Government spending on health care to increase 7x by 2016

With the country on a relatively sound fiscal footing, the PRC government is turning to major domestic issues like health care. According to the WSJ, government spending on health care will reach US$170 billion in 8 years.



This should be especially beneficial for domestic medical device companies like Mindray.

Liu Yanming, an analyst with Galaxy Securities, expects government funding for health care to soar to about 1.2 trillion yuan (roughly $170 billion) in 2016 from about 170 billion yuan in 2006.



Du Jinsong, an analyst based in Hong Kong for Credit Suisse, says some medical-device companies will benefit from this increased spending. Mr. Du estimates that revenue in China's medical-device market will grow an average of 20% a year between 2007 and 2010.

Shenzhen med device company buys sales network in US for $202 million

As I've said elsewhere, companies with established sales (and distribution) networks in the U.S. will become increasing attractive acquisition candidates for Chinese firms looking to access what is still, by far, the biggest market in the world.



From 3/11/2008 WSJ:

Mindray Medical International Ltd., one of China's top medical-device makers, will acquire Datascope Corp.'s patient-monitoring business for $202 million, Mindray said, securing a foothold in the U.S. market as the company strives to become an international competitor.



The deal between Mindray, of Shenzhen, and Datascope, of Montvale, N.J., comes as Chinese health care companies increasingly look to overseas markets to build on profits made on low-cost manufacturing at home.



The purchase of the Datascope business, which had revenue of $161.3 million last year, will give Mindray access to Datascope's network of sales and service representatives, some 90 people who peddle the company's products to hospitals and surgery centers across the U.S. Building that kind of network from scratch would have been a challenge, said Joyce Hsu, Mindray's chief financial officer, who confirmed the deal.