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Japanese medical lab device production goes upmarket in China amid Chinese new rules to buy Chinese domestically made products
Shimadzu to build high-end testing equipment overseas for first time
Medical labs use Shimadzu mass spectrometers to test blood and other samples. (Photo courtesy of Shimadzu)
EISAKU NITTA and MUNEMASA HORIO, Nikkei staff writersSeptember 11, 2023 11:20 JST
BEIJING/KOBE, Japan -- Japan's Shimadzu will start manufacturing high-end testing equipment for hospitals in China as early as 2024, as government rules push health care providers to buy Chinese-made products.
"We'll invest about 3 billion yen ($20 million) to expand our factory in Suzhou and start Chinese manufacturing of high-value-added products," President Yasunori Yamamoto told Nikkei in Beijing.
This will mark the first time for the company to make these high-end laboratory devices outside Japan.
Mass spectrometers can sell for the equivalent of as much as hundreds of thousands of dollars. Hospitals use them to examine blood or urine samples for traces of markers associated with cancer and other diseases.
The Suzhou facility will continue to make lower-end analysis instruments, and Shimadzu plans to increase its output of X-ray equipment and other medical devices there as well.
The manufacturer reported 482.2 billion yen in group sales for the fiscal year ended March. China was second only to Japan as a market and accounted for about 20% of the total.
Shimadzu aims for 200 billion yen in sales in China in the year ending March 2029, double last fiscal year's amount, Yamamoto said.
Shimadzu joins other Japanese medical equipment makers that have been ramping up manufacturing in China since disruption from the COVID-19 pandemic settled down in 2022.
Canon Medical Systems recently started building completed CT scanners in Dalian, after having previously made only parts there, and is considering making MRI equipment in China as well.
"In addition to demands from the government, competition with local manufacturers has gotten tougher," said Yasuyuki Masakari, an executive at Canon Medical.
Olympus plans to spend around 5.5 billion yen to build a new plant in Suzhou for endoscope components, aiming to bring it online in 2024 or later.
This shift to local production has been spurred by the Chinese government's push for domestic manufacturing of medical equipment, one priority in its Made in China 2025 industrial modernization initiative. A notice sent to local governments in 2021 directed them to prioritize locally made products when procuring medical devices.
"In response to the notice, since around 2022, lists restricting the introduction of imported equipment are increasingly being used at major hospitals in many areas," said Fumi Takatsuki, a partner at Japanese law firm Oh-Ebashi LPC & Partners.
Many foreign suppliers interpret this as the government essentially requiring production in China.
"There will be more cases where we won't even be able to participate in bidding if our products are still made in Japan," the head of a Japanese medical equipment company said.
The Chinese medical device market is forecast to double in size between 2020 and 2025 to 1.72 trillion yuan ($234 billion), according to Statista.
Western manufacturers like GE Healthcare and Philips moved early toward local development and production, starting around 2010, said Ka Gen at the Japan Research Institute.
This let them "secure large numbers of engineers in areas such as image analysis, which they leveraged to develop their own software," Gen said.
Japanese medical lab device production goes upmarket in China
Shimadzu to build high-end testing equipment overseas for first time
asia.nikkei.com
