The playing field for med techs in China is changing rapidly.
Over the past decade, the government has issued a number of policies reshaping the industry, whether it's about encouraging localization, whether it's about encouraging innovation. But a very important part of that is to control the spending.
Among the spending control initiatives, volume based procurement or VBP is by far the most important and also the most effective initiative, to control the price of medtech products. Since the first national VBP in twenty twenty, now VBP has been rolled out for about five years, with the rules being more rationalized.
It started from the most mature product categories with a lot of local competition, such as coronary stent, to some product categories that are still at the growth stage, such as electrophysiology or peripheral stents. Now, clearly, there is significant price pressure to the med techs. You may hear from the news that the price cut range, is from sixty percent to ninety percent depending on the specific product categories.
Despite the challenges, there is also some potential opportunities post VVP if you're well prepared. For example, you can expand your hospital coverage rapidly by effectively managing hospital volume submission. There is potential to shift your portfolio towards more premium products given the narrower price gap between premium and basic products post VVP. There is also an opportunity of procedure volume uptake given the drop of product price, though it takes time. And you will need to plan ahead the capacity of clinician education and supporting services, which can also be the constraints to procedure growth.
There is a number of ways company can try to do to navigate the BVP challenges. For example, you can try to influence the policy rule setting by negotiating for a better grouping so that you can stay in the game with a lower price. You can actively think about your portfolio in China to try to upgrade your product portfolio towards the more premium products in your existing portfolio.
And very importantly, try to bring in innovation at a faster space and at a lower cost.
Lastly, go to market remodeling is also an important initiative. You will need to think about how to reconfigure your channel to enhance your efficiency and effectiveness when you go to market.
