China Medical Device Industry Current Situation and Trends Presented by Jiang Feng China Association For Medical Devices Industry

Agenda  General Situation  Problems  Trends  Suggestions

General Situation: Manufacturers Above 10,000 medical devices manufacturers - 11,847 manufacturers in increase of 1400 compared with the year of 2004 Growth Rate: 13.40% Gross Industrial Output Value : More than USD3.09 billion

General Situation: Manufacturers Types of the industry structure 60% 3% 37% State-owned Enterprises Joint Ventures Private Companies (measured by quantity)

General Situation: Manufacturers Pearl River Delta Yangtze River Delta Bo Hai Bay Loop Three key geographical manufacturing areas

General Situation: Products Registration Information In 2005 : Imported Medical Devices: Domestic Medical Devices: Class I &II , Class III

General Situation: Products Therapeutic Products: Tri-dimensional Ultrasonic focused therapeutic system, body rotary Gamma knife, simulator, linear accelerator Medical Diagnostic Products : Black & white and colored supersonic diagnostic unit, sleeping monitor, digital X-ray system, MRI, CT, DR Operating & Emergency Appliances: Anaesthesis ventilation system Components: High frequency & voltage generator

Business Situation More than 30,000 Agencies Import Products – over 80% Market Shares Focus on High-tech devices and large equipment General Situation : Market Figures

Increase from 210billion in 2005 to 260billion in 2006 USA40 ％ Japan 12 ％ Europe 18 ％ China 5 ％ Others 25 ％ General Situation : Market Figures Sales Capacity of the global medical devices market

General Situation : Market Figures increased from USD5.56 billion in 2000 to USD11 billion in 2005,19% annually Sales Capacity

Sales volume in 2005 : Largest foreign-owned manufacturer: GE Medical USD 700million Largest domestic medical manufacturer: Mindray USD 120million Largest domestic agency: CMIC USD 61.7 million General Situation : Market Figures

Total Imported Value:USD1.82billion Jan.- Jun.2006 Besides the abovementioned countries, Holland, Singapore, UK, France, Switzerland, Ireland,Israel, Italy, Korea, Sweden General Situation: Import & Export 6.30 ％

Besides the abovementioned countries& areas, Singapore,UK, Italy,Russia,Taiwan, Canada, France, Malaysia,Ireland Total Exported Value : USD3.16 billion Jan.- June.2006 General Situation: Import & Export ％ Others 51.65%

General Situation: Import & Export Top 10 domestic export enterprises Jan.- Jun Hangwei GE Medical systems 航卫通用电气医疗系统有限公司 2 Omron Dalian 欧姆龙 ( 大连 ) 有限公司 3 Family Health Equipment (Shanghai)Co.,Ltd. 发美利健康器械 ( 上海 ) 有限公司 4 Siemens Hearing 力斯顿 ( 苏州 ) 听力技术有限公司 5 Luxottica Dongguan 陆逊梯卡华宏 ( 东莞 ) 眼镜有限公司 6 Terumo Medical Products (Hangzhou) Co. Ltd 泰尔茂医疗产品 ( 杭州 ) 有限公司 7 Shenzhen Baoan Foreign Economic Development Co.,Ltd. 深圳市宝安外经发展有限公司 8 SHENZHEN MINDRAY 深圳迈瑞生物医疗电子股份有限公司 9 Shanghai Light Industrial Products Import and Export Corp. Ltd. 上海轻工业品进出口有限公司 10 GN ReSound China 瑞声达听力技术 ( 中国 ) 有限公司

General Situation: Import & Export Main exported Products Standard device, small surgical instruments, etc. Some value added products - ultrasound imaging device - patient monitoring system - diagnostics tools

General Situation: Import & Export Foreign & Joint Ventures: over 50% of the total exporting volume Hi-tech Medical Equipment Export increased Increasing competitive capability of Medium & Small Enterprises

Problems Commercial Corrupt Practices Act NDRC policy of restricting price Equipment Choosing & Quota system Problems

Developing Law System Low R&D input Technology Achievements Transfer Difficulty Lack of high-tech products

Trends: demand Sales volume of the medical devices V.S pharmaceutics industry In developed countries 1:1 In China : 1:3 < 2% of GDP

Trends :demand MOH building the country and the community Medical treatment systems - USD 2.7 Billion / USD 0.85 Billion - Government Purchase Hospitals management system reform After SARS, medical devices input increase Growth Engine:

Trends :demand increasing desire for utilization of more advanced technologies and higher degree of operating autonomy in Chinese hospitals and clinics * 175,000 domestic hospitals & clinics,15% of the medical devices are made in the 1970s growing desire for better quality of care increasing availability of healthcare insurance Growth Engine:

Trends Fast Development of R&D Organizations More Investment Input More Focus on Intellectual Trainings High quality products increased High tech products enhanced Fast Growth Rate on Export Trends

Suggestions China Market Strategy Suggestion For Foreign Medical Device Manufacture

Suggestions China Market Strategy Suggestion for Foreign Medical Device Manufacture Pre-research Registration Price Strategy Select Distributor Manufacturing

Suggestions Pre-research - What is hot in China - Marketing situation and trend - The related manufacturer information from - Government policy and regulation Suggestion: Choose the senior NPO/Company

Suggestions Registration - High time cost - Evading the product not be clearly regulated - Choosing NPO/Company

Suggestions Price Strategy - Promotion Expense - Controlling price range

Suggestions Select distributor - Integrated Strengths - Extensive distribution, sales and service network - After-sales service and maintenance - innovative business model

Suggestions Manufacturing - Government resource and public relation - Distributing Channels - Patent Protecting / Products Copying

Thank You !