have passed certifications from the European Society of Hypertension (ESH), the Association for the Advancement of Medical Instrumentation (AAMI) in the United States, the British Hypertension Society (BHS) in the United Kingdom, and DHL in Germany. The company holds 106 independent intellectual property rights, including 90 patents.

Affected by the pandemic, demand for Andon’s COVID-19 prevention products, including test kits, sold in the United States surged significantly, leading to a substantial increase in sales revenue from these products. The net profit for 2022 ranged between RMB 16.5 billion and RMB 17.5 billion, representing a year-on-year increase of 1,715.90% to 1,825.95%.

2. Subcategory Rankings of the Global Expansion Index

(1) U.S. FDA List

(2) EU EUDAMED Listing

(3) UK MHRA List

(4) Australian TGA Rankings

(5) Clinical Trial Rankings

(6) Patent Rankings

Source: PureCert Medical Technology (Guangzhou) Co., Ltd.