Following the news of Medtronic’s latest financial report for Q3 FY2021 that medical device revenues have fully recovered through the anniversary of the COVID-19 pandemic, but a major threat is looming for medical device manufacturers with international presences in China;

Richard Hyde, Medical Analyst at GlobalData, a leading data and analytics company, offers his view:

“Medtronic’s Cardiac & Vascular Group reported $2.7bn in global revenue for the current quarter, which represents a 5.9% decline in organic growth compared to the corresponding period in the previous fiscal year. The decline is attributed to two factors: reduced surgical procedures due to COVID-19, and China’s recent drug eluting stents (DES) tender.

“China, similar to the rest of the world, experienced delays in cardiovascular procedures but were able to contain the spread of COVID-19 and therefore recover within 2020. China’s DES tender secured over one million DES for 2021, which GlobalData estimates would be valued at $94m, prior to the tender the value of DES in China was estimated to surpass $500m, a decline of 81%.

“GlobalData estimates that Medtronic owns approximately one quarter of the Chinese market share for DES. The decline in average spending price for DES will result in over $100m in missed revenue in 2021. China’s tender threatens to significantly alter the market share landscape as conditions now favor domestic products.

“While the tender is limited to Mainland China, domestic manufacturers will have the opportunity to grow their businesses within China and threaten to expand into major markets in the APAC region. China, Japan, and South Korea represent major opportunities for the coronary stents market and a significant amount of Medtronic’s overall Cardiac & Vascular Group portfolio. Medtronic investors must be cautious with the changing competitive dynamics in the APAC region. In response to this news Medtronic may need to focus M&A activity within China in order to strengthen its ties within the country.”