Analysis of Transformation Strategies and Profit Recovery for Chinese Orthopedic Medical Device Companies Under Centralized Procurement

Based on currently available information, I will analyze the transformation strategies and profit recovery paths of Chinese orthopedic medical device companies under the reshaping influence of centralized procurement policies.

Centralized procurement policies have completely transformed the business model of the orthopedic consumables industry, shifting it from a high-margin category to a medium-margin one. According to market data, major orthopedic companies including Weihai Orthopaedic (688161), Dabo Medical (002901), Chunli Medical (688236), Aikang Medical (1789.HK) and Sanyou Medical (688588) have all been significantly affected.

From the search results, it can be seen that Weihai Orthopaedic and Dabo Medical achieved significant growth in the third quarter of 2024, while Chunli Medical and Sanyou Medical experienced declines, reflecting the differentiated performance of enterprises in responding to centralized procurement policies [1].

• Transform from a single orthopedic consumables provider to a comprehensive medical device platform
• Expand to other high-value-added products beyond trauma, joint, and spine segments
• Develop emerging areas such as minimally invasive surgical instruments and digital surgical equipment

• Invest in R&D of advanced technologies such as 3D printing and personalized customization
• Develop intelligent orthopedic surgical navigation systems
• Deploy robot-assisted surgical equipment

• Actively explore overseas markets, especially emerging markets
• Establish an international sales and service network
• Enhance product competitiveness through international certifications such as FDA and CE

• Establish production bases overseas to avoid trade barriers
• Optimize global supply chain configuration

• Acquire leading enterprises in niche segments to quickly supplement product lines
• Integrate channel resources to expand market coverage

• Extend to upstream raw materials and downstream medical services
• Build a comprehensive “product + service” solution

• Reduce unit production costs through economies of scale
• Optimize production processes and increase automation levels
• Streamline the supply chain and reduce intermediate link costs

• Digital transformation to reduce management costs
• Refined marketing to improve input-output ratio

• Shift from pure product sales to a “product + service” model
• Provide value-added services such as surgical training and technical support
• Develop new models such as equipment leasing and pay-per-use

• Provide precision medical services through data analysis
• Establish a patient follow-up and rehabilitation management system

• Centralized procurement policies drive industry consolidation; leading enterprises will benefit from increased concentration
• Domestic substitution process accelerates; market share concentrates on leading enterprises

• Digital and intelligent transformation enhances product added value
• Innovative products are expected to gain higher pricing flexibility

• Centralized procurement policies continue to lower product prices
• Dual pressure from rising costs and falling prices

• The scope and intensity of centralized procurement policies may further expand
• Adjustments to medical insurance payment policies have a significant impact on the industry

The industry is in a period of deep adjustment, and enterprise differentiation will intensify. Enterprises with cost advantages, technical strength, and international layout will be the first to restore profitability.

The industry will move toward innovation-driven and service-oriented development, with digitalization, personalization, and intelligence becoming key directions. Leading enterprises are expected to achieve sustainable development through transformation and upgrading.

Although centralized procurement policies have had a short-term impact on orthopedic enterprises, they will promote the healthy development of the industry in the long run. Enterprises should:

1. Accelerate transformation and upgrading
   : Shift from cost competition to value competition
2. Strengthen innovation capabilities
   : Increase R&D investment and break through core technologies
3. Expand international markets
   : Diversify policy risks and find new growth drivers
4. Optimize business models
   : Develop toward servitization and digitalization

Investors should focus on leading enterprises with core technical advantages, sound international layout, and strong business model innovation capabilities. These enterprises are most likely to stand out in the industry reshaping and achieve sustained recovery and growth of profitability.

[1] Financial performance data of Chinese orthopedic enterprises in Q3 2024 from search results
[2] Policy Analysis Report on China’s Medical Device Industry
[3] Guosen Securities 2025 Investment Strategy Report on the Pharmaceutical and Biological Industry