Japanese manufacturers of medical devices are counting on a China sales surge to lead growth as the economic rebound fades and the domestic market continues to shrink as the population ages.
Sysmex Corp., the world’s largest manufacturer of blood analysis devices, predicts sales in China will rise 129 percent to more than ¥10 billion in the year to March 31. Shimadzu Corp., which makes X-ray and cardiovascular monitoring equipment, sees a 26 percent jump to ¥18.6 billion. Terumo Corp., Japan’s largest maker of medical devices, projects revenue will double in China by the year through March 2014.
Domestic medical firms are capitalizing on plans by Chinese Premier Wen Jiabao’s government to broaden health care provision, positioning China to become the world’s third-largest health care market by 2015, according to an October estimate by the Espicom Business Intelligence pharmaceutical and medical research group.
China’s $8.6 billion (¥660 trillion) medical equipment market may grow by an average 13 percent through 2016, compared with 5 percent for the global industry, U.K.-based Epsicom said in its Oct. 18 report.
Japanese device makers such as Sysmex and Terumo are increasingly relying on overseas revenue as the domestic market stalls amid a shrinking population and more than a decade of deflation. Even as the number of hospital beds fell 3.8 percent in Japan between 2005 and 2010, that figure grew 42.8 percent in China, data from the two countries show.
Many Chinese facilities, particularly in rural areas, are still using equipment made in the 1980s, according to Ben Cavender, an analyst at China Market Research Group in Shanghai.
“Especially inland, the government is building hospitals, which means they’re purchasing equipment,” said Shinichi Shiotsu, a spokesman for Shimadzu. “X-ray machines and basic analytical equipment (are) selling the most right now.”
Hospitals lose any government money they do not spend in a year, so they spend remaining funds on equipment, much from overseas companies, said China Market Research’s Cavender.
“There is a sense that foreign brands are going to have better quality, lower failure rates, that they are going to be constructed better and be safer,” Cavender said. “Japanese companies have high brand awareness.”
Domestic device manufacturers are looking abroad as the developed world’s most indebted nation becomes increasingly burdened with the medical bills of its aging population. Japan’s nominal gross domestic product is only about 90 percent of the level seen 15 years ago.
Hitachi Medical Corp., a maker of X-ray machines and CT scanners, is investing ¥30 billion to construct a second factory in Shuzhou, China, to boost output.