Healthcare reform in China could be a major boon to Medtronic (NYSE:MDT), according to CEO Omar Ishrak.
Ishrak spoke to the China Daily about how such reforms could allow Medtronic to expand care in the region and lower costs.
“In the medical device market in China, we have the leading market share. For our latest product in China – the heart valve – we have solid experience that we are proud of to bring to China. I think our competitive edge lies in our understanding the needs of local physicians so that we can customize products to meet their demands,” Ishrak told the paper.
Reforms aim to lower the cost of healthcare in China – something Ishrak said is a good cause, and that will help medical manufacturers increase access to care in the region.
“Future efforts would involve helping improve healthcare quality in remote China, expanding sales and distribution networks to reach more people in need,” Ishrak told the China Daily.
Ishrak touted that Medtronic would be the 1st company to open a bio-prosthetic heart valve manufacturing site in Shanghai, saying that the facility would help relieve the shortage of such valves in China and globally.
China is lagging behind other developed countries in terms of government healthcare spending, according to Ishrak, but that means that reforms could have a more significant impact on the country.
“The costs of healthcare remain high compared to other developed nations. Data from the World Bank shows that as of 2014, the US spends 17.1% of its GDP on healthcare, but China spends around 5.6% of its GDP. There is room for improvement, but the government is on the right track,” Ishrak told the paper.
The major problem in the region isn’t high costs, it’s limited access, Ishrak said, but the region still holds serious potential, he added, saying that there are more patients and more physicians in China than any other area in the world.
“In 10 years, probably, the Chinese market would have outpaced the US market.To us, what makes China unique, is that Chinese government has a systematic approach to resolve the huge demand for better healthcare service through managing the pace of investment and by improving training of medical professionals. In this way costs are controlled. The Chinese government has been leveling the playing field for market players, which makes China a long-term viable market,” Ishrak told the China Daily.
