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While China is one of the largest and fastest-growing markets for American medical technology, the size of the market is much smaller than the U.S., Europe or Japan. The $12 billion Chinese med-tech market is only about one-tenth the size of the U.S. market and less than the $70 billion spent in western Europe and the $30 billion spent in Japan.
Cultivating greater opportunities means not just selling products there. It’s hard to sell pacemakers if doctors have no experience implanting them. Boosting sales in China means training doctors, educating patients, building facilities, helping develop a regulatory industry and partnering with Chinese companies to take advantage of distribution and local knowledge. This is the infrastructure of the medical technology trade in China, said Rob Clark, a Medtronic vice president for corporate communications.
“The government is very interested in having the multinationals picking up these things,” he said. “But you have to be smart about it.”
Still, the market is being developed. Medtronic’s Global Heroes program highlights distance runners who run despite medical conditions including heart disease, diabetes or neurological disorders, thanks to medical technology.
In 2013, the program included a couple of young people from China: Yao Hui Wang and Lin Shen. Yao, a 21-year-old distance runner from Wuhan City with Type 1 diabetes, had his life changed by a Medtronic insulin pump, allowing him to finally forgo daily insulin injections and regain the freedom to run. Lin is a 20-year-old runner and high school basketball player from north-central China who also has a Medtronic insulin pump.
But there remain pitfalls to growth.
Chief among them is a concern that the Chinese government, which badly wants to develop its own medical device industry, is not willing or able to protect American intellectual property from pirates who would just turn around and produce devices under the name of Chinese companies.
Ives, of AdvaMed, said as Chinese manufacturers gain more expertise, concerns over piracy will intensify. Chinese companies already are selling lower-priced products that appear to use American intellectual property, he said. That could be dangerous to patients if Chinese products that claim to be the same as their U.S. counterparts do not work as well.
In 2011, St. Jude Medical won a $2.3 billion verdict in a California court against a former employee and a Chinese medical device company he started, for the theft of trade secrets.
N. Bruce Pickering, executive director and vice president of global programs at Asia Society Northern California, said intellectual property piracy fears keep some companies from jumping into the market — or selling top-line products in China.
“There is no desire to take cutting-edge stuff to China because it will get ripped off,” he said. “I think it really depends on how the analysis of the cost-benefit ratio plays out for you. Does the growth trajectory outweigh the risk? Then, OK.”
He added: “The truth is, there is for sure a compelling and attractive market. But companies need a clear strategy and understanding of risk.”
But that risk is not scaring away America’s med-tech companies. The market is too big, the potential for huge revenues too lucrative.
“I think globalization is not an option. It’s a must [for Medtronic],” Ishrak told China Daily in an interview last year. “It doesn’t matter whether you know us. It doesn’t matter how uncomfortable it would be in a different environment. It doesn’t matter what risks you might have to take.”
James Walsh • 612-673-7428