Sandwich Situation
Korean medical appliance manufacturers could be sandwiched between global leaders such as GE, Siemens, and Philips and their Japanese and Chinese counterparts.
According to the Samsung Economic Research Institute, the global healthcare market is estimated to grow 6.8 percent each year between 2013 and 2020 from US$4.3 trillion to US$6.9 trillion. The in-vitro and image diagnosis equipment segment reached US$100 billion in size as of the end of last year, when the therapeutic apparatus segment reached US$67 billion.
GE, Philips, and Siemens, the three largest players in the industry, are expanding their business by means of aggressive investment in smart care, in-vitro diagnosis, and comprehensive diagnosis systems as well as CTs and MRIs. In particular, they are picking up speed in the emerging markets including the Middle East, China, and India, where the annual growth rate reaches at least 10 percent. Their presence is a sort of entry barrier against the Korean companies that are trying to enter the markets, after failure in advanced countries.
Japanese medical equipment manufacturers, in the meantime, are regrouping themselves. The Japanese government recently picked medical exports as one of its key economic growth strategies to support package export of medical institutions, equipment and medicines. The companies’ advanced technological strength is likely to be redoubled with the assistance from the government.
Toshiba launched Toshiba Healthcare by gathering its healthcare business units. The subsidiary is aiming to record US$10 billion in sales in 2017. Hitachi’s newly-established Healthcare Business Strategy Headquarters is planning to record US$6 billion in 2018. Sony started the medical appliances business last year by setting up a joint company with Olympus, which topped the global endoscope market in 2013. Nikon is going to enter the market as well by investing US$2 billion.
Chinese manufacturers are expanding their lineup from mass-market to high-end products, too. The Chinese government announced its 12th five-year plan for medical equipment industry development two years ago. Eight to 10 large medical equipment enterprises will be grown to have a size of five billion yuan or more each, so the export ratio can exceed 5 percent.
Mindray Medical, one of the medical device makers representing China, achieved a 27 percent growth between 2007 and last year. Its annual sales amount to US$1.2 billion now. The company acquired Zonare, an American ultrasonic diagnosis system developer, last year to supply its high-end products to the U.S. and European markets.