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Orthopedic Device Markets in China: The Growing Threat from Domestic Competition

This live session took place on Tuesday, July 24, 2018.

Rapid growth in the Chinese orthopedic market and large foreseeable opportunities have attracted significant investment from both multinational competitors and local players alike over the past decade. However, rising health care expenditure has forced the Chinese government to implement cost-cutting initiatives, such as the Made in China 2025 program, introducing hospital guidelines to purchase more domestic products, and amendments to provincial reimbursement policies, which has significantly altered the competitive landscape in some orthopedic device markets.

Chinese competitors now hold a majority of the market share by unit sales and revenues generated in several low- and mid-end orthopedic device markets, such as in the trauma implant market. Over the years, the quality of domestically-manufactured devices in these markets has improved significantly and surgeons believe that several domestic brands are now on par with those from the traditional large multinationals. Apart from owning accounts such as lower-tier hospitals and those in smaller towns in China that were often deemed unprofitable by traditional multinational companies, —domestic players have now gained considerable share in some orthopedic device markets in top-tier hospitals as well, eroding market shares previously held by multinationals.

With increasing incentives for domestic innovation and manufacturing, acquisition of foreign technologies by Chinese companies, and the protectionist government policies mentioned above, some large domestic firms are now moving up the value chain in the orthopedic device market and making inroads into premium segments such as joint replacement implants. In the face of such intense competition, multinationals need to adapt quickly to local requirements in China, restructure their business models, and leverage the expansion of private health care systems to sustain revenue growth or regain lost market share from the domestic players.

This webinar addressed the following questions:

  • What is the impact of recent government policies on the orthopedic device industry?
  • How has the competitive landscape changed in recent years in key orthopedic device markets?
  • What are some of the strategies employed by domestic companies to gain market share?
  • What are the strengths and weaknesses of domestic and traditional multinational companies in the Chinese orthopedic market?
  • What strategies can the multinationals employ to sustain revenue growth?

Presenters:

Mohith Unny, Senior Analyst, Medtech Insights