Medical devices: the domain of 3M, Hartalega and Mindray

A small number of leading multinational companies dominate the Global Value Chains (GVCs) of medical devices, concludes an analysis by the European Parliament.

Those companies include 3M, Hartalega and Mindray.

Each of the top 10 companies (by revenue) is located in the United States or Europe and together they account for more than 50% of exports in all segments of the medical device sector.

Its prevalence is greater in the therapeutic market (72.6%); but lower in the consumables segment, including items such as bandages or dressings (59%).

That said, several non-OECD economies have entered the chain through manufacturing abroad, and exports from countries such as China, Malaysia, Mexico, Singapore, Costa Rica, and South Korea have grown much faster than the average.

Furthermore, according to the same analysis, there are also important regional characteristics specific to the product.

For example, examination gloves are produced almost exclusively in Malaysia, while masks are produced in a variety of different countries (although China remains the market leader in mask production).

The leading companies in the Personal Protective Equipment (PPE) chains come from both OECD and non-OECD economies and are very diverse.

For example, 3M is a major American company with operations in 70 countries, selling more than 60,000 different products in 200 countries, including face masks in Europe, Asia, and the United States.

In contrast, Malaysia-based Hartalega is a leading global producer of examination gloves with no manufacturing plants outside of Malaysia.

Medical devices

China’s growing role in the sector can be explained by the country’s vast domestic market, its growing demand for medical products, and an ambitious industrial policy aimed at building a globally competitive medical device industry, thereby reducing its dependence on imports.

Medical devices feature prominently in the «Made in China 2025» industrial policy strategy aiming to increase the domestic content of advanced medical devices to 70 percent.

An important policy instrument has been instructing local hospitals to purchase domestically produced medical devices from Chinese companies.

So far, the strategy appears to have been successful and the country’s medical device sector is experiencing a dynamic period of upgrade: once dominated by low-value-added activities, FDI projects in China are now driven by activities with high-value-added, and exports of medium to high-tech medical devices have exceeded low-tech exports since 2012. 

Companies like Mindray, founded in 1991 and located in Shenzhen, have managed to become leading companies in GVCs.

Lastly, shortages during the pandemic allowed Chinese companies to enter European markets in areas such as fans, a market segment from which Chinese products were rejected.