On March 1, the Executive Meeting of the State Council reviewed and approved the “Action Plan to Promote Large-scale Equipment Renewal and Trade-in of Consumer Goods”, which proposes “to promote the orderly upgrading of equipment, transportation equipment, and old agricultural machinery, education and medical equipment in key industries.”
The equipment update focuses on the field of “building diplomatic relations between workers and agriculture, education, culture and medicine”. The investment scale was about 6 trillion yuan in '27, with an additional investment of about 300 billion dollars every year, focusing on key industries such as metals, chemicals, building materials, electricity, machinery, transportation, textiles, and electronics. Financial support includes subsidies, tax incentives, and reloan interest rates.
According to data from the “Blue Book on Chinese Medical Devices (2023)”, China's medical equipment market size in 2022 was about 381.6 billion yuan, and the CAGR from 2017 to 2022 was 16.7%.
Medical sector: Strengthen the construction of high-quality and efficient medical and health service systems, promote the iterative upgrading of equipment and information technology facilities in medical and health institutions, and encourage medical institutions that are in a position to do so to speed up the upgrading of medical equipment such as medical imaging, radiotherapy, telemedicine, and surgical robots. Promote the renovation and upgrading of medical institutions' wards and make up for shortcomings in the ward environment and facilities.
According to Huaan Securities Pharmaceutical Research, the large-scale equipment replacement and update requirements reporting documents previously disclosed by Hubei Province focused on encouraging medical institution equipment and informatization upgrades, as well as AI wearable devices and AI-assisted diagnostic software in the field of medical equipment.
(1) From the level of documents issued by the State Council, it is determined that medical equipment updates are also within the scope, and subsequent funding sources are expected to be implemented.
(2) Within the medical system, especially older tertiary hospitals, they themselves also have great demand for more advanced medical equipment, informatization, and intelligence. The outbreak of COVID-19 has also revealed to a certain extent the shortage of domestic medical resources per capita. Starting with hardware is also an important original intention of the country to promote new medical infrastructure in recent years.
(3) In terms of favorable targets, first of all, it is beneficial to the entire medical device sector, and secondly, it favors some important support directions, such as imaging equipment (CT\ MR\ ultrasound\ microscope, etc.), surgical robots (orthopedic mobile robots, endoscopic surgery robots, etc.).
Hong Kong stock related concept companies:
Global Healthcare (02666): With the acquisition of Casixuanda, the medical equipment full-cycle management industry has entered the fast track of development. Casixuanda is a leading enterprise in the field of third-party maintenance of medical imaging equipment in China. The maintenance capacity can cover mainstream medical imaging equipment as well as small and medium-sized equipment such as life first aid, respiratory anesthesia, and hemodialysis. The total number of hospital customers exceeds 1,500, and the scope of services covers the whole country.
Minimally Invasive Robot-B (02252): The company Tumai Robotics continues to use its leading edge in the industry to complete the installed sales of multiple products. The flagship product Dragonfly Eye has achieved a steady increase in revenue with a good commercialization foundation. Currently, the company's surgical robot products approved by the NMPA include Tumai and Honghu, which obtained certification in January and April 2022, respectively. Among them, Honghu also obtained 510 (k) certification from the FDA in July 2022, completed its first commercial installation, and contributed overseas revenue for the first time.
Guichuang Tongqiao-B (02190): The company spans two high-potential tracks of neurological intervention and peripheral intervention, and is expected to fully enjoy the “increased surgical penetration rate+domestic replacement” dividend. In the field of neurological intervention, the company's intracranial support catheters and embolization stents are in the first tier of market share; in the field of peripheral intervention, UltraFree DCB continues to grow at a high rate (1H23 revenue increased by nearly 70% year-on-year). Currently, the market share is expected to increase further as collection progresses in various regions.
Xintai Medical (02291): The history of Xintai Medical can be traced back to 1994. It was first engaged in the development and application of shape memory alloy products, and was acquired by Lepu Medical in October 2008 to focus on the development of blockers. Currently, the company is committed to the R&D, production and commercialization of interventional medical devices mainly for structural heart disease.