On December 28, 2021, 10 departments including the Ministry of Industry and Information Technology, the National Health Commission, the National Development and Reform Commission, and the Ministry of Science and Technology jointly issued the "14th Five Year Plan" for the Development of the Medical Equipment Industry (hereinafter referred to as the "Plan"). The "Plan" proposes that by 2025, the foundation of the medical equipment industry will be advanced and the modernization level of the industry chain will be significantly improved. Mainstream medical equipment will basically achieve effective supply, and the performance and quality level of high-end medical equipment products will be significantly improved, forming a comprehensive support capacity for public health and medical health needs.

The medical equipment industry chain has four basic characteristics

Medical equipment refers to high-tech equipment developed for the purpose of improving and enhancing people's health, including hardware, software, integrated systems, and support systems.

The medical equipment industry is one of the symbols of a country's manufacturing and high-tech cutting-edge level, involving multiple industries such as biology, medicine, machinery, electronics, metallurgy, chemical engineering, information technology, etc. It is a multidisciplinary, knowledge intensive, and capital intensive high-tech industry. Its industrial chain mainly has four basic characteristics.

One is the long industrial chain. The medical equipment industry chain includes three major links: upstream raw material and component manufacturing, midstream medical equipment research and development, manufacturing, and services, as well as downstream wholesale and retail, medical and health industry, and household users. Covering economic and social activities such as manufacturing, service, and social governance (medical insurance, industry regulation).

Secondly, there are many enterprises on the chain. The medical equipment industry belongs to a typical multi variety and small batch industry, with each product involving different fields and disciplines such as electronic devices, mechanical manufacturing, biochemistry, and medical materials. The industry chain is complex and there are many participating enterprises. Taking the ventilator as an example, there are over 850 upstream enterprises supporting it nationwide, including general mechanical processing, electronic components, software enterprises, as well as specialized turbine fans, electronic chips, various sensors, solenoid valves, oxygen sources and other core component production and manufacturing enterprises.

Thirdly, there is a large investment in innovation. Medical equipment technology is complex, with high requirements for product development and manufacturing, involving multiple disciplines and knowledge intensive. Often, product performance updates and quality improvements are achieved through interdisciplinary integration. The research and development cycle is long, ranging from 3-5 years to 8-10 years to create an original high-end equipment. Therefore, the investment intensity required for research and development is high, and the combination of industry and finance is its biggest characteristic.

The fourth is strict industry supervision. Medical equipment is related to people's life safety and physical health. Countries around the world have established a complete legal and regulatory system for the design, research and development, production, sales, maintenance services, operation and use of medical equipment. The regulation of the entire industry chain is different from other industries.

The medical equipment industry chain in China is relatively mature

After years of development and technological innovation, China's medical equipment industry has formed a relatively mature industrial chain.

One is the rapid improvement of innovation capabilities, with some products reaching international advanced levels. In recent years, the Ministry of Industry and Information Technology, the Ministry of Science and Technology, and the National Development and Reform Commission have deployed a number of high-tech research projects, innovative development applications, and engineering industrialization projects for high-end medical equipment and key components. The National Drug Administration has issued medical device registration certificates for over 100 innovative products through the green channel. Government guidance and urgent market demand have greatly stimulated the innovation enthusiasm of enterprises. A batch of key technologies have made breakthroughs, breaking foreign monopolies in key components such as superconducting magnets, electron accelerators, and radio frequency/spectrometer. The third-generation heart stents, orthopedic surgical robots, and focused ultrasound treatment systems have reached international advanced levels. The production of electrocardiogram monitors, DR, fully automated biochemical analyzers and other products is leading globally.

Secondly, the market size is large and the industry continues to grow rapidly. In 2020, the scale of China's medical equipment market reached 840 billion yuan, with a compound annual growth rate of 11.8% in the past five years. The huge market demand has promoted the rapid growth of China's medical equipment industry, achieving a revenue of 410 billion yuan in 2020 and a compound annual growth rate of 16% in the past five years. Domestic enterprises account for over 10% of global revenue ($451.9 billion globally), and China has become an important global medical equipment production and manufacturing base.

Thirdly, the manufacturing system is basically sound, and characteristic industrial clusters are developing rapidly. We have formed a product series of over 1100 categories in 22 major categories, covering various stages such as diagnosis, treatment, and rehabilitation, which has preliminarily met the basic needs of the health industry. More than 65% of production enterprises have gathered in Guangdong, Jiangsu, Zhejiang, Shandong, Hebei, Shanghai, and Beijing, forming several collaborative and distinctive industrial clusters.

The fourth is the deep development of open cooperation, and the market competitiveness of local enterprises is gradually increasing. Global medical equipment giants such as GE Healthcare, Philips Healthcare, Siemens Healthineers and Medtronic have invested and built factories in China, driving the overall level of medical equipment in China. Ethnic enterprises have rapidly risen, with Shenzhen Mindray, Shandong Xinhua, Beijing Lepu and other enterprises entering the top 50 in the global medical device industry. The products of enterprises such as Shenzhen Mindray, Shenyang Neusoft, Shanghai Lianying, and Shandong Xinhua are sold to more than 110 countries and regions worldwide.

The fifth is to accelerate the intelligent transformation of enterprises and promote the improvement of quality brands. Leading enterprises such as Shenyang Neusoft, Shenzhen Mindray, and Shanghai Lianying have achieved the goals of remote operation and maintenance standardization, equipment failure rate reduction, and maintenance cost reduction by implementing intelligent manufacturing upgrading and transformation, focusing on breaking through core key technologies, formulating standards and specifications, and establishing experimental verification platforms. A group of suppliers have also tailored intelligent manufacturing system integration solutions for the medical equipment industry, actively promoting the intelligent transformation of small and medium-sized medical equipment enterprises.

Sixth, the medical equipment industry chain has been tested in the fight against the COVID-19. Since the outbreak of the COVID-19, the medical equipment industry has actively organized production and worked overtime to ensure supply, which has provided strong support for the national epidemic prevention and control to achieve major strategic results and the global epidemic resistance, in the face of the pressure of returning to work and production in China and the growing tension in the global supply chain.

However, compared to advanced medical equipment countries, China's medical equipment industry chain still has many shortcomings and weaknesses, such as weak innovation capabilities of enterprises, poor product reliability and stability, low industrial concentration, and the need to improve the industrial ecology.

Six aspects to promote innovative development of the medical equipment industry

During the 14th Five Year Plan period, we should fully leverage the advantages of the new national system and the super large-scale market, with enterprises as the main body and health demand as the guidance, enhance the modernization level of the industrial chain, and promote the innovative development of the medical equipment industry.

One is to strengthen top-level design and guide the high-quality development of the industry. Fully leveraging the leading role of the Plan, ten departments including the Ministry of Industry and Information Technology, the National Health Commission, the National Development and Reform Commission, and the Ministry of Science and Technology have joined forces to coordinate and mobilize resources and forces from all aspects, strengthen the coordination of policies, plans, standards, certifications, regulations, and other aspects, and jointly promote the high-quality development of medical equipment.

The second is to consolidate the industrial foundation and promote the optimization and upgrading of the entire industrial chain. Encourage cross disciplinary cooperation between the medical equipment industry and industries such as new materials, electronic information, aerospace, nuclear industry, shipbuilding, etc., aiming to focus on addressing the bottlenecks and shortcomings of the basic materials, core components, key components, medical software, basic processes, as well as industrial technology foundations such as intellectual property rights, standard formulation, testing and verification, certification and recognition, information security, etc. as determined in the "Plan", in order to achieve strong innovation and high added value A secure and reliable industrial chain and a solid foundation for the supply chain.

The third is to focus on key areas and improve the industrial chain of key products. Focusing on key areas such as diagnostic and testing equipment, treatment equipment, monitoring and life support equipment, traditional Chinese medicine diagnosis and treatment equipment, maternal and child health equipment, health rehabilitation equipment, and high end implant intervention equipment, systematically sorting out key upstream and downstream links and supply chain relationships of key medical equipment products, and compiling a supply chain graph of the main product industry chain. From the five external environmental factors of technology, economy, politics, society, and environment, suppliers, organizations From multiple dimensions such as customer and environment, we will assess the competitiveness and potential risks of the industrial chain supply chain, focusing on filling the gaps and forging the strengths.

The fourth is to promote cross-border integration and enhance the competitiveness of the entire industrial chain. Based on the advantages of industrial scale and large industrial supporting facilities, fully leverage the advantages of the new national system, encourage cross industry cooperation between state-owned enterprises, advantageous enterprises, and medical equipment enterprises in the fields of aerospace, nuclear industry, general machinery, new materials, etc., and supplement the shortcomings of advanced basic materials, components, supporting reagents, and manufacturing processes; Grasp the future development trend, leverage the advantages of information communication, artificial intelligence and other fields, from original innovation, technological breakthroughs, pilot demonstrations, to promotion and application, deepen the cross domain integration of medical equipment with electronic information, the Internet of Things, artificial intelligence, 5G and other fields, accelerate the development of intelligent and new medical equipment, and build distinctive strengths; Continuously improve the domestic production and supply system, and enhance the competitiveness of the entire industrial chain.

The fifth is to adhere to the collaboration between medical and industrial sectors, and promote the ecological construction of the supply chain. Support medical equipment enterprises to deepen cooperation with relevant scientific research institutes and medical institutions, strengthen the training of cross medical and industrial talents, and fully mobilize the enthusiasm of medical institutions and medical personnel to participate in the development of innovative medical equipment products. Cultivate a group of ecologically dominant industrial chain "chain owners" and advanced medical equipment manufacturing clusters, closely collaborate with upstream and downstream enterprises, strengthen resource, technology, and equipment support, and form a highland for medical equipment research and development and manufacturing. Further improve the green channel for registration and approval of innovative medical devices. Promote the application demonstration of medical equipment, and connect the research and development of medical equipment to the final "one kilometer" of the application industry chain.

Sixth, deepen open cooperation and accelerate integration into the global value chain. Strengthen international industrial security cooperation and promote diversified industrial and supply chains. Play the role of multilateral and bilateral cooperation and dialogue mechanisms, promote cooperation in various fields such as research and development design, clinical applications, and technical standards, and actively create an open, transparent, inclusive, and fair international market environment. Encourage leading backbone enterprises in the industry to innovate cooperation models such as capital, technology, and brand, integrate high-quality resources from domestic and foreign fields, layout global development, strengthen the leadership, integration, and organizational collaboration of industrial chains, supply chains, and innovation chains, and create a leading enterprise in the industrial chain with global resource allocation capabilities and core competitiveness. Relying on the "the Belt and Road" construction, we will promote high-quality medical resources to drive complete sets of medical equipment to "go global" and provide high-level medical and health services for countries and regions along the line.

(This article is from Shizhenshan, Institute of Comprehensive Technology and Economics for Mechanical Industry Instruments and Meters.)

(Editor in Chief: Shen Jiaping, Lv Qian)