Author Archives: Mike Guo

Future of the China medical device industry has a mixture of challenges and opportunities

There was no shortage of insights about the emerging Chinese market at last month’s [Medical Device & Diagnostics Symposium 2010 in Waltham, MA. Sponsored by several Chinese-based organizations such as the Chinese-American BioMedical Association (CABA), the event hosted speakers such as Xuan Kong, Vice President of NeuroMetrix Inc, and Philip Zhang, co-founder of Milstein Zhang & Wu.

Xuan touch on universal business risks (e.g. satisfying multiple parties, including patients, physicians, insurance providers, and the U.S. Food and Drug Administration) and clinical/regulatory risks (i.e. standard of care vs. enabling technologies). But he also discussed challenges of entering emerging markets, such as China, where he emphasized the importance of having a viable business model, marketing, distribution, and IP protection.

Philip also discussed the importance of IP protection in medical devices, highlighting the importance of the “freedom to operate” before briefly outlining the patent law system in China. Several distinctive characteristics include the oriental philosophy (meaning no one shall own the power and fruit of intelligence) and double standard – strong on paper, but weak in enforcement. See Lux Research’s report “Taming the Water Dragons: Opportunities and Challenges in the Chinese Water Sector for more on this. (client registration required).

Due to the absence of a scheduled speaker, the symposium failed to touch on investment opportunities in the medical device industry, especially in China. But our research reveals potentially huge opportunities fueled by increasing demand from a fast-aging population, rising income, and on-going healthcare reform; a cheap but capable workforce from local graduates as well as the waves of Chinese returnees from overseas incentivized by China’s Thousand Talents Program; and China’s disadvantage in technology and innovation. There are overwhelming advantages for multinational corporations in high-end instruments, such as magnetic resonance imaging, as well as for local companies in low-end products, such as medical disposables. Further opportunities await in China’s market for mid-end and/or affordable high-end medical devices (such as GE’s B30 patient monitor, as well as in the country’s small cities/rural areas. Among the possible strategies for market entry: local partnerships like Weigao’s partnership with Medtronic, and local innovations, such as [GE’s multiple R&D centers in China (see the November 30, 2010 LRTJ – client registration required).