SHANGHAI Aug 18 China may use incentives to
encourage domestic hospitals to use Chinese-made medical devices
as it looks to stimulate the local market and reduce soaring
healthcare costs, a potential threat to the global firms who
currently dominate the sector.
China will speed up the development of its medical device
industry and promote wider use of local products to "effectively
control unreasonable increases in the cost of medical care and
reduce the burden on patients," the country's health ministry
said in a statement posted on its website on Monday.
The overt backing by Beijing for homegrown medical devices
will raise protectionism concerns and is a headache for the
global companies attracted to China by annual growth rates
McKinsey & Co expect at around 20 percent over the next few
Global medical device makers, especially from the United
States, Europe and Japan, now dominate around three-quarters of
China's medical device market, which was worth 212 billion yuan
($34.51 billion) last year, according to figures from the Hong
Kong Trade and Development Council (HKTDC).
"We want to strongly advocate health ministry organisations
to use domestically-made medical devices, especially pushing top
level class III hospitals to use domestically-made products,"
the statement said, citing Li Bin, the head of China's National
Health and Family Planning Commission.
Li was speaking at a medical device conference in Beijing to
promote the domestic sector, the statement said.
A number of recent investigations by Chinese authorities
into foreign firms like Microsoft Corp and car
companies including Audi AG and Chrysler have sparked
concerns that Beijing may be using legal muscle to support
domestic firms at the expense of foreign companies.
China's foreign direct investment inflows in January-July
fell for the first time in 17 months compared with the same
period a year earlier, although Chinese officials stressed it
was not linked to a spate of recent probes into foreign firms
for alleged monopolistic behaviour.
Miao Wei, the head of China's Ministry of Industry and
Information Technology (MIIT), said in the same statement that
China needed to raise the level and quality of its homegrown
medical devices and create incentives for medical institutions
to use locally-made products.
The fast growth of China's medical devices market has drawn
in firms including Siemens AG, General Electric Co
, Koninklijke Philips NV, Johnson & Johnson
and Medtronic Inc. These compete with local
companies such as Mindray Medical International Ltd and
China Resources Wandong Medical Equipment Co Ltd.
Hospitals are the biggest distribution channel for medical
devices, accounting for almost 80 percent of the market,
according to HKTDC figures. There were around 13,400 public
hospitals in China last year, and a further 11,300 private
hospitals, according to a June report from Deutsche Bank.
(1 US dollar = 6.1425 Chinese yuan)
(Reporting by Adam Jourdan; Editing by Matt Driskill)