China has become especially enticing as an unpenetrated, gigantic health care market, especially since the government in 2009 signed into effect a health care reform bill promising $125 billion over a three-year period to modernize the infrastructure of health care and provide insurance coverage to hundreds of millions of people. Medical device companies look to China as an enormous and rapidly growing market for medical disposables and equipment. However, the complex nature of the distribution infrastructure in China will make it difficult for companies to get a foothold. Headquartered in Beijing, TCT Medical Inc., which recently received $10 million in venture funding from Fidelity Asia Ventures and Fidelity Biosciences, its sister firm in the US, offers a potential solution for companies focused on women's health, and a model for the future.
TCT Medical Offers A New Model For Device Distribution In China
Article preview from Start Up- July, 2010
Medical device companies are wrestling with health care reform in US markets, and its potential to dampen both innovation and existing device markets. Europe used to offer easy markets to device companies, but opportunity there appears to be drying up also as Europe begins to mount higher hurdles to reimbursement. ( See " European Cost Concerns May Impact Devices," IN VIVO , July/August 2010 [2010800133].) But somewhere in the world, there is a land where the dynamics are in place to foster, not stymie, growth in medtech product industries. Today, China has become especially enticing as an unpenetrated, gigantic health care market, especially since the government in 2009 signed into effect a health care reform bill promising $125 billion over a three-year period to modernize the infrastructure of health care and provide insurance coverage to hundreds of millions of people. Medical device companies look to China as an enormous and rapidly growing market for medical disposables and equipment.
However, the complex nature of the distribution infrastructure in China will make it difficult for companies to get a foothold. Headquartered in Beijing, TCT Medical Inc., which recently received $10 million in venture funding from Fidelity Asia Ventures and Fidelity Biosciences, its sister firm in the US, offers a potential solution for companies focused on women's health, and a model for the future.
For multinational companies wishing to detail products in China, there are numerous challenges, with the biggest being the fragmented and unpredictable nature of the distribution infrastructure. More than 150,000 individual distributors sell devices in China. Typically, they specialize in a region rather than a clinical focus. Many of them barely have the capital to stay in business. Most distributors sell a seemingly haphazard array of products for a number of different specialties, and they don't understand or offer non-compete agreements. Finally, China, with all of its provinces and regulations that are particular to each, presents a distribution challenge that's more like the entire continent of Europe, than a single, unified country.
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