APAC Focus: Fast growing surgical robot market; China companies a rising force

Surgical robots are designed to help doctors overcome many limitations of traditional surgeries, and are at a very early development stage in China. Frost & Sullivan forecasts the global surgical robot market to see a 21% CAGR in 2021-30F, while we forecast China to see an even faster 36% CAGR, reaching US$6.5bn in 2030E based on ex-factory price. MNCs dominate the market in China, but we think supportive government policies could help domestic makers quickly catch up. As locally made products were only launched recently and have yet to generate meaningful revenue, we don't think the market has fully appreciated their revenue potential nor the likely pace of import substitution.

We identify multiple drivers for faster growth in China's surgical robot market: 1) rising surgical demand and ability to pay from patients; 2) increased penetration as recognition widens among hospitals and surgeons; 3) supportive government policy; and 4) widening insurance coverage and diagnosis-related group (DRG) exemption provide a favourable environment for the wide application of surgical robots.
 

With multiple domestic products approved in the past 15 months, we believe Chinese companies could challenge currently dominant surgical robot companies given: 1) supportive policies encourage import substitution; 2) promising clinical trial results of domestic products; 3) localisation and price advantages; and 4) commitment to innovation and product upgrade. UBS China 360 team's in-depth analysis shows domestic makers are closing the technology gap for hardware and offer attractive cost advantages