New R&D labs a shot in arm for healthcare

Updated: 2012-08-17 07:39

By Wang Hongyi (China Daily)

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New R&D labs a shot in arm for healthcare

Doctors demonstrate a procedure at Covidien's China Technology Center in Shanghai. Provided to China Daily

Research center in step with government plan to improve medical facilities

The American healthcare products provider Covidien PLC is deepening its investment in China by opening its first China research and development facility in Shanghai this month.

The facility, China Technology Center, spans more than 9,290 square meters, houses 17 laboratories and has state-of-the-art surgical and simulation suites that enable healthcare professionals to be actively involved in the design and development of medical devices.

With a total investment of $45 million over three years, the CTC will eventually have more than 300 employees, and will focus on developing products that are customized to meet the needs of China and other emerging markets.

The CTC is not the company's first investment in China. It already has 10 commercial offices and a manufacturing plant in the country.

"Establishing this R&D facility in Shanghai will reinforce our continued commitment to providing innovative new products that will help healthcare providers worldwide improve patient care and extend healthcare delivery to more people and more places," says Jose Almeida, chairman, president and CEO of Covidien. "China is a key market in our global strategy, and this investment is a reflection of our strategic initiatives."

The company has experienced 25 to 30 percent growth in some of the BRICs countries, which is led by China, Almeida says.

"China is growing exceptionally well. The sales force, and how we are understanding the market and how we are penetrating several different facets of the market, has been great for us."

According to a report by the US financial giant Citigroup this year, the Chinese medical device market is expected to grow 17 percent in 2012. The report estimates the total market value of the 11 medical equipment segments surveyed to be about $5 billion in this year.

That overall growth is based on a projection of 12 percent growth in the medical equipment market and 25 percent growth in medical consumables. Strong demand from Chinese hospitals, due to larger purchasing budgets and planned infrastructure upgrades, is fueling the growth.

As part of the country's long-term healthcare reform program, the Chinese government is sparing no effort in investment in healthcare facilities and services, especially in remote and rural areas.

In 2009, guidelines on implementing healthcare reform issued by the State Council, and the corresponding 2009-11 implementation plan, called for the government to invest 850 billion yuan ($133.6 billion, 108.6 billion euros) on the overhaul, with a large part of the funding allocated to rural hospitals and community healthcare centers.

In the country's 12th Five-Year Plan (2011-15), healthcare is listed as a priority, with specific emphasis on improving infrastructure of rural healthcare facilities and updating medical equipment.

"The Chinese healthcare industry is on a fast track of development," says Wang Xinpei, deputy director of Shanghai Municipal Commission of Commerce. "The Ministry of Commerce, the Ministry of Health and the Ministry of Science and Technology all launched specific policies to boost the healthcare and medical device industry. In this regard, more innovative technology and products are urgently needed to meet local market demand."

New R&D labs a shot in arm for healthcare

Wu Dong, vice-president of Covidien China R&D, says: "The Chinese government attaches great importance to improving the medical services and products in rural areas. And to align with the Chinese government's health agenda, outlined in the 12th Five-Year Plan, undoubtedly underpins our development in healthcare in China."

He says the company will develop more products, primarily mid-end devices, targeting rural areas where they are most in need.

"We will also increase training for medical staff in rural areas and community-level hospitals, educating them on the safe use of these medical devices to better serve patients," Wu says.

The company has carried out various training programs in the past, and has established partnership programs with academic institutions in China to nurture young talent and gather fresh ideas for the advancement of the medical device industry.

"This fusion of expertise among healthcare professionals, students, scientists and engineers will be reinforced by the cutting-edge capabilities of our new R&D facility, bridging clinical knowledge, market understanding and technical innovation," Wu says.

"We are dedicated to improving patient outcomes, and we recognize the immense potential of basing an R&D facility in Shanghai. This location will help us make use of the internationally renowned experts based here in China, including world-class engineering talent. We believe this collaboration will drive innovation in China and across the emerging markets healthcare landscape."

Covidien has 24 global R&D centers specializing in endo-mechanical devices, vascular therapies, energy-based devices, tissue repair, ventilation and monitoring.

The company's revenue was about $11.6 billion last year, with nearly 5 percent of sales invested in R&D, twice as much as five years ago.

Covidien has launched more than 100 new products in that time, and expects to launch more than 50 over the next two years.

"The capabilities of the new R&D facility address the healthcare reform objective of strengthening product technology to improve patient outcomes," Wu says, adding that he expects the facility to produce one new product a year.

(China Daily 08/17/2012 page17)