The Chinese dental implant industry has shown strong growth in recent years and is expected to continue this trend in the foreseeable future. With the Chinese population experiencing increased upward mobility and the ability to afford dental care like dental implants, so has the increase in consumers’ access to and demand for restorative dental services. Organizations who provide these services are also growing to meet local demand.
With the dental implant market size reaching upwards of USD 600M by 2024 and almost $680 million by 2027[1]expected market increases are setting the stage for lucrative opportunities for dental implant manufacturers.
Source: iData Research Inc., 2021
A look at the public and private markets for dental implants
The proportion of dental implant procedures performed in private dental clinics is much greater than that of government-owned public hospitals in some regions; however, this split differs between Northern/Southern regions and Eastern/Western regions. And on average, across China the total number of dental implant procedures performed in private clinics versus public hospitals is split almost fifty-fifty.[2]
With an almost equal distribution of procedures taking place in clinics as compared to hospitals, it would seem logical to deduce that they are also equally desirable for implant manufacturers to focus on this area with their attention and investments. However, this is actually not the case. In fact, public hospitals are a much more lucrative segment for implant manufacturers to target to grow their business in China substantially.
Public hospitals are considered the most reliable and qualified treatment centers among patients and the prime segment for premium foreign brands today. Consumers have greater confidence in public hospitals, and the best dentists want to work for public hospitals—not private clinics.
More than 50% of dental implant sales already target hospitals as their prime segment today, and this market is estimated to win an even greater share of the market from private clinics in the future. Furthermore, most dental implant companies are persistent enough to put in the effort to succeed in public hospitals due to their strong influence, academic status, and better gross profit margin.
Foreign vs. domestic brands
It’s also key to know that Chinese patients prefer foreign brands over Chinese brands; in fact, more than 90% of dental implants in China are provided by foreign brands today.[3] Furthermore, Chinese consumers prefer American and European brands over all others since they are known to be market leaders in the dental industry with safe, high-quality performance.[4]
The high trust in foreign brands means excellent opportunity in the Chinese dental market. However, foreign brands doing business in China need to understand the regulatory challenges and new policies to be able to compete. For instance, the National Medical Products Administration (NMPA) launched new regulations for medical devices, which pose threats to foreign dental implant manufacturers.
A brief look at the regulations
In early 2021, a proposal was submitted to the National People's Congress mentioning the high cost of dental implants for the first time at the national level. Later that year, a notification was issued by the Pharmaceutical Equipment & Procurement Service Center of Sichuan Province stating that information collection of high-value medical consumables in the dental category would take place, including dental implants, repair abutments, prosthetic products (crown/bridges/bars) and other medical consumables that constitute dental implant systems.
And in 2022, an executive meeting of the State Council was held to deploy and accelerate the major projects identified in the "Outline" of the "14th Five-Year Plan," covering the years 2021-2025. At that time, it was announced that dental implant systems would be included in the program of volume-based procurement on a national level.[5]
State order 739 is the approval for the new regulation: "The Regulations on the Supervision and Administration of Medical Devices" which is now publicized and took effect as of June 1, 2021, with an enforcement date of January 1, 2022.
Although the official reasoning behind the new policy is a reduction in the cost of the medical burden on patients, Elos Medtech assesses that the policy will be much more detrimental to foreign dental implant brands sold in China than meets the eye. The new policy incentivizes the protection of domestic brands in China, localization of dental products, and development of China's technical knowledge in the dental implant industry.
Our assessment of the new policy's regulations is that it is becoming imperative to become classified as a "domestic" brand in China, acting as a Legal Manufacturer to be able to sell dental implant products into public hospitals in future.
And in the most recent move, on August 18, 2022, the Chinese National Health Care Insurance Association solicited public comments on the “Notice on Carrying Out Special Governance of Oral Implant Medical Service Charges and Consumables Prices.” This notice is in relation to the pre-stages of the procurement of implantology, and this move shows that the government is working swiftly to accelerate implementation of their implantology plan. Notably, this notification relates to both public and private clinics as well.
It's vital to act quickly to avoid being left out of such an important market, and Elos Medtech can help. For more in-depth information about the regulatory changes, how to become a domestic brand, and strategies to help ensure your success in China, stay tuned for our soon-to-be-released articles in the “In China for China” series.
[1] Dental Implants Market Size, Share & COVID19 Impact Analysis | China | 2021-2027 | MedSuite | Includes: Dental Implants (Premium, Value, Discount, Mini), Final Abutments (Stock, Custom Cast, CAD/CAM) & Surgical Guides
[2] Source: https://zhuanlan.zhihu.com/
[3]Source: Financial Report of the 21st Century
[4] Source 看牙好贵！为什么更多人偏爱进口种植牙？|牙科|口腔|全瓷牙|牙医_网易订阅 (163.com)
[5] Source: Heyihui Medical
