via Business Week: Health-Care Reform, China Style from Shaun Rein

A quick look at the opportunity for medical devices, from someone with a report to sell (not that there is anything wrong with that).

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In March, China’s State Council announced an allocation of $123 billion toward health-care reform. Under the plan, by next year 90% of China’s citizens will be covered by a universal health-care system and health-care facilities will be upgraded, including construction of 30,000 hospitals, clinics, and care centers across the country. Instead of focusing on large magnet hospitals (where queues to see rock-star-like doctors regularly top eight hours) the government plans to build local clinics to treat smaller problems and act as hubs directing traffic to bigger hospitals.

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While the U.S. medical device market has been hit by the financial crisis, China’s is estimated to almost double in size between 2006 and 2014 to $28 billion a year, making it a potential growth driver for foreign firms.

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With fattier diets and problems with smoking and pollution, Chinese are increasingly afflicted by the same diseases that are prevalent in the developed world: cancer, cerebrovascular disease, and cardiovascular disease. The number of cardiac patients in China is growing at a 20-30% annual rate, with the market for cardiovascular stents increasing by 40% annually.

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The majority of respondents [to the author's market research report] said that they were willing to pay 20% or more for Western device brands because they believed them to be more reliable.

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China’s Ministry of Health has also stated that it will place controls on [medical device] purchases exceeding 5 million yuan (roughly $710,000) in an effort to reduce costs.

Right now most domestic producers focus on low-end devices, with 90% of high-end devices still being sold by foreign companies.

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