Some Manufacturers Face Uncertainty; Others WIll Prosper

In the coming years, industry consolidation, aided by new investments into the healthcare industry by financial investors from China and abroad, will accelerate. The stronger players will be able to take advantage of new investments to acquire new technology and intellectual property ownership to develop future products and markets. Their economies of scale and large range of product lines also will allow them to maneuver through difficult times in the lower-tier market, while using political ties and connections to influence policies and regulations in the future. Small-scale manufacturers, however, may have a much harder time staying above water in China with all these changes.

Before the new healthcare reform is finally unveiled, it is hard to predict the impact the medical industries will experience. It is certain, however, that the Chinese regulatory agencies will use regulations to further restrict the erosion of inferior products in the market. Pressures from the market, government policies and regulatory agencies will further push the restructuring of the industries, injecting more professional practice and ethical business relationships among the players. As the industry matures and technology and new products emerge, we can expect a healthy 14%-16% (at minimum) annual growth for the industry in the next five to 10 years.