GE building on basics to expand health business

Updated: 2012-03-30 07:31

By Liu Jie in Chengdu (China Daily)

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International medical equipment and solutions provider GE Healthcare, a subsidiary of General Electric Co, plans to increase its sales in China's grassroots market to half of its business in the nation within five years, from less than 20 percent at present.

Rachel Duan, president and chief executive officer of GE Healthcare China, said on Thursday that the US-based company will launch 32 new products here over the next three to four years.

She said 70 percent of the new products will be tailored to grassroots medical care institutions, including hospitals in second- and third-tier cities and counties, as well as clinics in rural areas and urban residential communities.

"Seven (new products) will be launched this year and another 25 are expected in the coming two to three years. They are low-cost, high-performance and easy-to-use medical devices," she said.

"Our strategy is well-matched with China's new medical reform, which puts ensuring basic service and enhancing competence in the grassroots area as top priorities."

GE set up an innovation center in Chengdu in January, the group's first such facility in the world.

GE Healthcare is leveraging the center as a platform to set up cooperation with grassroots hospitals and clinics, especially those in western and central regions.

"Cooperation with our clients from a very early stage will help us develop customized products and solutions to meet local clinical demand," said Duan.

The center is focusing on the development of imaging, life support and remote ultrasonic systems, as well as medical imaging post-processing workstations.

Last year, GE Healthcare launched five new products customized to the Chinese grassroots market, including a portable ultrasound system and magnetic resonance apparatus.

"Going to the grassroots market has become a trend for multinational medical equipment providers, due to the huge market potential there, prompted by the central government's policies, and fiercer competition in key cities caused by the emergence of large domestic medical device companies," said Hu Ji, an analyst at domestic brokerage Huatai Securities Co Ltd.

China issued its 12th Five-Year (2011-15) Development Plan for the Medical Equipment Industry in January. The plan said infrastructure construction and equipment upgrading in grassroots medical institutions are priorities for the next few years.

China's medical device demand is booming, especially in counties and rural areas. Sales of medical equipment in the nation amounted to 135 billion yuan ($20.15 billion) last year, up by 26.6 percent year-on-year, according to China Economic Information Network, a domestic information service provider affiliated with the State Information Center.

The network forecast that the market will maintain fast growth in the coming five to 10 years, with a compound annual growth rate of 20 to 30 percent.

China's high-end medical device market is dominated by foreign manufacturers, as GE Healthcare, Philips Healthcare (a subsidiary of Royal Philips Electronics Ltd) and Siemens Healthcare, the medical care arm of Siemens AG.

These companies hold about 70 percent of the high-end market in China. However, they are facing emerging Chinese competitors in the premium market.

"Large Chinese companies, such as Shenzhen-based Mindray Medical International Ltd and Jiangsu Yuyue Medical Equipment Inc, are developing fast in sales with their new technologies and high-quality products," said Hu, adding that they are price-competitive with multinationals.