Recently, the executive meeting of the State Council focused on adopting two high-quality development plans for the medical industry, namely the "Action Plan for High Quality Development of the Medical Industry (2023-2025)" and the "Action Plan for High Quality Development of the Medical Equipment Industry (2023-2025)", providing clear guidance from various aspects such as pharmaceutical innovation, supply of pharmaceutical raw materials and excipients, and breakthroughs in medical equipment. The action plan proposes a series of specific measures, including increasing research and development investment, optimizing industrial layout, promoting deep integration of industry, academia, research and application, and improving drug quality and safety levels. At the same time, it is emphasized to strengthen international cooperation, actively participate in the division of labor in the global pharmaceutical industry chain, and enhance China's position in the global pharmaceutical industry chain.
Industry insiders say that the pharmaceutical industry is a strategic industry that is related to the national economy, people's livelihood, economic development, and national security, and is an important foundation for the construction of a healthy China. With the support of policy dividends, China's pharmaceutical industry has entered a new stage of development, and the level of innovation may significantly accelerate.
Continuous implementation of central and local policies
Since the beginning of the 14th Five Year Plan, the central and local governments have increasingly attached importance to the development of the pharmaceutical industry and medical equipment industry. Various provinces and cities have also successively introduced relevant policies to accelerate the approval of high-end medical devices, support innovative research and development of high-end medical equipment, and support high-quality development of the pharmaceutical industry, promoting the acceleration of China's pharmaceutical equipment innovation.
In recent years, the National Drug Administration has accelerated the approval of innovative medical devices, issuing the "Special Review Procedure for Innovative Medical Devices" and the "Priority Approval Procedure for Medical Devices", allowing innovative products and clinically urgently needed products to "queue up separately and run along the way". For example, focusing on high-end medical devices such as ECMO (extracorporeal membrane oxygenation therapy), particle therapy systems, and ventricular assist systems, early intervention guidance is provided to accelerate key core technology breakthroughs and promote breakthroughs in China's high-end medical devices.
Xu Jinghe, Deputy Director of the National Drug Administration, stated that in 2022, the main operating revenue of medical devices in China has reached 1.3 trillion yuan, and the average annual compound growth rate of medical devices in the past five years is 10.54%. It has become the second largest market for medical devices globally, with continuous improvement in industrial agglomeration and international competitiveness.
Xu Jinghe introduced that 217 innovative high-end medical device products, including domestic "brain pacemakers", carbon ion therapy systems, proton therapy systems, magnetic resonance imaging systems, panoramic dynamic PET/CT, third-generation artificial hearts, and artificial blood vessels, have been approved for market launch, addressing the serious dependence of some products on imports. Most of these products have already been used in clinical diagnosis and treatment, achieving good results.
In addition to accelerating approval at the central level, local governments have also successively introduced relevant policies to promote the acceleration of pharmaceutical innovation in China.
In 2022, the National Drug Administration implemented the requirements of the national major regional development strategy and issued an implementation plan for the production of medical devices by Hong Kong and Macao medical device registrants in 9 cities in the Guangdong Hong Kong Macao Greater Bay Area, further promoting the development of regional industries.
The policy of "Hong Kong Macao Medical Equipment Connect" continues to benefit residents of the Guangdong Hong Kong Macao Greater Bay Area. The Guangdong Provincial Drug Administration and the Guangdong Provincial Health Commission have earlier released the fifth batch of urgently needed imported Hong Kong and Macao drugs and medical devices catalog in the Guangdong Hong Kong Macao Greater Bay Area, which includes three newly approved urgently needed imported Hong Kong and Macao drugs and five medical devices.
With the gradual release of the policy dividend of Hainan Free Trade Port, in recent years, the Boao Lecheng International Medical Tourism Pilot Zone in Hainan has introduced over 300 types of international innovative medicine and equipment, becoming an important channel for international innovative medicine and equipment to enter China.
Shanghai proposes to improve the diversified payment mechanism to support the development of innovative medical devices, including multi-party cooperation to strengthen the supply of commercial health insurance products, data empowerment to support the development of commercial health insurance products, accelerating the clinical application of innovative medical devices, and increasing payment support for innovative medical devices.
Policy dividends promote continuous acceleration of industry innovation
In recent years, the independent research and development capabilities of domestic medical device enterprises have been continuously enhanced, and the achievements of independent research and development innovation have also taken root, constantly catching up in terms of underlying technology and cross innovation.
The latest data shows that as of July 2023, China has approved a total of 130 innovative drugs and 217 innovative medical devices. In the first half of this year alone, 24 innovative drugs and 28 innovative medical devices have been approved for marketing. It is worth noting that in 2014, there was only one such approval.
The high number of approvals is naturally due to the improvement of the company's innovation efforts and innovation capabilities. In recent years, the investment and cost rate of medical device research and development in China have shown a long-term trend of gradual improvement. According to data from Guojin Securities, the R&D cost rate of the medical device sector has increased from 6.2% in the second quarter of 2019 to 9.2% in the second quarter of 2023, an increase of 3 percentage points in four years.
Yuan Wei, an analyst at Guojin Securities, stated that with the introduction and implementation of multiple national policies to encourage scientific and technological innovation, the development of medical device innovation is accelerating, and the internal motivation for innovation and research and development of medical device manufacturing enterprises is greatly enhanced. Innovative medical device products will accelerate the emergence. The proportion of R&D investment to revenue of domestic listed companies is gradually approaching the level of multinational medical device companies.
Under the promotion of relevant policies in China, enterprise innovation has significantly accelerated, with more and more innovative drugs and medical devices being listed in China. The process of localization in many fields has accelerated, and the quality is getting higher and higher, "said Liu Bing, founder and chairman of Wobi Medical Holdings Co., Ltd.
Taking Woby Medical as an example, it has been the first to establish a research and development center in the United States since its inception. The company's neural intervention product spring coil officially entered the European and American market in 2019. As of 2022, its market share in some regions of the United States has reached 20% to 30%, and its product share in some hospitals is close to 50%, which has been recognized. In addition, in February this year, the pRESET thrombectomy stent, a subsidiary of Woby Medical, was approved by the US Food and Drug Administration (FDA) for the treatment of acute ischemic stroke. In August, the pNOVUS17 microcatheter independently developed by the company was approved for marketing by the National Drug Administration. At the same time, the product has obtained 510K certification from the US FDA and dual certification from the Japan Medical Device Administration.
Innovation and acceleration need to further supplement high-end shortcomings
Although some enterprises have made breakthroughs in innovation, overall, the per capita ownership of medical equipment in China is still relatively low, and the localization level of high-end medical devices is limited.
Some medical equipment in China has formed a catch up, but overall, the complete industrial chain that meets the requirements of high-end medical device manufacturing is not yet mature. On the one hand, it is due to insufficient talent and technology reserves, and on the other hand, the supply of key raw materials is still dependent, "Liu Bing said.
A report shows that currently, China's medical equipment market is the largest and the import substitution rate is relatively lowest in the field of equipment. Except for some life safety equipment such as monitoring, breathing, light bed towers, as well as mid to low-end imaging equipment such as DR and ultrasound, most high-end medical equipment in China still mainly relies on imports, including high-end imaging MRs, digital subtraction angiography, PET-CT, endoscopes, surgical robots, etc., with huge substitution space for imports.
In this context, in July this year, the National Development and Reform Commission and relevant departments revised the "Guiding Catalogue for Industrial Structure Adjustment (2023 Edition)", proposing to extend medical devices to professionalization and high-end value chains. Among them, encouraging the innovative development of high-end medical devices in the catalog includes: new gene, protein, and cell diagnostic equipment, new medical diagnostic equipment and reagents, high-performance medical imaging equipment, extracorporeal membrane oxygenation machines and other critical and critical life support equipment, artificial intelligence assisted medical treatment equipment, mobile and remote diagnosis and treatment equipment, endoscopic surgical robots and other high-end surgical equipment, high-end rehabilitation assistive devices, brain pacemakers Development and application of high-end implant intervention products such as fully degradable vascular stents, biomedical materials, and additive manufacturing technology.
Several analysts pointed out that China will further expand the promotion and application of domestically produced medical equipment, improve relevant support policies, and promote the modernization of the industrial chain and a higher level of integration into the global industrial system in a new stage of high-quality development. With policy support, the domestic medical equipment market is expected to continue to expand.