Journalist / Xu Tian
Published on 2020.4.27, the 945th issue of "China News Weekly"
"We need a ventilator." This is the first sentence that British Prime Minister Johnson said when he made a phone call with US President Trump after he was diagnosed with New Coronary Pneumonia.
The ventilator, which was originally a very small medical device, was caught by the public because of the outbreak. Ventilator can be divided into invasive and non-invasive. In severe cases, invasive ventilator is usually used to intubate the patient, which is also the most urgently needed medical supplies.
"No country in the world does not want to immediately buy a ventilator from China." Li Kai, assistant to the chairman of Yi'an Medical Company, said. Previously, China's market share in the high-end ventilator field was very low, but due to the restoration of domestic production capacity, it received numerous overseas orders, and the production schedule has been September.
This kind of precision instrument composed of 1500 to 1600 parts, the production supply chain is highly globalized, covering Europe, America and Asia. However, the epidemic severely damaged the global industrial chain and supply chain, and the ventilator became a "downward spiral" sample in the crisis: insufficient work in the upstream supply chain led to insufficient supply by European and American giants. The whole world is eager for China to quickly increase the capacity of ventilator, but the core technology and short board of key components are also a missing link in China's ventilator supply chain.
Both European and American giant companies, as well as large and small enterprises in China, are subject to the difficulties of the supply chain.
Orders flock to China
As the leading enterprise of domestic ventilators, Mindray Medical Chairman Li Xiting received countless calls from government officials, hospital directors and even ambassadors from other countries in China, all of which required ventilators, and there were thousands of ventilators at a time.
Wang Shuangwei, chairman of Shenzhen Security Technology, said that in the past 20 units were already a big target, but now, the list signed by him is not less than 100 units.
The role of the ventilator in the epidemic has been repeatedly proven. Ma Xin, deputy dean of Huashan Hospital affiliated to Fudan University, said that in the absence of special drugs, the ventilator is of great significance in the treatment of new coronary pneumonia. When the lung function of patients with new coronary pneumonia is significantly damaged, support by a ventilator and additional oxygen supply can restore the patient's lung function.
Zhan Qingyuan, director of the fourth and fifth departments of the Department of Respiratory and Critical Care Medicine of the China-Japan Friendship Hospital, told China News Weekly that the daily use of ventilators is in the Department of Respiratory Medicine, ICU, and Emergency Department. According to "China News Weekly", there are less than 10 invasive ventilators in the Second A Hospital of a county in Xiaogan City, Hubei Province before the outbreak. But like the China-Japan Friendship Hospital, the strength of the respiratory department is relatively strong, and there are many serious patients admitted daily, and there are more ventilators equipped before.
As a medical device, the ventilator has its service life, and it is replaced once every few years according to the frequency of use. This is an industry where annual demand and output are not high. According to the pharmaceutical industry report of Dongxing Securities, in 2018, China's medical ventilator output was 8,400 units, and sales volume was 14,700 units. From a global perspective, according to Markets and Markets' market research report, in 2019, the volume of the global ventilator industry was only $ 930 million. The North American market has the largest share, followed by Europe and Asia Pacific. Among them, the ICU equipped with invasive ventilator accounted for more shares.
In this niche field, European companies occupy an absolute dominant position. Hamilton in Switzerland, Dräger in Germany, and Getinge in Sweden are the first echelon brands. According to data released by CITIC Securities Research in 2017, the German brand Dräger occupies the largest market share of domestic respiratory equipment, accounting for 35.8%, and the domestic leading ventilator company Mindray Medical only accounts for 1.5%. Domestic ventilators have few exports and a high degree of concentration. Mindray Medical introduced that they accounted for more than 60% of the invasive ventilator exports, the second-ranked domestic brands accounted for less than 2%, and the majority of domestic brands exported less than 1%.
At the beginning of the epidemic, the demand for ventilators in Chinese hospitals increased significantly. There are 21 invasive ventilator manufacturers in China, most of them working overtime during the New Year. As of April 8, domestic ventilator manufacturers have supplied nearly 29,000 sets of various types of ventilator to the country, including nearly 18,000 sets to Hubei, including 3000 sets of ventilator.
However, with the development of the epidemic in the world, the international demand for ventilator has greatly increased. According to the prediction of Johns Hopkins University, during the new crown epidemic, American hospitals may need to add an additional 500,000 ventilators. According to foreign media reports, as of early April, the number of Italian ventilators can only meet less than a quarter of the demand, and the British ventilator gap is 18,000 units. As Africa was previously equipped with fewer ventilators, the future demand for ventilators is also huge. According to data from the International Rescue Committee, there are 12 million people in South Sudan, but there are only 4 ventilators throughout the territory; there are 3 in the Central African Republic, 11 in Burkina Faso, and 13 in Salarion.
Several well-known international ventilator enterprises have carried out production expansion methods such as recruitment, expansion of production lines, and three shifts, but it is difficult to meet the needs of the national defense epidemic in a short period of time, let alone the gap in international orders.
In this case, with the resumption of production in China, more and more international orders are rushing to Chinese ventilator manufacturers. Among them, the demand for invasive ventilators is particularly large. Most Chinese ventilator manufacturers have arranged orders until June and July, and some large manufacturers have arranged until September. As of the end of March, China's invasive ventilator has signed a unit of about 20,000 units, and there are a large number of international intention orders being negotiated every day.
"Meeting the needs of global epidemic prevention and control is unrealistic"
The 21 Chinese manufacturers of invasive ventilators have an annual production capacity of several thousand units, corresponding to the current international orders of at least 20,000 units. The gap between them is a multiple.
Like their international counterparts, Chinese companies have also increased production by recruiting workers, expanding production lines, and shifting three shifts. Jing Jungang, general manager of Mindray Medical Manufacturing System, said in an interview with the media that the Shenzhen Guangming factory had more than 2,000 people in the regular time period last year, and it has now increased to more than 3,800 people. With overtime and full load, it can produce every month 3000 ventilators, a three-fold increase over the past. They hope that the monthly production in June will reach 4,000 units.
Lai Chunhong, chairman of Pubo Technology Co., Ltd., told China News Weekly that the company has recruited more than 20 new employees. In the past, the production capacity was more than 100 units per month, but in April it has increased to 7 or 800 units per month.
According to data from the Ministry of Industry and Information Technology, of the 21 invasive ventilator manufacturers, 8 of them have obtained the EU mandatory CE certification for their main products, with a weekly production capacity of about 2,200 units, accounting for about one-fifth of global production capacity. From mid to late March to April 8, more than 4,000 ventilators were provided abroad. In less than a month, half of the production capacity in the past was completed.
Pu Bo Technology Co., Ltd. is one of the eight companies that have obtained CE certification. Lai Chunhong said that before, they received tens of thousands of intentional orders from the United States, and their production capacity exceeded their limits. "They will not consider taking orders at all."
In early April, the Ministry of Industry and Information Technology appealed to all sectors of society to have a clear understanding of China's ventilator production capacity, "to meet the global epidemic prevention and control needs is unrealistic."
On the one hand, invasive ventilators are high-end medical equipment, and the barriers to entry are very high. Compared with non-invasive ventilator, there are fewer manufacturers and higher technical content. Some experts once explained to the media the principle of invasive ventilator, which will adjust the oxygen supply at any time through the pulmonary dynamic parameters according to the patient's condition, vital signs, blood oxygen saturation and other indicators, and rely on the servo feedback control system to use The optimization algorithm keeps the oxygen supply frequency synchronized with the patient's breathing.
Lai Chunhong also believes that invasive ventilator is a device for human-computer interaction, which requires critical patients to have a "dialogue" with the ventilator, and the dialogue is controlled by algorithms. The formation of the algorithm depends on the company's research and development, which also determines the entry barrier for the invasive ventilator industry. It is impossible to develop the algorithm and develop a set of safe products in a few months during the epidemic. .
Because it is used by critically ill patients, no matter which component is faulty, it will cause the invasive ventilator to malfunction and endanger the patient's life. Therefore, each invasive ventilator requires huge capital investment, long-term testing and polishing. Lai Chunhong said that in China, manufacturers of invasive ventilators have a history of one or two decades, while European industry giants have a history of one or two hundred years.
On the other hand, although there are 21 invasive ventilator manufacturers in China, this is a highly globalized industry. The core components include voice coil motors, turbo fans, solenoid valves, chips, flow and pressure sensors, etc. The suppliers are in Europe and America. At present, this is the most important reason for restricting the production of ventilator worldwide.
The ventilator produced by Pubo is composed of more than 1500 materials, and materials that occupy more than 40% of the cost need to be imported. According to Lai Chunhong, several upstream supply enterprises of invasive ventilators in China are basically like this.
Foreign core component manufacturers are accustomed to start production after receiving orders, and almost no inventory. As the global demand for ventilator surges, they are under unprecedented pressure. A European upstream manufacturer, whose output has increased several times, is still in short supply, and gives priority to domestic or European ventilator manufacturers. In addition, due to the significant reduction in international flights, the transportation time in the past was only three days, increasing to six or seven days.
Prior to the epidemic, the delivery time of Pubo Technology Co., Ltd.'s upstream supply chain was 8 to 12 weeks, and it is currently extended to 28 weeks. Individual sensors produced in the United States will not be available next year.
The long road to localization
Ventilator manufacturers around the world are looking for alternatives to materials.
Automobile companies such as Ford, General Motors, and Tesla in the United States have cooperated with medical equipment companies to connect engineering teams to transform the production lines of automakers into production lines for ventilators and parts.
However, Mindray Medical believes that the move is "realistic." They said that it is difficult to imagine Tesla can replace all existing auto parts. Moreover, the newly designed components cannot be applied to ventilator products immediately from the perspective of reliability and safety in order to be responsible for patient safety. The German Dräger Company also made a similar evaluation. They believe that the conception of October cannot be transformed into "10 women giving birth one month after pregnancy", and it is called "an impossible task".
Chinese ventilator manufacturers have also begun to explore alternatives to domestic components. Previously, because the ventilator market was very small, the demand and output were relatively stable every year, and there had never been a supply outage of parts in the world. Therefore, Chinese ventilator manufacturers have rarely considered localized alternatives.
In the field of ventilators and even high-end medical treatment, there are not many Chinese companies producing parts. At present, the Ministry of Industry and Information Technology has provided a list of domestically-produced companies with similar parts for domestic ventilator manufacturers. Among them are a group of military enterprises, and coordinated the supply of spare parts for ventilator supporting enterprises in six provinces and cities.
One of the core components of the ventilator is the voice coil motor, which can be produced by Kunshan Tongmao Electronics Co., Ltd. Wang Yungao, technical director of Tongmao Electronics, told China News Weekly that there are not many domestic manufacturers of voice coil motors. Previously, supply to ventilator manufacturers accounted for only 3% to 5% of their business. The company ’s products mainly supply semiconductor equipment, Chip mounting and other enterprises. After the epidemic, orders from domestic and foreign ventilator manufacturers jumped to 60% to 70% of the business volume.
The ventilator has strict service life requirements. For the voice coil motor, it should be used from 70 million to 100 million times. After several years of cooperation with Mao Electronics and Mindray Medical, although the supply scale is small, the aging test of the voice coil motor produced by the other party is still ongoing.
It is not difficult to understand that the selection and testing of localized alternatives will be very long. I am afraid that it will take months or even a year or two. Lai Chunhong said that so far, Pubo's ventilator has not yet achieved the replacement of domestic materials. Perhaps in the next few months, more parts will be replaced by localization.
However, she also bluntly stated that there are at least two core components that cannot be domestically produced, namely sensors made in Europe and chips made in the United States. Wang Ning, the deputy general manager of CCID Consulting's Medical and Health Industry Research Center, shares the same view. He told "China News Weekly" that the sensor adjusts the flow of oxygen according to the breathing rhythm of the human body. The current technology at home and abroad is very different. Chips and compressors are developed earlier by European and American companies. There are technical barriers, and it is difficult for Chinese companies to break through.
Lai Chunhong believes that at present, both the government and ventilator companies are aware of the importance of upstream supply chains, especially core components. She hopes that the powerful leading enterprises in the industry can take the lead in the research and development of such parts and components. "Small enterprises cannot do this through long-term R & D and investment."
Wang Ning also believes that for domestic ventilator companies, especially leading companies, these large-scale international orders will play a stimulating role. "They see what quality the ventilator required for international orders will be strengthened in the later period. R".
China News Weekly No.15, 2020
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