China Medtech: Medical equipment procurement continued to slow down YoY in Q226

Research evidence excerpt

China Medtech: Medical equipment procurement continued to slow down YoY in Q226

in Kavya Deshpande

Q226 to price competition as local firms won some bids with relatively low prices. Key Analyst

market share developments include: 1) MRI and radiotherapy. United Imaging gained kavya.deshpande@ubs.com

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significant share from Philips in MRI and Elekta/Varian in radiotherapy. 2) Surgical

robots. MicroPort MedBot and Edge Medical gained meaningful share from Intuitive

Surgical. 3) CT. GE Healthcare lost share to Siemens Healthineers and Philips. 4) GI

endoscopes. Olympus again lost share to Fujifilm, after reversing the trend in Q126.

Fewer CMC VBPs vs. Q126; CT, ultrasound and DR remain key categories

We expanded our research scope from the VBPs for county-level medical consortiums

(CMC) organised by provinces to those organised by low-tier territories, reflecting the

increasing decentralization of procurement activities. In Q226, total procurement value

came in at Rmb993m, down notably from Q225 when provincial CMC VBPs alone

reached Rmb1,849m. On budget savings, provincial-level CMC VBPs saw an average

saving rate of 55% (vs. 52% in Q126). However, the budget saving rate for all VBPs in

our analysis was only 33%, suggesting that locally organized VBPs generally resulted in

more modest price reductions. By product, CT scanners/ ultrasound systems/ DR

remained the largest categories, representing 35%/ 24%/ 14% of total procurement

value, with budget saving rates of 41%/ 47%/ 20%. Among major companies, Mindray,

Neusoft and GE Healthcare won the largest amount of bids.

Lackluster funding support from local governments' bond issuance

Our tracker of local government special bond issuance (see page 3 for details) points to

continued weakness in Q226.