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From import monopoly to simple imitation, from joint venture introduction to independent research and development... nearly a century of dormancy and precipitation, China's medical imaging industry has entered a new stage of development. We will forge ahead and set out again, and lead high-quality development with scientific and technological innovation. Ethnic medical imaging equipment is rising. Huacheng Import and Export Data Observation Report.

Two wheel drive accelerates the growth of medical imaging equipment market in China

Medical imaging equipment uses X-ray, electromagnetic field and ultrasound to provide images of internal tissues and organs of the human body. Because of its non-invasive and relative safety, medical imaging technology is widely used, and is often the preferred diagnostic method for doctors when making clinical diagnosis and formulating treatment plans. Common medical imaging equipment mainly includes CT scanner, MRI scanner, DSA machine, GXR machine, ultrasonic equipment and PET scanner.

According to the Huacheng Import and Export Data Observation Report, from the market perspective, the global medical imaging equipment market is the largest part of the global medical equipment market, which has been growing steadily in recent years. Neusoft Medical recently published its prospectus, which shows that the global market size of medical imaging equipment has increased from $58 billion in 2017 to $70.4 billion in 2021, with a compound annual growth rate of 4.9%. It is expected to increase to $84.3 billion by 2026, with a compound annual growth rate of 3.7%.

The market of medical imaging equipment in China has developed more rapidly. The market size has increased from RMB 655 billion in 2017 to RMB 95.4 billion in 2021, with a compound annual growth rate of 9.8%. It is expected to increase to RMB 148.6 billion by 2026, with a compound annual growth rate of 9.3%.

Industry analysis, driven by market demand and policy dividend, China's medical imaging equipment market has accelerated. But among them, the key technology breakthrough, the acceleration of domestic substitution and the rise of national brands undoubtedly catalysed the market growth point.

Tackling key technologies and rising national brands

As we all know, medical imaging equipment is a market segment with the highest technical barriers in the medical device industry, which belongs to a typical multidisciplinary integration industry. Due to key technologies, core components and other reasons, China's high-end medical imaging equipment market has been monopolized by foreign enterprises such as GE Healthcare, Siemens Healthcare and Philips Healthcare ("GSP") in the past. In high-end PET/CT, MR, CT and other product markets, imported brands once accounted for more than 90% of the market share. Innovation drives domestic substitution. After more than ten years of technological development, domestic medical imaging equipment has reconstructed a new market pattern, Huacheng Import and Export Data Observation reported.

Among the main categories of medical imaging equipment, CT scanner is the largest market segment. Site Shi Capital published an article that in the past ten years, the CT market in China has grown steadily. In 2019, the sales volume of CT was about 4000 units. The epidemic broke out in early 2020, and CT was widely used in the diagnosis of COVID-19. The sales volume of CT across the country exceeded 7200 units, and in 2021, it also exceeded 7000 units. The number of CT configured in 2020 and 2021 will exceed the total CT sales in the first five years (2014-2019). By the end of 2021, the number of CT in China has reached 48000.

Back in the late 1980s, manufacturers in the United States, Western Europe and Japan have always dominated the global medical imaging equipment market, especially the high-end equipment market with advanced technology. Foreign imported equipment is often expensive, and medical institutions in small and medium-sized cities and towns in China are often difficult to afford. Even if the hospital spends a large amount of foreign exchange to import foreign CT machines, it is still in a state of insufficient installation. At that stage when the independent technology was poor, our choice was nothing more than to use virtue or "second-hand goods" from Japan and Holland.

Until 1997, Neusoft medical C2000 achieved a breakthrough of zero. This is the first domestic CT machine with independent intellectual property rights, and more than 50 sets were sold the following year. What needs to be added is that at that time, the CT installation in domestic hospitals was only in the hundreds. With the advent of this CT, the price of imported CT was immediately reduced by 20% - 30%, and the inspection cost of ordinary people was also reduced by half. What is particularly valuable is that Neusoft Medical has also demonstrated its strength in tackling the core technology of "array processor" - it has innovatively replaced the rapidly popularized PC, thus successfully leading a round of technology iteration in the international CT field.

After C2000, China's first spiral CT machine C3000, double-layer spiral CT, 16 layer spiral CT, 64 layer spiral CT, 128 layer high-end spiral CT, 256 layer wide body energy spectrum ultra high-end CT, 512 layer panoramic multimodal CT... were all born in Neusoft Medical. Relying on independent research and development, Neusoft has rewritten the history of CT development in China. Since then, the market share of domestic brands has increased rapidly with the overall strength. Data shows that in 2021, domestic brands will eventually win a place in the national CT equipment market. Among them, Neusoft Medical occupies 10% of the market share and Lian Ying Medical occupies 6% of the market share.

Magnetic resonance imaging system (MRI) is a kind of equipment that uses the magnetic resonance signals of atomic nuclei (mainly hydrogen protons) in water molecules in human body in a strong magnetic field to conduct tissue or organ imaging after reconstruction. Magnetic resonance imaging has a high resolution to soft tissue, and has the advantage of no radiation damage. From the discovery of MRI in 1946, to the commercial use of MRI equipment in the 1980s, and to the popularization of 1.5T and 3.0T equipment, MRI has become an indispensable clinical equipment.

Domestic magnetic resonance has been suffering from "core technology" for a long time. Superconducting magnetic resonance spectrometer, magnet, gradient system, radio frequency system, which are also the four core components of MRI.

In the "Fourteenth Five Year Plan" Medical Equipment Industry Development Plan issued in December 2021, the research on key components such as magnetic resonance high field magnet, cryogenic coil and multi-core spectrometer was included in the basic research action of medical equipment industry. Four months before the introduction of the plan, Neusoft Medical had good news: the 3.01T superconducting magnet was successfully developed, which achieved large aperture, high uniformity and high stability, while significantly reducing costs, and other key indicators reached the international advanced level. Neusoft also realized the independent development of gradient chain, radio frequency chain, spectrometer and other core components of magnetic resonance, thus realizing the independent control of the whole chain of magnetic resonance.

From the market perspective, although the import of magnetic resonance equipment market still occupied the main market share from 2017 to 2021, except Philips Medical, the overall market share of Siemens Medical and GE Medical declined in recent years. In contrast, domestic brands are catching up. In 2021, Neusoft Medical and Lian Ying Medical accounted for more than 15%, and Huacheng's import and export data observation reported.

Localization of some parts and components needs to be improved, and domestic enterprises accelerate to break the situation

It can be seen that in recent years, with the progress of the overall research and development level of domestic medical equipment, the core technology of products has been gradually overcome, product quality and reputation have risen, some domestic enterprises have achieved curve overtaking through technological innovation, the pattern of import monopoly is changing, and the domestic medical imaging equipment industry is gradually realizing the goal of running side by side with international brands.

However, compared with the world, the medical imaging equipment industry in China is still characterized by low industry concentration, small enterprise scale, and low share of domestic products in the middle and high-end markets. Among them, the core components are one of the main constraints. In this regard, the market is slightly worried.

It is understood that the main core components of CT include CT ball tube, high voltage generator, detector, slip ring, silent bearing, etc. The technical barriers to R&D and production process are high. Domestic brands are still mainly imported in the procurement of core components such as CT ball tube and high-voltage generator.

Not long ago, Lianying Medical stated in its public prospectus that its core components such as ball tubes and high-voltage generators for CT products, X-ray tubes, high-voltage generators and flat panel detectors for XR products, and magnetron tubes for RT products are still mainly outsourced, which poses the risk of unstable supply. The reason is that the company's main overseas suppliers are located in the United States, Europe, Canada and other countries and regions. In recent years, with the intensification of global trade frictions and geopolitical risks, if the above countries introduce negative policies to restrict the export of core components required for the company's production, the company may not be able to import sufficient core components.

Similarly, CITIC Construction Securities also pointed out that in the subdivision of medical imaging equipment, upstream core components and some high-end components are still mainly imported, and domestic leaders in midstream equipment are catching up. Among them, the localization of core parts in MR, DR, ultrasound and other fields is relatively high, and some high-end core parts in CT and other fields still have a big gap compared with imports, mainly including high-power CT ball tubes and other image chain core parts, as well as sensors, high-end chips and other electronic components.

Break the game and never stop. Since this year, Neusoft Medical, Lianying Medical and other giants have all sought to be listed to accelerate the domestic substitution process, so as to carry out the key core technology battle. The prospectus disclosed by Neusoft Medical shows that it will invest a large amount of money in research and development to develop super high-end CT, photon counting detector CT, low-cost CT and large-diameter CT; Develop high field and ultra-high field MRI and 1.5T MRI products; Develop economic DSA products and high-end DSA products; Develop innovative high-end PET/CT; Develop core components such as CT bulb, detector, magnet and ultrasonic probe.

In addition, in the past two years, domestic manufacturers, including Neusoft Medical, Lianying Medical, Mindray Medical, Wandong Medical, etc., have actively deployed in the fields of XR, CT, MR, PET/CT and other products, and constantly increased their efforts to expand the medical imaging equipment market.

Obviously, the advantages of the huge domestic market have been continuously verified. In the future development direction of the medical equipment field, the great opportunity to initiate "curve overtaking" for transnational brands has come. From nothing to existence, from existence to excellence, ethnic medical imaging equipment is rising, Huacheng Import and Export Data Observation Report.