Foreign Medical Device Manufacturers under Criticism

The foreign medical device manufacturers covet the big market brought by the new medical reform.

The foreign medical device manufacturers are attracted by the 850 billion yuan (USD 125.04 billion) in the new medical reform. However, the foreign medical device manufacturers are criticized for their ignorance of the after-sale service.

In the “Entrepreneur’s Roundtable Session” held by the Ministry of Health on August 21, Wang Guoqiang, vice minister of health in China, asked the senior executives from Siemens, GE, Philips and so on: “You have sold your high-end products to us to make the hospitals in the counties equipped with your products. But have you ever considered the utility and compatibility?”

In the China Medical Device & Equipment Show which was held at the same time, the foreign manufacturers have taken all the eye-catching positions in the exhibition room.

Do these medical devices priced at more than ten million yuan (USD 1.47 million) suit all the hospitals in China? Is it good for the hospitals in a small county to have the “Da Vinci Surgery System” equipped?

Sale without After-sale Service

Wang Guoqiang said in the conference: “Have you (the foreign medical device manufacturers) ever checked the performance and utility of your linear accelerator, MRI and CT or whether the operation of these products conforms to the specification?”

The multinationals present were all in silence for Wang’s words.

Wang Guoqiang added: “Cancer is the most fatal disease in China. Have you ever made a survey about your products’ performance of treating cancers?”

“I know that your products are equipped with the latest technology but the operators usually have no qualified skills and can not make full use of these advanced machines,” Wang answered this question by himself. “You want an improving sale of your products but the performance must be stressed.”

These words just figure out the truth that the foreign medical device manufacturers just focus on the profits but ignore the demand of their Chinese customers.

Instigated by the foreign device manufacturers, the tertiary and secondary hospitals in China are all striving to buy the expensive devices.

On June 29, 2009, the Ministry of Health issued a notice, criticizing the Shanghai Municipal Department of Health for its approving four hospitals’ buying “Da Vinci Surgery System” beyond its authority. In September 2008, the Beijing Municipal Department of Health didn’t prevent the Beijing Ditan Hospital from buying the robotic surgery system with special fund and was criticized by the Ministry of Health. In addition, the aforementioned hospitals which bought the “Da Vinci Surgery System” were forbidden to use these devices.

It is only an epitome of blindly buying the high-end medical devices in China. Wang Guoqiang said: “Without any special talents who are proficient in operating these devices, the costly devices can not function as expected which lie idle in the hospitals.”

In spite of this, the directors of some tertiary hospitals still think that their hospitals are short of high-end medical devices and hope for massive purchasing.

A director from a tertiary hospital in Northeast China said that every one million people in China have only 1.6 MRI machines while every one million people in the USA have 18 units. However, a source said that “the director has very good relationship with a large medical device manufacturer in the USA”.

Presently, the hospitals in the communities and rural areas have been the main targets of Siemens, Philips, GE and some other multinationals, who are expending their arms into the hospitals located in the counties and towns.

Costly Maintenance

Zheng Quanlu, vice chairman of the China Medical Device Association, says that the foreign companies have already taken 80% of the CT market, 90% of the MRI market, 90% of the supersonic device market, 85% of the test device market, 90% of the ECG market and 90% of the high-end physiological recorder market.

In addition, the markets of MRI machine, MR and CT are taken by GE, Siemens and Philips.

According to an insider from the China Chamber of Commerce for Import & Export of Medicines & Health Products, the foreign companies have already seized 90% of the high-end medical device market in China. “Nearly all the large hospitals are equipped with the foreign diagnostic devices.”

According to an insider from a Beijing-based medical device imports and exports company said that “the foreign medical devices are usually much more expensive than the domestic ones. A CT scanner usually costs 13 million yuan (USD 1.91 million). The high-end machines with better technology content are usually priced at 20 million to 30 million yuan (USD 2.94 million to 4.41 million).

The hospitals in China are still busy importing the costly medical devices despite the high prices. Around 20 units of “Da Vinci Surgery Systems” have already been bought by the Chinese hospitals. This robotic surgery device, whose exclusive agency was Chindex (Beijing) International Trade Co., Ltd, costs 22 million yuan (USD 3.24 million) per unit. In addition, each dismountable robotic arm of this machine can be used maximally for 20 times. According to a doctor in the Shanghai Ruijin Hospital, the cost of a surgical operation is between 80 thousand and 100 thousand yuan (USD 11.8 thousand and 14.7 thousand).

But the high price and costly maintenance can not put out the enthusiasm spurred by the foreigners. In the China Health Forum held on August 20, Siemens made a wonderful show of its Flash-speed CT scanner. By now only 100 units of this machines have been sold in the world, 20 of which are sold to China.

In addition, the foreign medical device manufacturers have no domestic rivals and therefore take the pricing right, forcing the domestic hospitals to accept their prices.

The problem of after-sale service ensures. Presently GE, Siemens and Philips respectively employ 3,000 people in China, most of whom are engaged in market while only a few provide the after-sale service. The analysts point out that the after-sale service can not bring so many profits as the sale of the devices. Therefore, the companies usually pay less attention to the after-sale service.

Siemens has already sold 15 thousand medical devices in China but the information about the after-sale service is unavailable. Dr. Bernd Ohnesorge, president of the healthcare department of Siemens China, refused to give out the detailed information about the proportion between the products directly sold by Siemens or sold by the agencies, which he considered as a business secret. He only said that some high-end products were distributed through the agencies.

The behindhand after-sale service is also attributed to the fact that the agencies usually sell the products with low profit margin and the lucrative devices are directly sold by the companies themselves. The foreign companies who stress their fame and market share take some measures to improve the after-sale service for the costly high-end medical devices. However, the agencies who sell the less profitable devices usually ignore the after-sale service.

A source said that the foreign companies and their agencies usually play close attention to the after-sale service for the tertiary hospitals. The manufacturers send the special engineers to install the machine and arrange training courses for the doctors and nurses. However, the after-sale service for the less important hospitals is usually not so satisfactory.

Presently, the Ministry of Health is promoting the medical device manufacturers to sell their products to the hospitals in the rural areas and promise subsidies. During that process, some foreign companies hope to persuade the hospitals to buy their high-end X-ray scanner and so on, which are not sure to be compatible with these hospitals in countryside.

Actually, the Ministry of Health is working on some stipulations to put an end to the blind purchasing of high-end medical devices and the dissatisfactory after-sale service.