Deep Research is Required in Chinese Medical Device Market

Tracking with Swedish Bactiguard  

Recently I’ve been following Bactiguard, a Swedish company actively working on preventing device related hospital acquired infections (HAI) using their unique designed medical devices such as venous catheter, endotracheal tube, foley catheter and the clinical implementation program (CIP) etc. The devices are featured with their coating technology, it is extremely thin and permanently bound to the surface of the medical device. The coating consists of the noble metals gold, palladium and silver. It reduces the adhesion of bacteria to coated surface.

In 2011, Bactiguard has signed an exclusive agreement with the Chinese Pharmaceutical distributor, Jian An. 40 million Swedish kronor has been paid for the exclusive rights to sell the entire line of Bactiguard´s products throughout China. That was one of the biggest step for Bactiguard’ since its establishment. My first reaction of this great news is that, there is no doubt for Bactiguard getting fast growth through this “exploding” market using high quality devices . Plus, Jian An is a quite experienced distributor in China. Jian An has estimated that Bactiguard´s devices could reach sales of 1.2 billion throughout China within 5 years. Bactiguard’s CEO Christian Kinch mentioned that: “If our Foley Catheters were used in only 50 percent of China’s hospitals, it could prevent up to 200,000 urinary tract infections and more than 5,000 related deaths each year, while also saving the Chinese healthcare system over $650 million in costs associated with HAI treatment.”

But after the deeper reading of the market and information, I realized that things are not so simple. There are some critical questions muse be pointed out.

First of all, Bactiguard is not the only one in China. Biomérieux, a French company also has the focus of HAI, under the pathology category I can see 22 products directly linked to HAI. Biomérieux’s business looks quit stable and strong in China. Also in 2011, they built their third biggest base in Shanghai, which is carrying on the mission of R&D, training, producing and sales activities. Furthemore, there is a British company called Bioquell also has focus on HAI, their products are based on the unique technology of hydrogen peroxide vapor (HPV) system relies on micro-condensation to effect total elimination of pathogens, including endospore forming bacteria. Bioquell opened their Chinese office in Shenzhen in 2011. In addition, Bioquell also awarded a contract to supply specialist hydrogen peroxide vapour bio-decontamination equipment to research organizations within the Chinese Government's Ministry of Agriculture worth approximately US$1 million. Biomérieux and Bioquell offer different options for HAI in Chinese market, even though Bactiguard have the different products. You may say they won’t affect Bactiguard, wait, check this out. Amsino, US company, their products are close to Bactiguard's. Amsino's product includes infusion products and access devices, blood collection and transfusion devices, anesthesia and surgical products, urological products, enteral feeding and irrigation products etc. Amsino is located in Shanghai with very mature experiences.

All companies above are successful cases in China. I think they give other foreign companies more brightness of Chinese medical devices’ market.

Second, my personal experience say, Chinese team is lack of management and marketing skill. What is local Chinese company’ strongest weapon? - networking. Chinese marketing is too rely on traditional method of networking such as direct selling, negotiation and meeting etc. Developing a business model, there are lots of important key factors that you should concern. For example, patients which includes the size, location, contact channels; physician which includes the role, level and also location, contact channels; Different types of media, competitor intelligence, authoritative policy etc. All these factor will affect the market and your strategy.

As I just mentioned above, authoritative policy is one of the very important factor. The Third Plenary Session of Eighteenth Central Committee mentioned that, China will continue to deepen the reform of primary health care institutions, and improve the network of primary health care services, improve the operational mechanism and rural clinics reasonable classification model. China will centralize the medical supplies into provincial level. That means there will be huge needs of medical devices in 2014, but the local medical devices benefit the right of priority. That is still a good signal for foreign company I think.

Well, Let’s back to Bactiguard again. They are very organized, have clear vision, their product are based on high technology and quality. Jian An is a powerful partner too. I can see lots of positive news of Bactiguard in Chinese networks. But hardly to find their products in there, I couldn’t see Bactiguard’s devices excepts the logo under Jian An’s portfolios. Maybe it too early to judge anything within a short research like this. But Bactiguard as a Swedish pioneer in this sector still has a long journey to go. I will stop here, I have not mentioned some famous Chinese local producer and some data of medical catheter in 2007-2011. This is just a very short research. But I think I did really clarified my point, which is: expanding into Chinese market should be more professional, need more and deeper research, there are lots of factors. Data shows that China still has huge growing space in medical devices future.