Jian Shi Medical's Wang Xin on the Transformation and Opportunities in Minimally Invasive Surgery

Surgery has always been one of the hottest topics in the medical device sector. Today, minimally invasive surgery, with its advantages of less trauma, reduced pain, fewer complications, and shorter hospital stays and recovery times, is highly favored by both physicians and patients, becoming the mainstream approach in surgical practice.

With the widespread application of surgical procedures, the market for minimally invasive surgical instruments has also grown rapidly. Public data shows that in the United States in 2019, the number of minimally invasive surgical procedures per million population was 16,877, with a penetration rate of 80.1%. In China, however, there were only 8,514 procedures per million population, with a penetration rate of 38.1%.Compared with developed countries such as the United States, China’s minimally invasive surgery sector still has immense room for growth.。

To address the issue of low penetration rates, on one hand, domestic companies such as Genesis have entered the minimally invasive surgery sector, employing strategies of product and technological innovation to capture market share; on the other hand, policies such as centralized procurement have reduced the medical burden on patients, jointly driving the development of China’s minimally invasive surgery industry.

For example, in 2020, a four-province alliance comprising Yunnan, Guizhou, Chongqing, and Henan launched centralized volume-based procurement for staplers, meshes, and films.Average price reduction for staplers: 73.13%; maximum reduction: 97.76%. In 2021, Chongqing jointly conducted centralized procurement with Hainan, Yunnan, Guangxi, Qinghai, Henan, Xinjiang, and the Xinjiang Production and Construction CorpsDisposable endoscopic linear cutter staplers and components, with an average price reduction of 79.2% and a maximum reduction of 97.9%;In December 2021, Guangdong Province led a 16-province alliance in centralized procurement.Ultrasonic Scalpel Tips: Average Price Reduction of 70.11%, Maximum Reduction of 93%。

However, centralized procurement has also had a significant impact on the minimally invasive surgery industry.

Wang Xin, Chairman and CEO of Genesis Medical, believes that:First, volume-based procurement is a new market rule, where the superior prevails over the inferior and only the fittest survive.. Among them, enterprises that fail to adapt to the reforms are likely to be eliminated, while those capable of controlling costs and ensuring quality will capture the future market.

Second, for the industry, volume-based procurement helps enhance corporate innovation.Centralized volume-based procurement guarantees sales volumes for winning bidders, while also improving payment collection and reducing selling expenses. To maximize profits, enhance cost efficiency, and secure future market share, winning enterprises must devote greater efforts and resources to the research and development of core technologies. Meanwhile, companies that fail to win bids must also pursue innovation and develop next-generation products; otherwise, they risk being eliminated from the market.Therefore, in the long run, volume-based procurement is conducive to corporate innovation, which in turn promotes the healthy development of the industry.

Third, centralized procurement has sounded the horn for industry consolidation.In the industrial sector, centralized procurement has led to greater market concentration, enabling winning bidders to capture sufficient market share. This allows them to leverage economies of scale to reduce production costs and lower healthcare expenses for the public, thereby enhancing their competitive edge. Meanwhile, this market consolidation will phase out traditional companies with severe product homogenization and a lack of innovation, significantly improving resource utilization efficiency. In the distribution sector, channels are simultaneously evolving toward greater concentration and scale. Following centralized procurement, substantial changes will occur across production, distribution, and usage stages, as well as in the broader operating environment. Companies must anticipate these shifts and proactively drive channel transformation.

So, how can innovative companies avoid being eliminated? How can they become leading enterprises in the field of minimally invasive surgery?Genesis Has Made Numerous Attempts After Acquiring Reach Surgical and Nantong Huaerkang。

Impacted by the successive rollout of centralized procurement, the market landscape in the minimally invasive surgery sector is undergoing drastic changes. In response, Genesis Medical’s General Surgery Division (including Reach Surgical and Nantong Huaerkang, among others) has implemented countermeasures across three key areas.

First, actively participate in bidding competitions.. According to reports, Reach Surgical, a subsidiary of Genesis Medical, has repeatedly won bids in multiple centralized procurement programs for surgical staplers and ultrasonic scalpels, resulting in substantial growth in product sales. For instance, Reach Surgical’s ultrasonic scalpels and surgical staplers were successfully selected in the centralized procurement of ultrasonic scalpels and surgical staplers in Fujian Province, the centralized procurement of surgical staplers in Hunan Province, the 16-province centralized procurement of ultrasonic scalpels led by Guangdong Province, and the multi-provincial alliance centralized procurement of laparoscopic surgical staplers in Chongqing. In some cases, its entire product lines were awarded contracts.

2021,Reach Surgical has seen a significant increase in sales of its minimally invasive surgical products, leading to an expanded market share. This growth has also accelerated the market entry of its innovative products, thereby shortening hospital development cycles and reducing associated costs.

Second, ensure product qualityFor innovative enterprises, winning a bid in centralized procurement is only the beginning of the story. The manifold increase in production volume may impact product quality. Therefore, after being acquired by Genesis, Reach Surgical strengthened its supply chain management and quality control systems to ensure product quality. Meanwhile, Reach Surgical also improved production efficiency through process innovation, enabling its annual production volume to exceed 1 million units in 2021.

Third, Increase Investment in InnovationTo compete in the future market, companies must continuously innovate and launch new products that meet clinical needs to have a chance of success. Therefore, in addition to its existing Tianjin Surgical Product R&D Center, Reach Surgical has also established an R&D center in Minnesota, USA, to increase the development of minimally invasive surgical instruments, providing clinicians with advanced and cost-effective minimally invasive surgical products.

Notably, Genesis has entered into strategic partnerships with South Korean companies LivsMed and Sejong Medical, securing exclusive agency rights for their full-angle laparoscopic hand-controlled robotic arms and trocar products, respectively.As a result, Genesis has built a diverse product portfolio comprising surgical staplers, ultrasonic scalpels, sutures, trocars, and laparoscopic hand-controlled robotic arms.。By leveraging its winning bid products as an entry point, Genesis can rapidly introduce its other minimally invasive surgical products to the market, thereby consolidating its domestic position in minimally invasive surgery.Leading Enterprise Status。

After nearly two years of implementing centralized procurement policies, the competitive landscape of the minimally invasive surgery market has undergone significant changes. In the field of surgical staplers, imported products previously held over 60% of the market share, while domestically produced products accounted for less than 40%. Currently, driven by promotions from domestic manufacturers and the impact of centralized procurement policies, the market share of domestically produced surgical staplers has exceeded 50%. In the field of ultrasonic scalpels, Johnson & Johnson (USA) previously dominated more than 90% of the Chinese market. Today, domestically produced ultrasonic scalpels have broken the foreign monopoly, capturing 20%-30% of the domestic market.

It can be said that the volume-based procurement (VBP) policy has significantly increased the localization rate of medical devices. Meanwhile, winning bidders such as Genesis have seized substantial development opportunities, including rapid market expansion, promotion of products not included in VBP, and transformation into platform-based enterprises.These changes represent only a fraction of the dramatic shifts in the market, and only those capable of adapting to them stand a chance of evolving into truly great enterprises in the future.。

Currently, certain provinces and municipalities in China have included minimally invasive surgical products, such as staplers and ultrasonic scalpels, in centralized volume-based procurement programs. However, another segment of the market remains open to free competition among enterprises. Meanwhile, numerous domestic medical device companies have launched overseas expansion initiatives, aiming to market Chinese-made devices globally to increase revenue scale and improve profit margins.

Regarding free-market competition and the global expansion of medical devices, Genesis offers unique insights. First, leveraging its extensive product portfolio, Genesis provides integrated minimally invasive surgical solutions to clinical practice in the minimally invasive surgery market, creating synergistic effects. Second, Genesis has strengthened its R&D efforts by establishing surgical product research and development centers in Tianjin, the United States, and other locations, thereby accelerating the development and commercialization of Reach Surgical’s second-generation ultrasonic surgical products. Meanwhile, Genesis has expanded Reach Surgical’s sales team, which previously consisted of several dozen employees, to drive product commercialization. Additionally, Genesis places significant emphasis on product quality, ensuring high-performance standards for all manufactured products. Finally, Genesis relies on demonstrated clinical efficacy to leverage product advantages and rapidly penetrate the market.

For example, in terms of product advantages,Reach Surgical's New Generation of Electric StaplersThe staple cartridge, designed for use with disposable blades, offers sharp and efficient performance without causing tissue damage, ensuring optimal staple formation. With a wide 55-degree articulation angle, it provides greater operational flexibility, facilitating precise maneuvering in confined spaces. Additionally, the product features electric firing, a 15-second pre-compression reminder, a safety lock indicator, and battery level monitoring, enabling clinicians to perform surgeries more smoothly and conveniently.

Reach Surgical's New Generation Ultrasonic Scalpel DeviceIt features full-process intelligent tissue adaptation technology, enabling faster cutting speeds, reduced lateral thermal damage, and safer vessel sealing, while allowing for safer operation near vital organs, thereby enhancing surgical safety. Additionally, the ultrasonic scalpel transducers from Reach Surgical, Inc. are equipped with chips that detect the end effector and intelligently interact with the main unit. By optimizing energy output based on the parameters of each transducer handpiece and end effector, they ensure consistent and stable amplitude of the transducer handpiece, improve cutting efficiency, and shorten surgical time.

Leveraging the high-quality performance of its minimally invasive surgical products, Genesis has outperformed numerous international brands to become a primary supplier in over 500 major hospitals across China. Furthermore, it has successfully penetrated international markets in Europe, the Americas, and South Korea, emerging as a leading Chinese exporter of surgical instruments.

Wang Xin Shares Four Personal Insights on the Global Expansion of Medical Devices: First, pay attention to patent FTO (Freedom-to-Operate) issues by analyzing valid patents and invalidated prior art to avoid infringing on others’ patent rights and incurring punitive damages.

Second, ensure high-quality export products and competitive pricing. Overseas, product prices are relatively higher than in China, but operating costs are also higher, including cross-border transportation, local distributor management, and responding to changes in local policies. This requires companies expanding overseas to reduce costs through efficient management and set competitive product prices to better penetrate the market.

Third, customer service must be timely and efficient. The medical device industry is not a “one-off transaction”; it requires sustained post-sale support. This necessitates that companies expanding overseas establish comprehensive local service centers to promptly address customer issues, thereby increasing their market share.

Fourth, companies expanding overseas need to consider their future strategic layout. Is the goal to bypass domestic centralized procurement and make quick profits abroad, or is there a medium- to long-term plan for globalization? In fact, foreign customers place great emphasis on medium- to long-term partnerships, making it difficult to gain traction through short-term trade alone. Meanwhile, prices for medical device products overseas are declining year by year, and competition is intensifying. Therefore, domestic enterprises should formulate a solid globalization strategy before proceeding with overseas expansion.