In-depth research report on the medical equipment industry: When will the localization spring arrive?

The medical equipment market has large capacity and high growth and sustainable. Roughly calculating medical equipment accounts for 35%-40% of the market share in the medical device market. It is estimated that the annual sales revenue of the whole industry is over 100 billion. In recent years, the large increase in the number of visits has led to rapid growth in medical equipment . The average annual growth rate of sales in the medical equipment industry in 2008-2012 was as high as 25%. We expect this growth rate to continue in the next few years.

At present, the localization rate of medical equipment is generally low. Due to technical gaps, purchasing habits, etc., the procurement of medical equipment in domestic medical institutions (especially in the middle and high-end) has long been dominated by foreign brands represented by GE, Siemens and Philips, and the overall localization rate is expected to be less than 40%.

Policy support, the domestic medical equipment spring is coming. 2014 is the policy year for medical devices in China. For the first time, it has explicitly supported domestically produced equipment at the national level, and has quickly launched a series of “combination punches” to ensure that the implementation of policies is in place in terms of operability. The "spring" of domestic medical equipment is coming soon. With the increasing proportion of centralized procurement of medical equipment in recent years, the government's influence on hospital bidding is increasing. In the future, the “Domestic Excellent Equipment Catalogue” will gradually become the main reference for hospitals to purchase domestically produced equipment, and its status is even as good as the “medical insurance catalogue” in drug procurement.

The future development of the industry is indeed clear, and domestic leading enterprises have multiple benefits. First of all: the overall localization rate is expected to increase rapidly, and the market space can be replaced very much. Secondly, the concentration of domestic leading enterprises will increase, and a large number of small enterprises lacking independent research and development will be blocked from the catalogue and the market share will shrink. In addition, the domestic brand product structure is expected to be optimized, the proportion of high-end products will increase, and the profitability will rise.

Investment suggestions and investment targets: For domestic medical equipment companies, in the next few years, driven by top-down policies, it is expected to usher in a good development opportunity for the “scale and share” of the market, and at the same time increase brand awareness and product structure. It is expected to be optimized, leading enterprises can seize the development opportunities and focus on improving product quality. It is expected that from the past, the “Red Sea”, which relies solely on price competition, will enter the “blue ocean” jointly created by the policy and the market. From the subdivided products, we believe that the higher the unit price and the lower the localization rate, the more obvious the benefits, including CT, MRI, color ultrasound, X-ray machine, inspection and analysis instruments, ECG, and monitoring.

Specific to listed companies, we believe that the benefits of large equipment companies will be more obvious, and the growth flexibility will be greater. At the same time, it is necessary to pay attention to the company's growth into relevant new fields through mergers and acquisitions. For example, the probability of mutual penetration between imaging devices is high. In summary, it is recommended to pay attention to China Resources Wandong, Kehua Biological and so on.

Risk warning: policy implementation is lower than expected

First, the first batch of excellent domestic medical equipment catalogue entered the public notice

Recently, China Medical Equipment Association publicized the "Excellent Domestic Medical Equipment Selection Results" on its official website. This selection is the first domestic equipment catalogue, mainly involving X-ray machines, color ultrasound and automatic biochemical analyzers. The final 27 companies 96 products were selected. Among them are 6 A-share listed companies, including China Resources Wandong (4 DR devices), Kehua Bio (5 automated analyzers), Dyre Medical (8 automated analyzers), Neusoft Group (5 ultrasounds, 1 DR), Hejia shares (1 DR), Xinhua Medical (1, DR). Among them, Wandong has 4 products in the category of 500mA digital X-ray machine, the advantage is very obvious. Neusoft has selected 5 products in the B-type color ultrasound category. The selection of various types of biochemical analyzers is based on Mindray, Dyre Medical and Kehua Bio.

In-depth research report on the medical equipment industry: When will the localization spring arrive?

Second, the demand for medical equipment continues to be strong

According to the statistics of the Ministry of Industry and Information Technology, the output value of medical equipment and equipment of enterprises on a national scale in 2013 was 188.86 billion yuan. According to the medical device industry association, the total industry sales in 2013 has reached 328.7 billion yuan. Among the sales channels of medical devices, hospitals account for nearly 80% of the market, becoming a “market decision maker” for medical devices. Rough calculation, in which medical equipment accounts for 35%-40% of the market share, the industry's annual sales revenue is expected to be more than 100 billion.

In-depth research report on the medical equipment industry: When will the localization spring arrive?

In recent years, the large increase in the number of visits has led to rapid growth in medical equipment. The average annual growth rate of sales in the medical equipment industry in 2008-2012 was as high as 25%.

In-depth research report on the medical equipment industry: When will the localization spring arrive?

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