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Signify Premium Insight: Siemens Healthineers and the 5Gs of Chinese Growth

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Siemens Healthineers recently announced that it is partnering with Universal Medical Imaging to help primary healthcare centres in China increase the efficiency of their medical imaging procedures and improve diagnoses.

The agreement is set to use 5G networks to increase healthcare providers’ access to advanced diagnostic imaging equipment and remote scanning assistant tools from Siemens Healthineers, as well as facilitating more efficient access to Universal Medical Imaging’s medical experts.

The Signify View

The volume of medical imaging exams undertaken in China has increased dramatically over recent years. Medical imaging vendors such as Siemens Healthineers have capitalised on this growth, with China, and the significant numbers of new hospitals built in the country, providing huge swathes of new customers. However, as the number of hospitals has grown and their medical imaging hardware needs have been sated, vendors will increasingly have to identify and exploit new ways to grow within the Chinese market.

Siemens Healthineers’ partnership with Universal Medical Imaging is one such strategy for achieving this. One of the limitations preventing purchases of additional medical imaging hardware is the lack of qualified personnel to acquire and interpret the images. This barrier is particularly acute in more rural and remote parts of the country, as many physicians and aspirant physicians have migrated to the urban centres where their skillset has been most needed.

Over time this will become a greater impediment. Medical imaging volumes are forecast to continue to rise over the coming years so this issue will need to be addressed. While there are initiatives to train more radiologists and imaging technicians, this is neither a short-term solution, nor is it realistically going to solve the issue, with shortages of some medical professionals, particularly radiologists, a problem across the world. Siemens hopes its partnership is a better near-term solution.

Remote Rescue

Universal Medical Imaging is one of China’s independent medical imaging providers, employing more than 500 imaging physicians across 30 cities. Supporting these physicians with Siemens Healthineers’ remote scanning assistant tools over 5G networks, will allow them to remotely aid local, primary-care physicians across the country without relying on cabled connections which are often more expensive. By assisting local physicians and technicians with the acquisition and analysis of medical images, Siemens Healthineers will also increase the viability of medical imaging in these remote areas, in doing so creating new modality sales opportunities.

While there has been demand for some medical imaging equipment in these less densely populated areas, particularly for simpler modalities such as X-ray, this isn’t a particularly lucrative opportunity for Siemens Healthineers. These modalities are inherently lower cost and less profitable for international medical imaging vendors, while a proliferation of domestic companies offering lower-priced solutions, and government-promoted China-first procurement policies further hinder the opportunity they present. However, connecting physicians in remote primary care and imaging centres to physicians in central urban areas, with more specialist knowledge, makes it viable for these remote centres to purchase and utilise advanced imaging modalities. By partnering with Universal Medical Imaging on 5G-based remote assistance solutions, Siemens Healthineers is essentially making it possible for a greater range of providers to purchase its more profitable higher-end systems.

Future Foundations

What’s more, the fact that Siemens Healthineers’ technology could play an important role in opening up these more remote markets within China means Siemens Healthineers stands to be among the biggest beneficiaries as the market grows. A reliance on Siemens’ remote scanning assistance tools to make the acquisition of advanced modalities viable, is likely to also necessitate the use of the German vendor’s systems. As such, Siemens will be better placed to defend against advances on the space by Western competitors as well as domestic vendors such as United Imaging, that may offer equipment at a lower price, or whose use may be incentivised by the Chinese government.

In addition, such a strategy is also likely to offer benefits in the future too. In Western Europe and North America in particular, Siemens Healthineers, as well as GE Healthcare, Philips and others have enjoyed success working to forge long term partnerships with hospitals and provider networks. These extended agreements, which see the vendor supply a range of modalities, services and support to providers, elevate medical equipment sales beyond simple transactions into reliable, long-term revenues. In addition, such deals offer the opportunity to upsell additional equipment and services, further entrenching a vendor at a provider.

While the partnership between Siemens Healthineers and Universal Medical Imaging is far less integrated than these deals, it does bear some similarities. For providers in remote locations, the reliance on Siemens remote imaging assistance tools means that the purchase of an MRI or CT system, for example, is not just a simple transaction, instead, it is the acquisition of part of a wider system. As such, it confers, albeit at a much smaller scale, some of the benefits, and may be a precursor to a broader and more integrated partnership between a provider and Siemens Healthineers.

The Expansion of Imaging

In the future this partnership, and others like it, will also increasingly enable medical imaging examinations to be conducted in more non-traditional settings. In the near to mid-term, growth in medical imaging will start to come from the expansion of diagnostic imaging centres. Over the longer term, however, as demand for medical imaging increases, China could also start to see the availability of medical imaging in local pharmacies and retail environments, for example. It is unfeasible for one of these locations to hire a team of experienced technicians and radiologists. But, as long as there is 5G cellular coverage, a likelihood given that the network reaches almost 90% of China’s rural centres, less qualified and less experienced personnel will, with the support of Universal Medical Imaging’s experts, be able to conduct medical imaging exams. This is still a long way off, with the first inroads into medical imaging in retail and pharmacies only just being taken in the US, a far more developed market, but, given China’s scale and the growing need for medical imaging, and particularly advanced medical imaging, this represents a huge opportunity for the future.

Maximising this opportunity will not be straightforward, with other vendors, both Chinese and international keen to take advantage as the market opens up, but Siemens, for the time being at least, is in a strong position to capitalise. More broadly the move represents the German vendors’ acknowledgement of the change in the Chinese market. Vendors such as Siemens Healthineers are still reliant on Chinese customers to realise their growth targets, but as growth for traditional customer bases slows, and business for large urban providers transitions to predominantly replacement sales, this growth must be earned elsewhere. Utilising a partnership model to minimise risk, and taking advantage of new technology, Siemens Healthineers’ plan is sound. With the partnership, the stage is now set for Siemens Healthineers to take advantage of China’s next phase of growth.

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This Insight is part of your subscription to Signify Premium Insights – Medical Imaging. This content is only available to individuals with an active account for this paid-for service and is the copyright of Signify Research. Content cannot be shared or distributed to non-subscribers or other third parties without express written consent from Signify ResearchTo view other recent Premium Insights that are part of the service please click here