China's Health Care Reform: Bull Run for Medtech Starts in the Year of the Ox
While all of the attention is focused on US health care reform and how it may hurt medical technology, China is undertaking massive reform of its own, which looks to be a boon, first for equipment and diagnostics, then for devices.
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With clear regulatory approval paths in Europe and growing markets in Asia and other developing markets, device executives and investors see international markets as increasingly attractive alternatives for clinical validation, revenue, and regulatory approval.
Medtech R&D productivity is being undermined by a range of deep-seated changes in the health care industry. Companies that underestimate this challenge face the prospect of lackluster growth over the long term. But in sharp contrast, Boston Consulting Group has identified a set of "High Science" device companies that are making a concerted effort to reinvent their approach to R&D and gain a competitive edge.
China has become especially enticing as an unpenetrated, gigantic health care market, especially since the government in 2009 signed into effect a health care reform bill promising $125 billion over a three-year period to modernize the infrastructure of health care and provide insurance coverage to hundreds of millions of people. Medical device companies look to China as an enormous and rapidly growing market for medical disposables and equipment. However, the complex nature of the distribution infrastructure in China will make it difficult for companies to get a foothold. Headquartered in Beijing, TCT Medical Inc., which recently received $10 million in venture funding from Fidelity Asia Ventures and Fidelity Biosciences, its sister firm in the US, offers a potential solution for companies focused on women's health, and a model for the future.