[Blue Book of Medical Devices] Current Situation and Development Trend of Orthopaedic Implant Industry in China _ Market

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Original Title: [Blue Book of Medical Devices] Current Situation and Development Trend of Orthopedic Implant Industry in China [Editor's Note] This article is excerpted from China Medical Device Industry Development Report (2021) B14, written by Xu Shufu, General Manager of Zhengtian Business Department of Beijing Natong Technology Group Co., Ltd., and Li Renyao, General Manager of Orthopaedics Department of Beijing Natong Technology Group Co., Ltd. [Abstract] The sudden outbreak of COVID-19 at the end of 2019 has caused great losses to the global medical device market, brought new opportunities and development directions, and promoted the transformation of the medical device industry from low-end to high-end. On the one hand, companies have increased their investment in technological innovation, on the other hand, the smart medical model has gained unprecedented opportunities for development in the epidemic. At the same time, in 2020, all provinces in China will carry out purchasing with quantity, change the profit structure, and then promote the adjustment of market structure and the centralization of the industry. The promulgation of a series of regulations on the supervision of medical devices and the implementation of the unique identification code (UDI) of medical devices indicate the improvement of the supervision of medical devices and the tightening of quality control in China, while the registration certificate holder system brings new opportunities for the development of medical device companies, especially new companies. In 2020, China's orthopedic medical device market reached 29.8 billion yuan, and the localization rates of trauma, spine and joint reached 72%, 54% and 47% respectively. With the maturity of domestic enterprises'technology, the localization rate will be further improved, and innovation is still the source of power for the sustainable development of orthopaedic medical device market in China. [Key words] aging; localization rate; purchasing with quantity; digital orthopaedics [Good News]: Report on the Development of China's Medical Device Industry (2021), the fifth volume of the Blue Book of Medical Devices, was created by the China Institute of Drug Administration and published by the Social Sciences Academic Press, with Wang Baoting and Geng Hongwu as the chief editors and Yu Qingming, Jiang Haihong and Li Qiang as the deputy editors. The report was published in September. (Text below) The "14th Five-Year Plan" put forward by the Fifth Plenary Session of the Nineteenth Central Committee points out the direction for the development of China's medical device industry, and also puts forward higher requirements. With the promulgation of a series of government policies, regulations and regulations, including the Outline of the "Healthy China" 2030 Plan, the Regulations on the Supervision and Administration of Medical Devices, the Notice on the Pilot Work of Expanding the Medical Device Registrant System, and the Pilot Work Program of the Medical Device Unique Identification System, we have strengthened the supervision of medical devices. It also provides a good external environment for the innovation and development of medical devices from the policy aspect. Based on the objective environmental factors and policy guidance, this paper focuses on the research and analysis of the development situation, hot spots, new technologies and trends of orthopaedic medical device industry in 2020, in order to provide reference for the healthy and sustainable development of the industry. I. Overview of China's Orthopaedic Medical Devices Market in 2020 (I) Market Overview Expand the full text Large population base and aging population are the basic national conditions of China at the present stage. In 2022, the population over 65 years old will account for 14% of the total population, and will reach 28% by the middle of this century [2]. The elderly are a high-risk group with low bone mass, and osteoporosis is an important factor leading to fracture. In bone-related orthopedic diseases (such as osteoarthritis, vertebral compression fracture, osteoporosis, etc.), the elderly account for nearly 50%, and in fracture patients, the elderly account for 1/3. In the future, the number of orthopedic patients in China will continue to grow with the increase of the elderly. With the modern working lifestyle, the improvement of quality of life and the expansion of sports groups, the probability of orthopaedic injuries is also increasing, including fractures caused by traffic accidents, cervical and lumbar diseases, soft tissue injuries and so on. China's GDP ranks second in the world and grows fastest, but in terms of government health expenditure, China accounts for less than 5% of GDP, while the United States accounts for 16.9% of its GDP [3]. With the proposal of "Healthy China", our government has accelerated the promotion of the universal health insurance system, and the proportion of health expenditure will continue to increase. With the expansion of patient scale and the coverage of medical insurance payment, it is foreseeable that the orthopaedic market in China will continue to expand in the future. In recent years, with the release of a series of policies and regulations, our government adjusts the contradiction between the growing demand of patients and the supply of medical devices through macro-control, so as to maximize the limited resources to serve the people. Especially for domestic leading enterprises, based on the low degree of centralization of Chinese enterprises, under the promotion of a series of policies such as "two-invoice system" and purchasing with quantity, fee control, price reduction and domestic penetration will promote the centralization of leading enterprises in the industry. This is the best opportunity for China's orthopaedic implant industry to upgrade and penetrate the domestic market. While strengthening the innovation and development of medical devices, we should also strengthen the strict supervision of medical devices. China will grasp the healthy and sustainable development of medical devices from the perspective of encouragement and supervision. (II) Industry segmentation In 2020, China's orthopedic implant market reached 29.8 billion yuan, an increase of 10% over the previous year. The main segments are trauma, spine, joint and sports medicine (see Table 1). According to the information published on the website of the National Medical Products Administration, a total of 237 orthopaedic Class II and Class III registration certificates were approved in 2020, including 202 domestic (including Hong Kong and Taiwan) and 35 imported [4]. 1. Trauma In 2020, a total of 76 registration certificates were approved by NMPA,3d titanium wire, including 74 domestic ones and 2 imported ones. Affected by the COVID-19 epidemic, the growth rate of the trauma market, which is dominated by elective surgery, such as spine and joints, has slowed down significantly. Imported trauma showed a negative growth due to factors such as the third-level hospitals as the main line-ups for anti-epidemic and the purchase of trauma belts. In the domestic trauma market in 2020, imports accounted for 28%, with a growth rate of -5%; domestic products accounted for 72%, with a growth rate of 13%. In the future, degradable material solutions will be the main development direction of the trauma market. 2. Spine In 2020, 71 registration certificates were approved by NMPA, including 61 domestic and 10 imported. In 2020, there was no provincial-level purchase with quantity in the domestic spine market, and the joint market was less affected by price reduction. Also affected by the novel coronavirus epidemic and the anti-epidemic of the third-level first-class hospitals, the imported spine showed a negative growth. In the domestic spine market in 2020, imports accounted for 46%, with a growth rate of -2%; domestic products accounted for 54%, with a growth rate of 22%. In recent years, microscopic fusion, 3D printing and navigation robots have become the focus of attention in the field of spine, and are also the key development direction of spine in the future. 3. Joints In 2020, there were 54 registration certificates approved by NMPA, including 43 domestic ones and 11 imported ones; 37 registration certificates related to hip joints, 11 registration certificates related to knee joints and 6 others. Joints account for the highest share in the field of orthopaedic subdivision. As joint surgery is mainly elective surgery, the number of joint surgery has been steadily increased with the improvement of epidemic control. Affected by the price reduction of purchasing in Yunnan, Anhui, Jiangsu and Zhejiang,titanium bar grade 5, the growth rate of the joint market has slowed down to a certain extent. In the domestic joint market in 2020, imports accounted for 53%, with a growth rate of 4%; domestic products accounted for 47%, with a growth rate of 16%. In the future, it will be one of the trends in the joint market to increase market share through digital solutions, including robot-assisted surgery. 4. Sports medicine In 2020, Yunyi obtained a total of 32 registration certificates approved by NMPA, including 23 domestic ones and 9 imported ones. Sports medicine is the fastest growing segment of the orthopaedic market. Traditional orthopaedic enterprises and emerging enterprises have laid out the market one after another. In the domestic sports medicine market in 2020, imports accounted for 92%, with a growth rate of 23%; domestic products accounted for 8%, with a growth rate of 66%. At present, sports medicine solutions in the domestic market mainly focus on traditional anchors, interface screws, titanium plates with loops and other implants, which are used to solve more than 80% of basic arthroscopic surgery. Artificial ligament and biological tissue engineering related products have become indispensable solutions in the future layout of manufacturers, and are better choices for soft tissue injury repair. Second, the current hot spot of orthopaedic medical device market in China (I) Policies regulations 1. Purchase with quantity In July 2019, the General Office of the State Council issued the Reform Plan for the Control of High-value Medical Consumables (No.37 issued by the State Office), which clearly explored the centralized procurement of high-value medical consumables in accordance with the principles of purchasing with quantity and linking quantity with price. This will not only lead to the change of profit structure and the reduction of profit margin, but also bring opportunities for the improvement of localization and industry centralization, and domestic leading enterprises will be the biggest beneficiaries. Since 2019, Yunnan, Anhui, Jiangsu, Zhejiang and Shandong have successively carried out the work of purchasing with quantity. Among them, the average decrease of joint purchasing in Anhui has reached 81%, the average decrease of spine has exceeded 50%, and the highest decrease has reached 95%. The average decrease of artificial hip prosthesis in Jiangsu is 47%; Shandong joint procurement, the average decline of more than 86%, while the lowest price of pottery to pottery products dropped to 4800 yuan, the highest reduction of trauma reached 94%, the average price of universal locking bone plate was 2200. In the provinces where purchasing with quantity has been carried out, the average price drop is about 50%, while the largest single product drop is more than 85%. From the perspective of bid-winning enterprises, import enterprises have an average of 1-3 bid-winning enterprises in purchasing with quantity in each province, while domestic enterprises have been selected more than 10 in each province, of which leading enterprises have won more than 80%. In 2021, in the face of the upcoming second batch of national unified procurement with quantity, orthopaedic enterprises need to actively improve talent management and innovative technology, develop differentiated products, so as to improve product quality and brand competitiveness, and maintain their sustainable development. 2、UDI The unique identification of medical devices (UDI) is the identity card of medical devices and the code to identify the uniqueness of medical devices. UDI system plays a positive role in realizing the transparency of all aspects of the whole life cycle of medical devices and improving the traceability of medical devices. The "Key Tasks for Deepening the Reform of Medical and Health System in the Second Half of 2020" issued in 2020 (No.25 issued by the State Office) put forward that some key varieties such as high-value medical consumables should be selected to implement the unique identification of medical devic es, so as to link up their codes in registration, sale and use, so as to make them unique. To realize the unified management of the production and circulation of medical device consumables. Since the publication of the Pilot Work Program of the Unique Identification System for Medical Devices National Health Commission in 2019, the pilot work of UDI in China has been officially launched. According to the current needs of medical and health reform, 69 varieties of 9 categories, including bone joint implants, spinal implants and joint replacement implants, were selected as the first batch of medical devices. Select 108 users and 116 production and operation enterprises including 23 orthopaedic enterprises such as Tianjin Zhengtian Medical Devices Co., titanium plate gr7 ,nickel titanium wire, Ltd., Shandong Weigao Haixing Medical Devices Co., Ltd., Beijing Aikang Yicheng Medical Devices Co and Dabo Medical Technology Co as the first batch of pilot units for the sole identification of medical devices. Since the pilot work was carried out, all parties have actively participated in and worked together to basically build a unique identification system framework and a unique identification data platform. The pilot orthopedic enterprises have basically realized the functions of unique identification creation, code assignment and data upload. The next step is to carry out the global pilot of unique identification according to the work deployment, and explore and expand the application of unique identification in medical treatment, medical insurance, supervision and other fields. The construction of UDI system is a systematic project to lay a foundation for long-term benefits. Orthopedic implant enterprises should carry out the implementation of unique identification as early as possible, actively explore the application mode of UDI in product traceability and other fields, and give full play to the application value of UDI. (II) Application of new technologies 1. Biodegradable materials At present, the main materials of orthopedic implants are metal (titanium, cobalt-chromium-molybdenum, stainless steel, etc.), PEEK, ceramics, polyethylene, etc. However, with the gradual maturity of orthopedic implants, especially for traumatic fractures, the homogeneity of traditional metal implants among enterprises is obvious, so enterprises need to seek breakthroughs to maintain their competitiveness. The development or use of new implant materials has become a consensus among enterprises. Degradable materials have broad application prospects because they can not only provide initial stability, but also be degraded and absorbed after fracture healing, avoiding secondary surgery. (1) Degradable metal material Degradable metal materials have good mechanical property, mainly including magnesium, iron, zinc and their alloys. The research of these materials is mainly focused on the internal fixation of traumatic fractures. Among them, magnesium alloy has good biocompatibility and its density is close to that of human bone, so it is the most widely studied. At present, the European Union has approved the world's first magnesium alloy degradable screw, but the degradation rate of magnesium metal is faster than the formation rate of new bone, and the degradation products are easy to accumulate around the tissue. Therefore, the degradation rate of magnesium alloys, the mechanism and process of corrosion degradation in vivo, and the products need to be further studied. The mechanical property and biocompatibility of zinc alloys are similar to those of magnesium, and the metal inertness makes the degradation rate of zinc alloys suitable. As an inorganic antibacterial material, zinc also has certain antibacterial properties, and it is one of the essential elements for human body, so zinc alloys are regarded as a new choice for degradable metal materials in the future. At present, zinc alloy has been successfully used in clinical cases of internal fixation of maxillofacial trauma fractures in China. However, the research of zinc alloy is still in its infancy, and a lot of research and clinical data are needed to support its safety and osteoinductive mechanism. (2) Absorbable polymer material Absorbable polymer materials can be decomposed into CO2 and H2O through a series of enzymes or chemical reactions in vivo, and do not produce additional elements in vivo, so they have no toxic effects on human body. Polylactic acid (PLA) is one of the most widely used absorbable polymer materials in the field of orthopaedics. It has good biocompatibility and has been widely used in spine, trauma, sports medicine and other fields. The original polylactic acid material has high brittleness, poor toughness and residual fragments after degradation, and after copolymerization with other monomers and process improvement, the extensibility of the material is increased on the basis of maintaining the strength of the material, the control of the degradation rate of the material to match with the regeneration rate of bone tissues can be realized, and the material can be completely degraded and absorbed. However, due to the poor mechanical property of polymer absorbable materials, the mature products on the market are mainly craniomaxillofacial and non-load-bearing bone fixations. With the upgrading of technology, there is a process of high-strength absorbable polymer materials for load-bearing parts, but to complete the transformation of products, a large number of performance and safety validation are needed, which is an important material in the field of orthopaedics and even biomedical engineering in the future. Bone graft materials account for more than 50% of biomaterial applications. At present, there are many kinds of bone graft materials on the market, and autogenous bone is the most recognized choice for bone graft. However, due to limited sources and greater trauma, clinical use is limited. In addition, allogeneic bone and xenogeneic bone also account for a certain proportion, and the largest share is artificial bone. Traditional artificial bones mainly include tricalcium phosphate, calcium sulfate, hydroxyapatite, etc. On this basis, bioactive glass has established its dominant position in the bone graft market by virtue of its good biocompatibility, osteogenic ability and degradability. With the increase of choices and the complication of diseases, the clinical requirements for products are also increasing. Therefore, on the basis of the existing bioglass, it has become the main direction of research to increase its toughness and plasticity and improve its osteogenic ability by adding collagen, hyaluronic acid and other materials. In a word, the application of absorbable polymer materials is a new trend of orthopaedic materials in the future and has broad application prospects. 2. Digital orthopaedics The Outline of the 14th Five-Year Plan mentions that in order to speed up the development of digitalization and build a digital China, digital technology has also been vigorously developed in the clinical application of orthopaedics in recent years. Digital orthopaedics covers surgery from preoperative planning to intraoperative navigation, as well as postoperative evaluation and rehabilitation, and the integration of these treatment processes forms a digital orthopaedic surgery platform. (1) Preoperative assistance Preoperative assistance includes doctor-patient remote communication and consultation, preoperative planning and other modules, and precise planning can be achieved through three-dimensional reconstruction model, simulation training, AR assistant diagnosis and other technologies. AR-assisted preoperative planning can change the tradition of analyzing a large number of flat medical image data before operation, import the image data into AR system, and realize the information presentation of image data through image segmentation and three-dimensional visualization technology. And the three-dimensional reconstruction model can provide more accurate anatomical parameters for a doctor, so that the doctor can more intuitively and comprehensively understand the situation faced by the operation; and because a three-dimensional image is closer to reality than plane data, the three-dimensional reconstruction model can effectively shorten the learning curve of the doctor. At the same time, through the virtual cutting function of three-dimensional model, doctors can repeatedly carry out simulation training and communication. (2) Surgical robot According to the open data of National Medical Products Administration, in 2020, domestic enterprises obtained 12 registration certificates for orthopaedic robots, including 3 navigation robots and the rest rehabilitation training robots. According to the statistics of Persistence Market Research, in 2018, the installed capacity of new orthopaedic robots in China was about 26, accounting for less than 4% of the global total, and by 2019, it had reached 138, accounting for about 12% of the global total of orthopaedic surgical robots. At present, there are more than 20 enterprises carrying out robot research in China, most of which are in the stage of prototype trial and clinical trial. Surgical robot navigation or assisted surgery can help doctors achieve accuracy, flexibility and minimally invasive operation, reduce radiation damage to doctors during operation, and shorten the recovery time of patients after operation. At present, the number of orthopaedic surgical robots in China is limited, the cost of surgery is high, and the medical insurance reimbursement policy is imperfect. Most of the leading international orthopedic enterprises enter the field of robotics through mergers and acquisitions to consolidate the existing orthopedic business. At the same time, in the future, robots may be integrated with the use of orthopedic consumables, and enterprises need to advance the layout to ensure that follow-up orthopedic products can maintain access to the use of surgical platforms. With the deepening of clinicians'understanding of robots and the support of policies for intelligent surgery, the clinical acceptance of surgical robots is further improving. From the perspective of health economics, robot-assisted surgery will have great social and economic benefits in the future. III. Market Development Trend and Forecast According to the "TheOrthopaedic Industry Annual Report 2020" report [5], in the global orthopaedic market in 2019, the United States ranked first with a share of $33.1 billion, accounting for 62%; Central Europe ranked second with a share of 24%; Of the 10% share in the Asia-Pacific region, China and Japan are the larger single markets; the rest account for 4%. In 2020, in the global orthopedic market, the joint market share is $16.1 billion, with a growth rate of -17.4%, including $7.6 billion for knee replacement, $6.4 billion for hip replacement, and $2 billion for limb joints; $7.9 billion for spine, with a growth rate of -18.1%, and $7.3 billion for trauma, with an increase rate of -15.4%; Sports medicine is 4.8 billion, with a growth rate of -17.3%. In the forecast of the global orthopedic market in 2021, joint replacement is $19.5 billion, with a growth rate of 21%, including $9.3 billion for knee joint, $7.8 billion for hip joint, and $2.4 billion for limb joint; $9.6 billion for spine, with a growth rate of 22%; $7.5 billion for trauma, with an increase of 19%; and $6 billion for sports medicine, with an increase of 23%. In order to cope with the problem of continuous expansion of orthopaedic patients caused by aging in China, through investigating the mode of foreign patients'visits, it is found that the number of day outpatient operations in the United States has exceeded 80% of the total number of operations, and in the past 10 years, the number of registered orthopaedic day outpatient clinics (including hospital outpatient clinics and independent surgical centers) has increased exponentially. In 2020, nearly 10000 operations were carried out in orthopaedic day clinics, most of the sports injury operations can be carried out in day clinics, and the number of joint replacement and spinal orthopedics operations in day clinics is also gradually increasing. Daytime outpatient service can reduce the average cost of hospitalization by 20% -40% and the cost of medicine by 37% -55%, alleviate the contradiction between supply and demand of medical resources, play an important role in optimizing medical resources and improving medical efficiency, and also have practical significance for the ongoing reform of medical supply side in China. At present, the popularization rate of day surgery in China is low, the payment and reimbursement policies are implemented according to outpatient regulations, and there is no matching medical insurance payment system. In addition, the nature of day surgery determines that patients leave the hospital without full recovery, so the outpatient department carrying out day surgery should ensure the safety and quality of the operation, do a good job of medical advice after discharge and prevent possible complications. It can be predicted that with the construction of medical information and the improvement of day outpatient facilities, orthopaedic day surgery in China will enter a rapid development stage, and the corresponding home care and rehabilitation service market will further develop. Therefore, the field of orthopaedic medical devices needs to further improve the medical system of "prevention, treatment and health" to play a role in graded diagnosis and treatment. References [1] Xu Shufu, General Manager of Zhengtian Business Department of Beijing Natong Technology Group Co., Ltd., undergraduate; Li Renyao, General Manager of Small Orthopaedics Business Department of Beijing Natong Technology Group Co.,titanium bar gr7, Ltd., graduate. [2] China Development Report 2020: Development Trends and Policies of China's Aging Population [3] Publicly available information on OECD official website [4] National Medical Products Administration public information [5] "TheOrthopaedic Industry Annual Report 2020" back to Sohu, see more Responsible Editor:. yunchtitanium.com

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