In January of this year the Spanish multinational GENOMICA, a leader in molecular diagnostics and analysis of genetic identification, announced the opening of its new subsidiaries in China and Brasil, from which, in addition to the subsidiary that opened in Sweden in January 2013, allow them to operate in the main markets of the In Vitro Diagnostic of the world: Asia, Latin America and Europe.
And is that the IVD market global shows a capacity of unstoppable growth, hoping to reach a size of 102 billion dollars for 2022, compared to the 74 billion that presented in 2017.
Did you know that the sector of in vitro diagnostic devices is in full evolution in emerging countries such as China and Brazil?
Find out through the history of international expansion of genomics, the Spanish multinational leader in genetic identification.
«The opening of the subsidiary in China represents a fundamental advance in the company’s strategic plan. This office is crucial for GENOMICA not only for having so presence in one of the world’s most powerful markets, but also gives us the opportunity to continue with the expansion of the company by Asia Pacific.» Rosario Cospedal, General Manager of the Group GENOMICA.
The subsidiary enables the company to maintain a direct relationship with its customers and provide better technical support in the Asian giant and the rest of countries in which it operates in the area, such as Indonesia, the Philippines, Thailand and Taiwan, in which already had active presence through commercial offices. In addition this opening represents an unprecedented milestone to be «the first company of in vitro diagnostic devices with a headquarters in China».
And is that the Asian giant is experienced a period of economic prosperity that has much to see the opening to the investment of international companies. However, with this momentary opening to international investment their goal is to attract technology companies to implement new technologies and industries, thus improving the innovation in the manufacture of the country, which is already in 2015 presented its campaign «Made in China 2025», which promotes and encourages that at least 70% of the medical devices used in hospitals and clinics should be made in China for the 2025.
In this way, the aim of this initiative in reality is to promote the domestic market, as well as reduce costs in health and pose a threat to the large multinationals of the sector, since in order to be competitive within the Chinese market are forced to create subsidiaries, which are subject to the tax laws of the state of residence, in this case China, so it would be taxed for the same, and establish alliances with Chinese partners. Thus, since the foreign medical device manufacturers, to operate their businesses, they need to approve investments for the marketing of their products, which must have been able to register them before in the administration of Food and medicine of China (CFDA), for what must have obtained the license that would qualify as foreign investment enterprise (FIE) and comply with quality requirements of the CFDA, requiring it to an extended period of time for all the efforts by various governmental institutions.
For all the above reasons, to benefit from the incentive program that represents «Made in China 2025» many foreign companies consider, as we have already mentioned, the move to China through the creation of subsidiaries and open new production lines with Chinese manufacturers partners.
On the other hand, China presents the second of the largest markets of medical equipment in the world, behind the UNITED STATES and above Japan and Europe, with a turnover of more than 48 billion dollars, according to the legal and business experts of Norton Rose Fulbright, and the last year the demand for medical devices has been greater than the supply.
This is mainly due to the increase in age (for 2050 one third of the Chinese population, with 1.4 billion inhabitants, will have more than 60 years) and of its middle class, willing to do more spending to improve the quality of its health system. All this will be accompanied by a higher prevalence of chronic diseases of aging and new lifestyles, increasing the incidence of lung cancer and heart disease, associated among other things to greater urbanization of rural areas and the increase in the industrialization of the country.
In terms of its health system, at present China presents more than 16,000 hospitals, of which 85% are public, with annual expenditure of more than 200 billion yuans (26.8 billion dollars) that the state invests in the purchase of medical devices of medium/Low quality, from local manufacturers, and the importation of high quality products from foreign manufacturers.
Similar changes are occurring in countries like Brazil.
Brazil is the sixth most populated country in the world and the largest in Latin America by population and extension. It is an emerging market, being according to WHO the second largest producer of medical technology between countries with emerging economies at the global level, after China, and with many possibilities of growth, as it is experiencing an increase in the incidence of chronic and infectious diseases, such as the new outbreak of yellow fever that comes spreading since 2016, accompanying the increase in total spending in the health sector.
The Secretariat of Science, Technology and Strategic Inputs of the Ministry of Health of the Brazilian Government sees this industry as a strategic sector, since it grows annually a 7% since 2003, and has created special policies for the resort for the Health Care Industry, which is one of the axes of the Growth Acceleration Program, and invests billions year after year in infrastructure, research and technology in the sector, resources from the Brazilian Development Bank (BNDES) and research promotion agencies.
However, despite the developments in production and sales, the country reported a deficit of $3 billion in the trade balance in 2010, and its production is concentrated in the multinational companies installed in the country, as is the case in China as well.
To counteract this situation, in 2011 the Government approved the Provisional Measure No. 495, which promotes the purchase of products and services on the part of the Government, as it represents an important action to reduce imports in the sector, and reason for the creation of subsidiaries by foreign companies.
However this situation contradicts the reality of the local market, able to answer the 90 per cent of the demand of hospital equipment.
«Imports show that there is domestic demand and that the country has room to grow. The incentive to buy the Brazilian product is essential to ensure the sustainable development of the Health Industrial Complex.» Franco Pallamolla, president of Abimo (Brazilian Association of the industry of articles and medical, dental, hospital and laboratories).
Another of the measures implemented to promote the sector of medical equipment and devices was the creation of ‘Brazilian Health Devices‘, a new brand that will represent the Brazilian industry abroad.
In this way, the multinational comes into play in a very favorable to occupy an important place in the Brazilian market of molecular diagnostics, and therefore all of Latin America countries.
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