Helping Massachusetts Medical Device Businesses Export to China and Beyond

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• Helping Massachusetts Medical Device
  Businesses Export to China and Beyond
• Paula Murphy, Director Massachusetts Export
  Center
• Robert D. Ward, Executive Director MA Office of
  International Trade Investment

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MA Medical Device Exports
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Our Mission

• The mission of the Massachusetts Export Center
  is to help companies throughout the state achieve
  success in global markets. Our goal is to meet
  the complex needs of exporters by developing and
  providing targeted, high-impact services
  delivered through a state-wide network of
  international trade professionals.

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Office Locations Staff
Westborough
Amherst
Boston
Holyoke
New Bedford
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Export Counseling Technical Assistance

• Assessment of export readiness export planning
• Export strategy and international business plan
  development
• Export market assessment selection
• International sales, marketing distribution
  channel development/management
• Overseas trade show identification and
  facilitation
• Mechanics of exporting (classification, payment,
  financing, documentation, shipping logistics)
• Export Regulatory Compliance

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Export Compliance Assistance Program

• An enhanced assistance program to help clients
  comply with U.S. export regulations
• Counseling technical assistance on U.S. export
  regulations
• ECCN classification guidance
• Export license determination assistance
• Assistance in establishing an Export Management
  System
• In-house training and seminars on export controls
  and compliance
• Targeted referrals to government authorities
  responsible for export controls

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Export Training

• In-House Training
• Seminar Topics
• Trainers
• Locations
• Attendees
• Partners
• Highlights of Upcoming Programs

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International Market Research Publications

• Sources of information
• Demographic, economic, political, social/cultural
• Statistical analysis of export activity
• In-depth industry analysis in target market
• Key contacts (distributors, competitors,
  manufacturers, end-users, trade associations,
  etc.) in target market
• Intern program
• Publications

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Collaboration With MOITI

• Overseas trade shows
• Overseas offices
• Incoming trade delegations
• Collaborative marketing efforts

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2003 Client Impact Survey

• Clients reported over 22.5 Million in export
  sales as a direct result of the assistance
  provided by the Mass Export Center (2004 numbers
  will be over 30 Million)
• Between 2002 and 2003, Export Center clients
  experienced a 23.6 increase in export sales
  more than double the overall increase of just
  11.7 in Massachusetts export performance for
  the same time period
• 95 of clients credit the Mass Export Center with
  helping them to achieve specific export sales
• 100 of clients found the services of the Export
  Center to be beneficial and 83 of clients
  reported that the Export Centers services
  exceeded their expectations
• Surveys were distributed to a total of
  60 clients assisted during 2003 for which there
  was likely export impact. Survey results are
  based on a total of 27 responses received, for a
  response rate of 45.

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Federal Export Resources

• U.S. Department of Commerce
• Structure
• International Partner Search
• Gold/Platinum Key Programs
• Trade missions shows
• Bureau of Industry Security
• U.S. Small Business Administration
• Export-Import Bank of the U.S.
• Others

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MA Office of International Trade
InvestmentMission

• Grow and diversify the MA economy and workforce
• Improve access to resources and support for FDI
• Assist MA industries looking to enter and/or
  expand into the global marketplace with a focused
  approach to promotion through
• European trade shows
• Overseas offices
• Reverse trade missions (with a buyer component)
• Select joint private/public trade missions
• Protocol
• Support Route Development

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Objectives to Achieve Mission

• Leverage Private and Public Sector Resources
• Cross pollinate with sister agencies to
  coordinate complimentary programs (SBDCs, MOBD,
  MassDevelopment etc)
• Complete partnership with Mass Export Center
• Maintain Mexico, Berlin and China offices,
  investigate SE Asia and Brazil representation

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Targeted Export Promotion

• Overseas Offices
• Inbound/Outbound Trade Missions
• International Trade Shows

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Marketing to FDI Export Promotion

• Trade Shows 2005
• CeBit
• Energy
• Medica
• International Dental Show
• Laser
• Investor Conferences
• Drug Discovery Conference
• Venture Capital
• Inbound Trade Missions Protocol Operations
• CASE (Council of American States, Europe)

• - International Toy Show
• BioTechnica
• Productronica
• British American Business Council
• Brazil Invest in USA

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Elements of MA FDI Strategy

• Targeted FDI Clusters
• - electronics/electrical computer/telecom
• - life sciences
• - pharmaceuticals
• - financial services
• Regional concentrations
• Institutional support system
• Infrastructure

• Labor market
• -manpower
• -education
• -training
• RD - Public and Private
• Concentration
• - biomedical engineering
• -biotechnology
• -IT and communications
• Availability of VC Funding

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Policy Measures to Attract FDI

• Taxation
• Investment Tax Credit
• Single Sales Factor Tax Allocation
• Economic Development Incentive Program
• RD Tax Credit
• Financial incentives
• Training Grants
• Equipment Financing Programs

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MassachusettsMedical Device Business in China
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The Existing Market

• GDP per capita in Shanghai is estimated at 4,500
• Many hospitals are upgrading facilities
• After WTO foreign investors can take up to a 70
  equity share in a hospital
• Certain areas such as Hangzhou are actively
  encouraging private sector participation in
  healthcare.
• The medical insurance sector will be opening

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Market Drivers
1. Brain Drain
2. New Developments
3. Demographics
4. Government Policies
5. Public Opinion
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Market Drivers - Brain Drain
Talented students from rural districts attend
university and stay in major cities.
Talented rural physicians seek employment in
major cities.
Talented research physicians seek opportunities
overseas to pursue research.
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Market Drivers - New Developments
Group hospitals being formed. Allowing
physicians to practice in a variety of locales.
Increase in private companies and private wealth
in cities is increasing demand for private care.
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Market Drivers - Demographics
China is experiencing a growing aging population.
Creating and increasing incidence of age related
diseases and also creating demand for senior care
facilities.
Changing lifestyles are leading to increased
incidents of obesity and diet related conditions
such as diabetes and high cholesterol.
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Market Drivers Demographics Heart Conditions
1. In 2002 it was estimated that 16 of all
pharmaceuticals sold were cardiovascular.
2. China surgeons performed 4,000 heart bypasses
in 2000 and surgeons in Hangzhou did 1,200 open
heart surgeries in 2001. The survival rate for
these surgeries is at the level of Great Britain.
3. The private heart surgery market is developing
in coastal cities.
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Market DriversDemographics A Diabetic
Population
Estimated 150 million diabetics worldwide, 60
million in Asia. By 2025 the number is expected
to double. The disease in China alone is
expected to surpass 38 million by 2025.
In China urban areas 1 of the population was
affected by diabetes, in Shanghai and Beijing is
now 6.
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Market Drivers - Government Policies
The Ministry of Health is moving to become a
quality assurance and inspection agency from
their traditional management role.
There is a realization that in order to deliver
comprehensive healthcare there will need to be
private participation in the development of
hospitals.
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Market Drivers - Public Opinion
The public does not believe that they are
receiving value healthcare or proper service.
Public perception of the healthcare systems
weaknesses is shaping government policy.
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Opportunities in HealthcarePharmaceuticals

• China is now the 8th largest drug market in the
  world.

• China is expected to be the largest drug market
  in the world by 2050.

• 40 of 50 most popular brands are foreign or
  Sino-foreign joint venture account for 42 of the
  market by value.

• The State Drug Administration predicts the
  market share by sales value could reach 70.

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Opportunities in HealthcareChinas
Pharmaceutical Imports
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Opportunities in HealthcarePharmaceuticals
The 12 coastal developed provinces including
Shanghai, Jiangsu, Zhejiang, Shandong, Guangdong,
Beijing and Liaoning accounted for 78 of the
consumption in 2003.
Of Chinas 18 provinces with over 20 growth rate
11 were in coastal areas.
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Market Barriers - Distribution
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Opportunities in Healthcare Device Sales

• Redundant testing is still a problem
• The consolidation of the SFDA is helping
• Regulations are becoming more transparent
• Many service providers are establishing China
  operations
• Strong family units have opened the door for use
  of premium products

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Opportunities in HealthcareChinas Medical
Device Imports
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MA Medical Device Exports to China
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MA China Services

• Fully-staffed trade office in Shanghai featuring
  bilingual trade specialists
• Help to locate agents, distributors and end-users
  for Massachusetts products, services, hospitals
  and universities
• Introduce your institution to qualified Chinese
  partners through our web site and speaking
  engagements

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Upcoming China Events for MA Medcial Device
Companies

• ChinaMed Trade Show, Beijing
• April 24-27, 2005 and April 11-14, 2006
• Catalog booth
• Fall, 2005 visit by MOITI China representative
• Possible MA Healthcare Trade Mission to China
  (2006)

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Joint Web Portal
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Massachusetts Export CenterMA Office of
International Trade Investment

• www.mass.gov/global
• Massachusetts China Office
• www.masschinaoffice.com