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21st Century Business Herald reporter Han Liming and intern Li Jiayu report from Shanghai

At a time when the global medical device market is developing rapidly and the competitiveness of the domestic medical device industry is constantly increasing, Chinese medical device companies are facing unprecedented international opportunities. "Going overseas" to conquer the world has long been a must for local leading medical device companies. From the performance in 2023, we can also see that most of the listed medical device companies with better performance have benefited from the growth of overseas business and the breakthrough of high-end products.

While leading domestic medical device companies are exploring ways to "go global", many new innovative companies have also emerged to "test the waters" for global product layout. Some companies have indeed benefited from the overseas boom, but some have encountered resistance and risks. How medical device companies of different sizes can take the path of "going global" continues to attract attention from both inside and outside the industry.

An industry insider told 21st Century Business Herald that "the challenges faced by medical device companies going overseas are mainly in the fields of technology and clinical recognition. For products going overseas, it is necessary to ensure that the technical performance reaches international standards and is clinically verified and recognized abroad in order to have a chance to continue to develop in the international market."

Li Jizong, director of the Shanghai Biomedical Technology Development Center, emphasized the key points of medical device overseas expansion at an industry conference held recently. "First, we must be familiar with overseas policies, regulations and business rules and improve our own cognitive ability; second, we must have our own value and excellent products and technologies; third, we must attach importance to talents and overseas expansion strategies."

In this case, how should local medical device companies go about “going overseas”?

The challenges of going overseas are not small

According to data from China Insights Consulting, the global medical device market is expected to reach US$848 billion by 2030, with a compound growth rate of 6.4% from 2021 to 2030. Attracted by the large overseas market size and stable pricing, and driven by the improvement of domestic device procurement and innovation capabilities, the development of Chinese devices going overseas has been in full swing, but the challenges cannot be ignored.

On the one hand, my country's exported medical device products are still mainly low-value medical consumables and low-end medical equipment. The "China Medical Device Import and Export Analysis Report (2023)" shows that my country's export of medical consumables in 2023 accounts for the highest proportion, reaching 44.91%; IVD instrument export trade volume increased the most, reaching 2.503 billion yuan, a month-on-month increase of 12.18%.

On the other hand, the international market is highly competitive. Multinational medical device giants have dominated many fields of medical equipment for many years and have significant advantages in academia, clinical evidence, customer awareness, global supply chain integration, product technology development, overseas after-sales service and brand influence.

Looking at the development history of multinational medical device giants, they have achieved full self-production of core components through self-research and mergers and acquisitions, which has become one of the foundations for them to maintain a stable global market share and continue to innovate and make breakthroughs in technology. Innovation is undoubtedly a key step for Chinese medical device companies to take a steady path to "going global".

"On the one hand, my country is promoting the development of high-end medical equipment, and its value is not only reflected in the economic benefits. The development of equipment will strongly drive the development of upstream and downstream industries in the supply chain, such as core components and materials. On the other hand, through the joint innovation of domestic independent technology companies and clinical experts to improve the level of clinical scientific research, there is an opportunity to be at the forefront of the world in some subdivided technology fields, so that Chinese people can benefit first, and there is an opportunity to export China's clinical standards and experience to the world." The above-mentioned industry insider said.

However, the registration and supervision requirements for medical devices in various countries show certain differences, which also increases the difficulty for Chinese medical device companies to "go overseas". For example, the "White Paper on Trends and Strategies for China's Innovative Drugs and Devices Going Overseas in 2024" points out that the FDA is extremely strict in reviewing the registration and certification of medical devices for marketing, especially Class III (high-risk) medical devices, to ensure that these devices are thoroughly evaluated before they are put on the market. Strict supervision has brought challenges to the export of medical devices to the European and American markets.

"From the perspective of FDA's regulatory access path, it is usually based on the classification of medical device products and goes through the clinical exemption, 510(k), and PMA paths, with the difficulty increasing step by step." Zhao Jiaji, vice president of Shanghai Weizhou Pharmaceutical Technology Co., Ltd., said that during the application process, it is necessary to be good at utilizing resources such as the free consultation and communication channels with the FDA to shorten the access time.

Ma Chao, director of industrial and industrial investment at Colliers International, pointed out at the above-mentioned industry conference that "Whether domestic medical devices can be successfully exported depends mainly on product quality and innovation, marketing strategy and channel construction, and product adaptability and compliance. The regulations of each market have their own characteristics. Only by selecting products that best comply with local regulations according to the target market and lowering the entry threshold can the products gain local competitiveness."

How do innovative companies respond to challenges?

International development has become a consensus among my country's leading medical device companies. For some innovative small and medium-sized medical device companies in China that are affected by cost control and IPO pressure, going overseas is also a way to expand their commercialization. Ma Chao analyzed that small and medium-sized enterprises have obvious objective disadvantages compared with large enterprises in terms of resources, brands, and market penetration, but "small boats are easy to turn around", so they should focus on their unique advantages and flexibly adjust their strategies.

Specifically, first, focus on niche markets and niche fields, use unique technological advantages to obtain structural opportunities, and find your own foothold; second, establish cooperation and alliance relationships with local partners, distributors and other related companies, work together to reduce market entry costs, and quickly establish a local sales network; third, adjust your own products and marketing strategies in a timely and flexible manner in response to the ever-changing market environment, and find opportunities to achieve leapfrog development; fourth, use digital marketing channels to increase brand awareness at the lowest cost and attract potential customers; fifth, focus on after-sales service and support to increase brand added value and customer satisfaction and loyalty.

Different overseas expansion modes bring different benefits to enterprises. According to the information disclosed on the official website of the Ministry of Commerce, the current overseas expansion modes of medical device products include OEM, acquisition and registration. According to statistical analysis, from 2016 to October 2023, the number of overseas medical device registrations by Chinese enterprises has been increasing year by year, and registration has become the preferred mode for most medical device enterprises in my country to go overseas.

Sun Lin, Chairman and Founder of Shanghai Sailin Renxin Medical Technology Co., Ltd., explained, "From the perspective of overseas expansion models, cross-border M&A models can lay the foundation for companies to acquire intellectual property rights, enter markets, and obtain local resources and channels; technical cooperation, joint ventures, licensing and other models facilitate rapid acquisition of cooperation resources from local institutions; and the sole proprietorship model based on capabilities is conducive to maximizing the company's commercial interests."

"From a practical perspective, talent and global leadership are also important factors for going overseas. We must also pay attention to mutual respect in humanity and seek our own business development in a way that local people can identify with," Sun Lin added. From this point of view, by deeply understanding the needs and characteristics of different markets and formulating targeted market strategies and product solutions, medical device companies going overseas are expected to achieve better results in the global market.

In addition, choosing the right "going overseas" destination is also crucial. According to TouBao Research Institute, the Asia-Pacific market, mainly China, and developing countries such as Latin America, the Middle East, and Africa, account for only about 30% of the total, but the population of these regions exceeds 7 billion. With the development of the economy and the improvement of medical standards in these regions, it is expected that the growth rate of the medical device market in developing countries will be faster than that in developed markets.

"For start-up medical device companies, blindly competing with giants in the US and European markets when their own product line layout is not yet complete will not allow them to resist risks very much. It is better for them to accumulate and develop in the secondary market, grow from a single product company to an overall solution provider, and improve their competitiveness," said the above-mentioned industry insider.

"Different types of medical device companies will face different challenges and opportunities when developing overseas markets, including differences in market demand, regulations and standards, technological competition, after-sales service and support, etc. These factors will become more profound as they are put into practice," Ma Chao added. "The medical device industry is still a manufacturing industry in the final analysis. If the manufacturing industry wants to go overseas or develop sustainably, the core logic is to make good products. In addition, when going overseas, try to downplay the country label and do a good job of localization."