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China's medical Artificial Intelligence market continues to grow

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More Chinese medical AI companies are going public, reveals Omdia analyst Sally Ye - and 5G is expected to unleash AI's potential further.

On September 22nd, Airdoc Technology, a fast-growing start-up offering an AI-driven system that takes and analyses photographic images of the retina, passed listing hearing which means it is going to be the first public-listed medical AI company in China. 

Shukun Tech, another AI-focused start-up focusing on assisting cardiovascular disease diagnosis, filed for IPO on September 21st, joining the growing list of Chinese medical AI companies going public this year.

China health systems are facing significant challenges to meet drastically growing medical demand driven by an aging population and growing patient expectation alongside constrained medical resources. Lack of high-quality healthcare professionals is another pain point.

The average misdiagnosis rate in China stands at 30%, and can be as high as 40% for difficult and complicated cases, especially at more basic medical facilities. The application of AI can alleviate daily administrative tasks for healthcare professionals and support them in clinical decisions, improving the patient outcome. All these factors provide an opportunity for AI application in China healthcare. 

In July 2017, The State Council of China released the New Generation Artificial Intelligence Development Plan. This policy outlines China's strategy to build an AI industry worth more than 62 billion US dollars, driving related industry value worth more than 774 billion US dollars by 2025.

It aims to make China the leading AI power by 2030. Smart healthcare is one of five key AI-based applications alongside smart manufacturing, smart city, smart agriculture, and smart national defense. The “Internet + Healthcare” Initiative (launched in 2018) aims to further drive the digital transformation of China’s healthcare systems.

In January 2020, China FDA granted the first AI medical device license which represented a milestone of medical AI commercialization. Medical AI is applied in a multitude of areas including imaging, drug development, auxiliary diagnostics, and health management. 

The Omdia Healthcare Equipment Database estimates that China is the second biggest medical imaging market in the world (5.72 billion US dollars in 2020). For ultrasound, MRI and CT, it ranks as the top market globally. Currently, imaging is the most common application of medical AI in China. Omdia currently estimates that there are around 150 Chinese medical AI providers, with more than 40% of them focusing on medical imaging. 

At the time of writing, there are more than a dozen AI medical imaging software companies which have been granted a Class III medical device license to support clinical decisions.

In September 2021, Tencent obtained a Class III medical device license for its pneumonia CT imaging software to support triage and assessment, becoming the first internet company in China to obtain a Class III AI medical license. (When software is used to support clinical decisions, it is classified as Class III medical device. For non-clinical decision support purposes, such as data collection and processing, the software is classified as Class II medical device.)

The upgrading of technology infrastructure in China will also support AI adoption. Of all the 5G base stations globally, 59% of them are located in China. As per the latest data released by the Ministry of Industry and Information Technology, 5G smartphone users in China reached 419 million in August 2021 (30% of total Chinese population).  

5G increases the speed and responsiveness of the network, enabling vast data aggregation, remote monitoring and real-time response. The growing prevalence of 5G shall unleash the potential of AI applications in healthcare.

With the number of Chinese medical facilities expanding and healthcare expenditure increasing, the Chinese medical device market shall maintain double digit growth over the next five years.

The government-led “Internet + Healthcare” initiative and state-level AI strategy shall propel the digital transformation of China’s medical systems. Omdia projects the medical AI market in China will reach 6 billion US dollars in 2025 (a CAGR of more than 20%). 

Startups and hi-tech giants alike are embarking on medical AI solution development, becoming new stakeholders in the Chinese healthcare device market. 

As equipment and systems become more connected and integrated, collaboration among healthcare stakeholders will become commonplace. Traditional healthcare equipment suppliers will need to adapt to the digital ecosystem of the Chinese market to survive and thrive.

As observed in the Omdia Healthcare IT – 2021 Topical Report, the future healthcare system will present a very different landscape: from in-hospital care to home-based care; from curing to caring and prevention; from opacity to transparency; and from isolation to connection and collaboration.

Sally Ye is a health care technology analyst at the Healthcare Technology division of Omdia, a sister research brand of Omnia Health. Located in the US, Europe and China, Omdia’s health care team produces a wide range of syndicated and customized reports, including a monthly China Healthcare Market Update, the Healthcare IT Topical Report, and the Healthcare Equipment Database, as well as in-depth reports and analysis on the medical imaging industry.

TAGS: China
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Medical Imaging Trends Report 2020

Take an in depth look at the global medical imaging equipment market. This exclusive report explores growth drivers and tech trends by region, covering CT, MRI, nuclear medicine, ultrasound systems,  X-ray systems and more.

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