CHINA — GE HealthCare is expanding its presence in the Chinese medical device market by forming a long-term joint venture with Sinopharm, one of the largest life science products companies in the world.
Sinopharm is ranked second in the Pharma 50 report of the world’s largest pharma companies, with around US$60 billion in annual revenue.
Along with drug development, Sinopharm operates a significant logistics network for drugs and medical devices in China.
Meanwhile, GE HealthCare is ranked sixth in the Medtech Big 100 report of the largest medical device companies.
GE HealthCare already has an existing joint venture relationship with Sinopharm through Hangwei, a medical equipment manufacturing company formed in 1991.
The new long-term joint venture is with Sinopharm’s China National Medical Device Co. (CMDC), and it initially involves providing non-premium CT and general imaging ultrasound solutions for primary care and rural health.
The product scope may be further expanded as the joint venture develops, subject to agreement by the two parties.
The formation of the joint venture is pending regulatory approvals from the Chinese government.
According to GE HealthCare, the new joint venture is aligned with its business strategy to grow in emerging markets with a local approach tailored to customer needs.
The company aims to develop, manufacture, and commercialize medical equipment to address the growing needs of China’s healthcare market.
This latest joint venture is part of GE HealthCare’s ongoing expansion plans, following its spinoff with GE, which took effect in January.
The company recently announced a 10-year agreement worth up to US$760 million with Advantus Health Partners, providing its healthcare technology management services to Advantus’ clients.
China is a prime market for GE HealthCare
According to GE HealthCare’s most recent annual report, roughly 13% of its US$18.3 billion revenue in 2022 came from China.
The company has 7,200 employees in China, which is just under half of the 16,300 employees it has in the U.S. However, the company’s revenue from China declined by 6%.
This was due in part to COVID-19 lockdowns, as well as the Chinese government’s efforts to control healthcare costs by changing the procurement process for the national health system.
GE HealthCare’s annual report noted that a policy effectively prohibits the sale of products through multi-layer distributors, even between wholly-owned subsidiaries.
Other U.S. medtech companies have also struggled with the Chinese government’s volume-based procurement decisions.
For example, Zimmer Biomet spine and dental tech spinoff ZimVie recently announced that its spine tech business is exiting the market due to these procurement decisions.
Despite these challenges, GE HealthCare appears to be expanding its presence in China through the recent joint venture with Sinopharm.
The company’s business strategy is to grow in emerging markets with a local approach tailored to customer needs.
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