China's med-tech industry corners a big global market pie while India still explores

While the Indian medical equipment industry is struggling to grow and reduce our dependency on imports, China, a relatively newcomer in the global medical equipment market since the start of this century, has started conquering the global med-tech market dominated by the US and European companies.

If China accounted for less than 3% of global trade in med-tech products in 2000, its share in global med-tech trade surged to 12.4% by 2021, amounting to nearly $40 billion. By the end of 2023, China had more than 32,000 medical device manufacturers, generating $160 billion revenue. This growth is driven by government initiatives, strong domestic demand, and rising innovation within the country’s healthcare sector, says a Praxis Global Alliance research report. In 2024, China exported $11.4 billion of medical instruments, and the main destinations were the United States ($2.5 billion), Japan ($649 million), Germany ($600 million), Brazil ($452 million), and India ($447 million).

As against this, India, which imports 70-80% of its medical equipment requirements from countries such as the US, China and Germany, imported med-tech worth $8.1 billion in FY24. With a domestic industry mainly producing low-end technology medical devices, exports were worth only $3.7 billion in FY24. The market size of the medical devices sector in India was $11 billion (approximately ₹90,000 crore) in 2020, and its share in the global medical device market was only 1.5%.

What drives China?

The Chinese success stems from a powerful combination of strategic and strong government support, aggressive R&D investment, strong technological capabilities, and calculated global expansion, say experts.

China's national strategies like 'Made in China 2025' explicitly prioritise med-tech, setting ambitious goals for domestic production of mid-to-high-end devices (70% by 2025, 95% by 2030). The Government also offers significant financial incentives. Direct government support (subsidies, tax breaks, below-market borrowing) for listed MedTech firms increased nearly fivefold between 2017 and 2022. Highly favourable R&D tax policies help innovation. These include a 100% super tax, manufacturing firms can deduct 200% of R&D costs, which helps to significantly reduce the cost of innovation. Additionally, faster VAT refunds for equipment upgrades further support innovation and growth.

Driven by government incentives and market competition, Chinese MedTech firms are now investing heavily in R&D. Leading companies dedicate 11-14% of their revenue to R&D, surpassing the 6-8% average often seen among Western peers. To ensure quality, programmes like the 14th Medical Equipment 5-Year Plan further emphasise improved performance and quality standards through mandatory requirements and inspections, note Praxis Global Alliance researchers.

The Chinese med-tech industry is also focusing on developing high-end medical devices, effectively harnessing its national capabilities in digital technology and AI to gain a competitive edge in MedTech. China leads significantly in digital health patents, accounting for 40% globally (over 66,000 patents) between 2018 and 2022, more than double the US filings.

Chinese MedTech players are leveraging a powerful mix of affordable labour, proximity to suppliers, and growing technical depth to manufacture high-quality devices at significantly lower costs. Investments in cutting-edge technologies and access to global talent are helping bridge the quality gap, while local sourcing and scale efficiencies drive down prices. This combination is enabling Chinese firms to offer globally competitive products that deliver strong value across both emerging and mature markets, say experts.

The Chinese MedTech companies are also actively using strategic partnerships and acquisitions in the global market. Shenzhen Mindray Bio-Medical Electronics, popularly known as Mindray, acquired Germany-based DiaSys Diagnostic Systems for over $660 million in 2021. Leading Chinese companies like Mindray, Venus MedTech, Peijita, Zhenda Medical, United Imaging, AK Medical, Bluesail, MicroPort and Wego have bought at least ten overseas MedTech companies since 2017, investing many billions.

India's global ambitions

India's focussed global ambitions in MedTech sector bloomed as late as 2023. The country came up with the India National Medical Devices Policy, 2023 to emerge as a global leader in the manufacturing and innovation of medical devices by achieving a 10-12% (from less than 2%) global share over the next 25 years. The Policy envisages helping the Medical Devices Sector grow from the present $11 billion to $50 billion by 2030.

A Production-Linked Incentive (PLI) scheme for promoting domestic manufacturing of Medical Devices (PLI MD) was launched with an outlay of ₹3,420 crore and tenure from 2020-21 to FY 2027-28. The financial incentive is given to selected companies at the rate of 5% on incremental sales of medical devices manufactured in India and covered under the four target segments - Radiotherapy, Imaging Devices, Anaesthesia, Cardio-respiratory & Critical Care, and Implants.

Under the scheme, 19 green-field projects have been commissioned and production of 44 products, including high-end medical devices such as Linear Accelerator, MRI machines, CT-Scans, Mammograms, C- Arms, Ultrasound machines, which were previously imported into the country. The cumulative sales made by the applicants under the scheme up to September 2024 was ₹8,039.63 crore (which includes exports worth ₹3,844.01 crore), shows government data.

Now, 100% Foreign Direct Investment (FDI) is allowed in the medical devices sector and most FDIs are in sectors such as equipment and instruments, consumables and implants. ​FDI inflow in the medical and surgical appliances sector stood at ₹25,959.25 crore ($3,735.93 million) between April 2000 and September 2024, says the IBEF data. Leading investors include global players like Johnson & Johnson, Medtronic and Transasia Biomedicals.

Medical device clusters are coming up in Gujarat, Maharashtra, Karnataka, Haryana, Andhra Pradesh and Tamil Nadu. The scheme Promotion of Medical Devices Parks, with a total financial outlay of ₹400 crore and the tenure from 2020-21 to 2024-25, provides for the maximum financial assistance of ₹100 crore each to 4 selected States/Union Territories for the creation of Common Infrastructure Facilities in the medical devices parks. In May 2023, an Export Promotion Council for Medical Devices was established under the Department of Pharmaceuticals, with its headquarters in Noida.

According to IBEF, the medical technology sector in India is projected to reach ₹4,33,150 crore ($50 billion) by 2030 and the diagnostic equipment market is expected to reach ₹51,978 crore ($6 billion) by 2027, up from ₹34,652 crore ($4 billion) in CY23. India's medical technology industry is poised to reach exports of up to ₹1,69,000 crore ($20 billion) by FY30, according to the Confederation of Indian Industry (CII).