China Wound Care Market Is the Local Potential Much Higher than the Exports?

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August 2014

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Executive Summary

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Source: Frost & Sullivan

Key Findings

• The wound care market in China is moving away from being an export-oriented industry to domestic-

sales-oriented industry, due to expanding domestic demand and the contraction of export market. The

share of domestic sales has been increasing; and there has been an increase in the number of export-

oriented manufacturers venturing in the domestic market.

• 10% of the manufacturers account for 47% of the market share. The other 90% of the manufacturers

are smaller and regionalized.

• Traditional wound care products contribute to 70.0% of the total wound care market revenue, as these

products require low technology and the natural materials are sourced in China at low cost.

• With the increase in disposable income and physicians’ awareness of the benefits of advanced wound

care dressing, the growth potential of advanced wound care dressing is expected to increase.

• MNCs dominate the advanced wound dressing segment, while local manufacturers hold a higher

share of the traditional wound care segment. Owing to advancement in technology and development

of new strategies in servicing hospitals and clinicians, domestic manufacturers are making inroads into

the advanced wound care dressing segment.

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Source: Frost & Sullivan

Market Definition

Tier Function No. of Bed

I Primary care hospital that provides prevention, basic medical services, and health maintenance 20-99

II Regional hospital that provides medical services to multiple communities 100-499

III Cross regional hospital that provides specialized medical services to multiple regions >500

Total Wound Care Market: Segmentation, China, 2013

Wound care refers to the restoration of the continuity of cells, through a continuous sequence of

inflammation and tissue repair during which epithelial, endothelial, inflammatory cells, platelets and

fibroblasts briefly interact to restore normal function.

Moist wound dressing, antimicrobial dressing, and active therapies are grouped under advanced wound

dressing segment in the study.

In China, hospitals are classified into three tiers according to their functions and size as below:

Traditional Wound Care Products

he restoration of the

Moist Wound

Dressing

continuity of cells th

Antimicrobial

Dressing

gh a continuous

Active

Therapies

equence of

Negative Pressure

Wound Therapy

Total Wound Care Market

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Key Questions This Study Will Answer

What are the key market drivers and restraints in the Chinese wound care market?

What is the growth prospect for traditional wound care segment and advanced wound care segment

in China?

Who are the key market participants? What are the positioning strategies of the key market

participants?

What is the business environment of the Chinese wound care market?

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Note: All figures are rounded. The base year is 2013. Source: Frost & Sullivan

Market Engineering Measurements

Total Wound Care Market: Market Engineering Measurements, China, 2013

For a tabular version, click here. Stable Increasing Decreasing

Compound Annual Growth Rate

5.5%

(CAGR, 2013–2021)

Market Concentration

8%–10%

(% of market share held

by top 3 companies)

Market Stage

Growth

Market Size for Last Year of Study Period

$3,124.6 M

(2021)

Customer Price Sensitivity

7

(scale:1 [low] to 10 [high])

Degree of Technical Change

5

(scale:1 [low] to 10 [high])

Market Revenue

$2,037.0 M

(2013)

Base Year Market Growth Rate

4.8%

Market Overview

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CEO’s Perspective

2

The average disposable income in China, mainly in the urban

sector has increased by 13.4% a year and is around 25,000 Yuan.

This increase, along with affordable pricing, is likely to support

spending on better treatment; hence, market share of domestic

companies is likely to increase by 10–5% during the period.

3

Hospital sector accounts for 70%–80% of the total sales, hence

sales force channelization to build relationships with hospital

personnel is the key to success. With the growth in newer cities,

Tier II hospitals is likely to be the new opportunity for growth.

4

Domestic wound care manufacturers tend to invest around 2% of

the revenue in R&D. With increased competition form

multinational participants, innovation in products, competitive

pricing and quality is key to increasing market share in the wound

care sector for these companies.

5 The universal coverage (approximately 95%) of public health

insurance schemes and increased reimbursement rate for wound

care products would further stimulate demand.

1 With 18% of the population in China aged above 60 years and

10% of the population being diabetic, the country holds very high

potential for the growth of wound care products.

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Multinational Companies to Watch

Smith & Nephew

One of the earliest MNCs which made its presence in the AWC market in China.

The company has two manufacturing facilities in China which cater to the global

demand. It has two education and training centers that provides knowledge and

product training for physicians in China. Its long-term relationship with many key

Tier III hospitals has supported loyal customer base and high market share.

Molnlycke Health Care AB

The company has built strong relationship with physicians in China by setting up

its wound care center to training clinicians at six Tier III hospitals. This approach

allows the company to create product portfolio that meets the local needs. It is

one of the leading companies in moist wound care product sector.

Coloplast

The company has a significant presence in wound care and ostomy care market

in China. It is considered one of the leaders in the moist dressing sector due to

its superior quality products and effective marketing strategies. The company

aims to expand its product line and target key hospitals and also increase its

sales force to support the same.

Kinetic Concepts Inc.

With its leading technology in AWC, the company has significant presence in the

NPWT segment in China. The takeover of Systagenix supported further

penetration into advanced wound care (AWC) dressing market in China.

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Local Companies to Watch

Shandong Wego

Newlife Medical

Devices

A leading domestic manufacturer of NPWT. The company has good reputation

among the Tier III hospitals. Its strength in product innovation and effective

marketing strategy (through providing training to physicians and nurses) makes

the company a leader in the segment.

Zhejiang Top

Medical

The company is one of the pioneers of AWC products in China. Its strength lies

in strong R&D and extensive distribution network. The company intends to

expand its market coverage through own brands.

Winner Medical

Group Inc.

An established and leading manufacturer and exporter in traditional wound care

products. The company owns a vertically integrated supply chain which allows it

to better control costs and provide high quality products. Its established

brands—Winner and PurCotton—have gained extensive presence in domestic

market.

Changchun JA

Biotech

A leading manufacturer of hydrogel dressing, the company has gained

recognition and support from the government. Its R&D ability and product

innovation outstand many manufacturers of the segment.

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The Last Word—Three Big Predictions

3 AWC will gradually replace the traditional wound care in during and beyond the

forecast period.

1 More export-oriented manufacturers will reorient the focus of business to the

expanding domestic wound care market, so intense competition among

traditional wound care products manufacturers is expected.

2 Government policy to support the growth of local Chinese AWC product

manufacturers would challenge the domination of MNCs in this segment.