The availability of preventative care is an important measure in the quality of healthcare available in a country.
Diagnostic imaging is one of the most important elements of preventative care due to its versatility, offering doctors tools in the assessment and diagnosis of countless diseases and medical conditions. This industry has been experiencing unique growth trends in different geographies due to capital equipment purchase patterns. Diagnostic imaging is an expensive market with high upfront costs as well as purchase agreements that necessitate extra and continual maintenance costs, and in North America and Europe the install base of many machines have matured. In these regions, the majority of diagnostic imaging machines are maintained well past their recommended lifespans, with hospitals opting to purchase replacements parts and upgrades for installed devices. Growth in these markets is relatively slow.
China’s diagnostic imaging market: rising population
However, with China’s rising populations come a rising number of patients suffering from ailments that should be diagnosed or managed through the use of MRI, CT, ultrasound, X-ray or nuclear imaging. This growing pool of patients has led to a high demand for medical imaging. The Chinese diagnostic imaging market is dominated by large global players such as Siemens Healthineers and GE Healthcare who have used their manufacturing bases to establish a foothold in the country. Smaller domestic players such as Mindray have been making headway into capturing a share of the market, and are expected to grow as the Chinese government prioritizes investments in their domestic medical technology industry.
Diagnostic imaging devices such as MRI or PET systems require specialized set-ups, including safety mechanisms for the machines and work flow set ups for radiologists. The high monetary investments needed for these devices are prohibitive for widespread installations in many emerging economies, including China. In China’s tiered hospital system, high-end imaging technology, like nuclear imaging or MRI, is usually only available in tier 3 institutions, or comprehensive hospitals with more than 500 beds. However, the government’s latest 5-year plan includes frameworks for rural hospitals by equipping them with imaging technology. The government’s investment in rural hospitals will lead to a massive boost in sales in the diagnostic imaging market. Tier 3 hospitals prefer to invest in premium systems such as 3T MRI and 128-slice CT to increase reimbursement rates, but the widespread investment in smaller hospitals will lead to sales in low and mid-range devices in the near future.
Domestic manufacturers still face obstacles in the production of high tech devices, but in the next ten years the Chinese imaging market will become dominated by local players, including low-end, mid-range, and premium devices. Although access to core components such as crystals or tubes is limited for domestic companies, especially compared to the supply chains of industry giants, domestic companies have the upper hand when it comes to responsiveness to customer demands and strategic innovation in the Chinese markets. By attracting strong research and development teams and investing in efficient technology, manufacturing barriers can be overcome. Domestic Chinese companies will also benefit from policies that favor local players as public hospitals are encouraged to purchase new equipment and improve their diagnostic imaging offerings.
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