Agenda

1. China Medical Device IndustryCurrent Situation and TrendsPresented by Jiang FengChina Association For Medical Devices Industry

2. Agenda • General Situation • Problems • Trends • Suggestions

3. Above 10,000 medical devices manufacturers - 11,847 manufacturers in 2005 - increase of 1400 compared with the year of 2004 Growth Rate: 13.40% Gross Industrial Output Value : More than USD3.09 billion General Situation: Manufacturers

4. General Situation: Manufacturers Types of the industry structure State-owned Enterprises Private Companies 3% 60% 37% Joint Ventures (measured by quantity)

5. General Situation: Manufacturers Three key geographical manufacturing areas • Pearl River Delta • Yangtze River Delta • Bo Hai Bay Loop

6. General Situation: Products Registration Information In 2005 : • Imported Medical Devices: 10111 • Domestic Medical Devices: 33847 Class I &II -- 27213, Class III -- 6634

7. General Situation: Products • Therapeutic Products: Tri-dimensional Ultrasonic focused therapeutic system, body rotary Gamma knife, simulator, linear accelerator • Medical Diagnostic Products: Black & white and colored supersonic diagnostic unit, sleeping monitor, digital X-ray system, MRI, CT, DR • Operating & Emergency Appliances: Anaesthesis ventilation system • Components: High frequency & voltage generator

8. General Situation : Market Figures Business Situation • More than 30,000 Agencies • Import Products – over 80% Market Shares Focus on High-tech devices and large equipment

9. General Situation : Market Figures Sales Capacity of the global medical devices market Increase from 210billion in 2005 to 260billion in 2006 Others 25％ USA40％ China 5％ Europe 18％ Japan 12％

10. General Situation : Market Figures Sales Capacity increased from USD5.56 billion in 2000 to USD11 billion in 2005 ,19% annually

11. General Situation : Market Figures Sales volume in 2005 : • Largest foreign-owned manufacturer: GE Medical USD 700million • Largest domestic medical manufacturer: Mindray USD 120million • Largest domestic agency: CMIC USD 61.7 million

12. Total Imported Value:USD1.82billion Jan.- Jun.2006 General Situation: Import & Export 6.30％ Besides the abovementioned countries, Holland, Singapore, UK, France, Switzerland, Ireland ,Israel, Italy, Korea, Sweden

13. Besides the abovementioned countries& areas, Singapore,UK, Italy,Russia,Taiwan, Canada, France, Malaysia,Ireland General Situation: Import & Export Total Exported Value : USD3.16 billion Jan.- June.2006 20.94％ Others 51.65%

14. General Situation: Import & Export Top 10 domestic export enterprises Jan.- Jun.2006 1Hangwei GE Medical systems 航卫通用电气医疗系统有限公司 2Omron Dalian 欧姆龙(大连)有限公司 3Family Health Equipment (Shanghai)Co.,Ltd. 发美利健康器械(上海)有限公司 4Siemens Hearing 力斯顿(苏州)听力技术有限公司 5 Luxottica Dongguan 陆逊梯卡华宏(东莞)眼镜有限公司 6Terumo Medical Products (Hangzhou) Co. Ltd 泰尔茂医疗产品(杭州)有限公司 7Shenzhen Baoan Foreign Economic Development Co.,Ltd. 深圳市宝安外经发展有限公司 8SHENZHEN MINDRAY 深圳迈瑞生物医疗电子股份有限公司 9Shanghai Light Industrial Products Import and Export Corp. Ltd. 上海轻工业品进出口有限公司 10GN ReSound China瑞声达听力技术(中国)有限公司

15. General Situation: Import & Export Mainexported Products • Standard device, small surgical instruments, etc. • Some value added products - ultrasound imaging device - patient monitoring system - diagnostics tools

16. General Situation: Import & Export • Foreign & Joint Ventures: over 50% of the total exporting volume • Hi-tech Medical Equipment Export increased • Increasing competitive capability of Medium & Small Enterprises

17. Problems • Commercial Corrupt Practices Act • NDRC policy of restricting price • Equipment Choosing & Quota system Problems

18. Problems • Developing Law System • Low R&D input • Technology Achievements Transfer Difficulty • Lack of high-tech products

19. Trends: demand • Sales volume of the medical devices V.S pharmaceutics industry In developed countries 1:1 In China : 1:3 < 2% of GDP

20. Trends :demand • MOH building the country and the community Medical treatment systems - USD 2.7 Billion / USD 0.85 Billion - Government Purchase • Hospitals management system reform • After SARS, medical devices input increase Growth Engine:

21. Trends :demand • increasing desire for utilization of more advanced technologies and higher degree of operating autonomy in Chinese hospitals and clinics * 175,000 domestic hospitals & clinics ,15% of the medical devices are made in the 1970s • growing desire for better quality of care • increasing availability of healthcare insurance Growth Engine:

22. Trends • Fast Development of R&D Organizations • More Investment Input • More Focus on Intellectual Trainings • High quality products increased • High tech products enhanced • Fast Growth Rate on Export Trends

23. Suggestions China Market Strategy Suggestion For Foreign Medical Device Manufacture

24. Suggestions China Market Strategy Suggestion for Foreign Medical Device Manufacture • Pre-research • Registration • Price Strategy • Select Distributor • Manufacturing

25. Suggestions • Pre-research • - What is hot in China • - Marketing situation and trend • - The related manufacturer information from • - Government policy and regulation • Suggestion: Choose the senior NPO/Company

26. Suggestions • Registration • - High time cost • - Evading the product not be clearly regulated • - Choosing NPO/Company

27. Suggestions • Price Strategy • - Promotion Expense • - Controlling price range

28. Suggestions • Select distributor • - Integrated Strengths • - Extensive distribution, sales and service network • - After-sales service and maintenance • - innovative business model

29. Suggestions • Manufacturing • - Government resource and public relation • - Distributing Channels • - Patent Protecting / Products Copying

30. Thank You ! frankcmic@yahoo.com.cn