Weitere Ă€hnliche Inhalte Ăhnlich wie China: Opportunities and Hot-Spots in the MedTech (Medical Device), Pharmaceutical and Healthcare Markets (20) Mehr von L.E.K. Consulting (15) KĂŒrzlich hochgeladen (20) China: Opportunities and Hot-Spots in the MedTech (Medical Device), Pharmaceutical and Healthcare Markets2. CONFIDENTIAL
1
China means different things to different companies ...
... an âattractiveâ
commercial market
... a source of
capital and
investment
... part of my supply
chain solution
© L.E.K. Consulting Australia 2014
3. CONFIDENTIAL
2
China is the worldâs fourth largest medical device market
2.3
3.4
3.5
4.7
5.1
5.5
6.3
8.4
8.9
13.3
14.0
23.2
31.5
155 12525 1203020100 35
France
China
Germany
Japan
USA
Switzerland
Mexico
India
Billions of US$
Brazil
Spain
Russia
Canada
Italy
UK
120.4
Medical device market size by country
(2012)
Note: * Forecasts assuming exchange rate at US$1=RMB5.5 by 2017, according to EIU
Source: Espicom, EIU, L.E.K. analysis
China medical device market size* (2007-17F)
0
5
10
15
20
25
30
35
40
Billions of US$
CAGR=
20.2%
CAGR=
23.1%
17F16F15F14F13F12E111009082007
© L.E.K. Consulting Australia 2014
4. CONFIDENTIAL
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China is the third largest pharmaceutical market in the world and will
account for a quarter of global value growth to 2015
China
Russia
Japan
Canada
U.S.
UK
Asia Pacific
Spain
Germany
Italy
France
15-20%
10-15%
5-10%
0-5%
CAGR*
2010-15F
Pharmaceutical market growth rate* by major market
(2010-15F)
The worldwide contribution of the Chinese pharmaceutical market is expected to continue growing through
2015, eclipsing the growth contribution of the U.S., EU5, and Japan combined
Latin America
Africa
Note: * Constant USD exchange rate
Source: IMS Health, L.E.K. analysis © L.E.K. Consulting Australia 2014
5. CONFIDENTIAL
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The different types of cities have different dynamics and importance
Note: *Number of population in the province times disposable income per capita; **Number of population in the city times
disposable income per capita
Source: L.E.K. interviews and analysis
Groups
Categorized
cities
Sub-segmentation
criteria
City tier
segmen-
tation
City tier
sub-
segmen-
tation
# of
cities
Example
cities
National hubs Beijing, Shanghai and Guangzhou Tier 1 Tier 1 3 Beijing
Shanghai
Guangzhou
Provincial
hubs
Key
provincial
hubs
All provincial
capitals excluding
Guangzhou, such
as Wuhan,
Chengdu and
Nanchang
Total provincial
disposable income*
> RMB100bn
Tier 2 Tier 2-A 16 Wuhan
Nanjing
Chengdu
Non-key
provincial
hubs
Total provincial
disposable income*
< RMB100bn
Tier 2-B 12 Taiyuan
Haikou
Nanchang
Non-hub
cities
Wealthy
city
markets
Other cities, such
as Jingzhou,
Mianyang
Total city disposable
income**
> RMB 25bn
Tier 2-C 20 Wuxi
Yantai
Xiamen
Other city
markets
Total city disposable
income**
< RMB 25bn
Tier 3 Tier 3 236 Jingzhou
Fushun
Zhanjiang
© L.E.K. Consulting Australia 2014
6. CONFIDENTIAL
5
The healthcare landscape encompasses a range of âsegmentsâ
T3, C3
c.13
c.20
Tier 1
City,
Class 3
Hospital
c.50
c.2
c.7
T1, C2 T2, C2
c.3
T2, C3
30
20
40
50
China hospital landscape by average annual inpatients surgeries and hospital segments (2012)
Thousands of inpatients surgeries
10
0
Number of hospitals
9,0008,5008,0007,5007,0006,5006,0005,5005,0004,5004,0003,5003,0002,5002,0001,5001,0005000
County
c.3
T3, C2
Premium segment Value segment Un-addressable
Source: China hospital database, L.E.K. analysis © L.E.K. Consulting Australia 2014
7. CONFIDENTIAL
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Unlocking any commercial potential is dependent on a range of factors
Product range
Sales and
distribution strategy
Tendering and other
areas
Premium or value
segment
Pricing
Service
requirements and
differentiation
Direct vs. dealers
Sales force roles
and incentives
Dealers roles and
incentives
Distributors and
dealers consolidation
Tendering roles and
responsibilities
Changes as a result
of new regulations
Regionalization of
sales force
Customer
segmentation
Account potential
Current and future
sales
© L.E.K. Consulting Australia 2014
8. CONFIDENTIAL
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Tendering and listing are becoming increasingly challenging
Province/City tendering
Hospital source list
Surgeon selection
Tendering and selection
process
Key outsider
influencer
âą Manufacturer
âą Provincial
distributor
More than 20 domestic and
imported brands
A list of 15-20 domestic
and imported brands
c. 2~5 domestic
brands and 1~4
imported brands*
Preliminary
selection criteria
âą Brand awareness
âą Historical performance
âą Completed documentation
and support materials
Brand used
Description
âą Relatively easy to get
onto the list, especially for
a well-known brand
âą Sets the price ceiling for
the brandâs products in
the region
Note: *For mid and lower tier markets
Source: L.E.K. interviews and analysis
âą Local distributor
or provincial
distributor
(in target hospitals)
âą Distributor relationship and
access
âą Product payment structure
âą Product price and quality
âą Fierce competition
âą Many brands are
excluded at this stage
âą Prices are negotiated
âą Level 2 Distributors âą Product quality
âą Manufacturersâ pull from
marketing activities
âą Patient affordability
âą Distributorâs recommendation
and/or promotions
âą Surgeons select from
brands that are on the
hospital list
© L.E.K. Consulting Australia 2014
9. CONFIDENTIAL
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Innovation
Indigenous innovation in MedTech sector has been listed as a key initiative in the
12th Five-Year Plan (2011-2015) published in 2011
Domestic firms are encouraged to enhance R&D efforts in order to develop
indigenous technology and innovation, making them more competitive against
foreign competitors
Source: L.E.K. research and analysis
Industry
restructuring
and upgrade
A series of goals has been set for the development of MedTech sectors during the
12th Five-Year Plan. By 2015: 200 new patents of MedTech; 50-80 innovative
medical devices; 40-50 innovative high-technology medical device companies
c.RMB1.5billion special supporting fund from the government in 2013 and a total
c.RMB10billion investment to support domestic MedTech innovations by 2020
Three key themes in healthcare initiatives in the 12th Five Year Plan
Developing innovation is featured prominently in Chinaâs 12th Five
Year Plan (2011-15)
Increase
coverage and
quality of
services
Increase insurance coverage
Improve public hospital services
Improve services for family planning, women, children, elderly and disabled
Guarantee product safety
© L.E.K. Consulting Australia 2014
10. CONFIDENTIAL
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More than 10 provinces have set up at least one MedTech Science
Park and the central government targets to build another 8-10 by 2015
Chongqing
Jiangsu
Beijing
Guangdong
Hunan
Zhejiang
Hubei
Liaoning
Heilongjiang
Jiangxi
Shanghai
Henan
MedTech science park locations in China
(2013)
By 2013, 12 provinces and
municipalities had set up at least
one MedTech Science Park
The central government plans to
build another 8-10 MedTech
Science Parks by 2015
Beyond MedTech science parks,
China established more life
science parks across the country
- there were already more than
120 life science parks in China
in early 2010
Source: Local MedTech science park websites, Ministry of Health (MOH), 12th Five-Year Plan, L.E.K. research and analysis
Province with MedTech
Science Park
Province without
MedTech Science Park
© L.E.K. Consulting Australia 2014
11. CONFIDENTIAL
10
Healthcare infrastructure is at the early stages of a long transition
Healthcare provider
landscape (2009)
Level 3
(1,233)
Level 2
(6,533)
Level 1 & Community
Healthcare Center (CHC)
(10,825)
Community Healthcare
Station (CHS)
(22,092)
Township Healthcare Station
(THS)
(39,627)
Healthcare provider
landscape (2020*)
Urban Rural
Ad-
vanced
Hospitals
(1,559)
Community
Healthcare
Station
(22,092)
Village Clinic
(632,770)
Community
Healthcare
Center
(5,216)
Township
Healthcare
Station
(38,475)
County /
District
Hospital
(6,056)
Primary
healthcare
Initial diagnosis
Essential medicines
prescription
Chronic disease
management
Public hygiene
services
Physicals
Vaccination
Healthcare education
Advanced
healthcare
Care for severe or
rare diseases
Advanced diagnosis
and treatment
Scientific research
Advanced
secondary
healthcare
institution
Primary
healthcare
institution
(PHCI)
Services provided
© L.E.K. Consulting Australia 2014
12. CONFIDENTIAL
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Further information and insights
Expanding in China MedTech Market: Where To Go From Here, In Vivo
Pricing and reimbursement for high value therapies in China, BIO Buzz
Tackling Chinaâs EDL Challenge: Navigating the Changes and Planning for Success,
PharmAsia Newsletter
Investing in Health, EuroBiz
Looking After Chinaâs Elderly, China Business Review
Hospitals Adopt New Strategies to Boost Profitability, but Still Face Deep Challenges:
A New Imperative for MedTech
Biopharma & Life Sciences Outlook 2013
Articles can be found on our website: http://www.lek.com/our-publications/articles
www.lek.com/medtech
www.lek.com/lifesciences
© L.E.K. Consulting Australia 2014
13. CONFIDENTIAL
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China means different things to different companies ...
... an âattractiveâ
commercial market
... a source of
capital and
investment
... part of my global
supply chain
solution
Assisting Australian Companies to Enter China
an AusBiotech/ Austrade initiative
© L.E.K. Consulting Australia 2014