The significant downturn in business activities in the Chinese medical sector because of the government’s anti-corruption campaign is “relaxing already” according to Siemens Healthineers chief financial officer Jochen Schmitz.
Schmitz was speaking at the Jefferies 2023 London Healthcare Conference being held in London, UK, from 14 to 16 November.
The Chinese market represents around 15% of global revenue for Siemens Healthineers, which has a market cap of $57bn. In July, the Chinese Government launched an anti-graft campaign that targeted corrupt doctors and senior hospital staff – the effect was a near freeze in medical equipment demand. Siemens Healthineers took a hit in Q3 2023 revenue, also affected by issues at cancer treatment business Varian and Covid-19 test sale drop-offs.
Schmitz said that the government initiative “stalled purchasing behaviour in the industry” and was “black and white” in nature, citing pushback from the Chinese healthcare system. He said that it resulted in approximately 30% less order intake for Siemens Healthineers.
Despite the lower demand from China impacting sales forecasts, Schmitz said the situation is only temporary, adding that Siemens Healthineers assumes the effects will not be present by Q1 2025. Schmitz said that the situation did not affect the company as much as it could have, as it sells directly rather than relying on distributors.
Schmitz added that the freeze will also create a pent-up demand for equipment in 2025, saying that the revenue from China is “not lost, just shifted”.
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Siemens Healthineers posted better-than-expected Q4 results and expects comparable revenue growth of 4.5% to 6.5% for the 2024 fiscal year compared to 2023.
In November, the company laid off 300 members of staff from its diagnostics and manufacturing division in a bid to save €300m.
Responding to rumours that Siemens Healthineers is exploring options for its diagnostics division, Schmitz said its diagnostics arm remains a core business along with its imaging devices and accessories.