Sinolink Medical Devices Industry 2026 Annual Strategy: Focus on two main areas of going global and innovation, pay attention to overseas expansion to accelerate the identification of stronger targets.

Sinolink released a research report stating that the sector's investment strategy in 2026 will focus on two areas: going global and innovation. The focus will be on high-quality medical device companies that have a strong presence in overseas markets, leading product innovation and research and development capabilities, and have gradually cleared the price pressures in the domestic market. Recommendations include: 1) Micro-Tech (688029.SH), a leader in digestive endoscopy consumables, 2) Jiangsu Yuyue Medical Equipment & Supply (002223.SZ), a leader in domestic medical devices with strong brand influence and innovative wearable products, and accelerating expansion in overseas markets, 3) LIFETECH SCI (01302), a Hong Kong-listed medical device company specializing in innovative products in the cardiovascular intervention field. Key points from Sinolink are as follows: Review of 2025: Policy support is clear, and market share of leading enterprises continues to rise. Amidst pressure to control healthcare costs, the domestic market has weak in-hospital demand. Many enterprises are still facing pressure from inventory digestion and price adjustments. The core factors driving the sector's upward trend come from specific innovative products and policy support. Despite being under pressure, the market further promotes industry concentration, and leading companies continue to maintain stable profit margins. Outlook for 2026: Sector investment strategy will focus on going global and innovation. Going global will bring additional growth opportunities for enterprises, while innovative products will support profit margins during a period of declining traditional business prices. Leading companies in developed overseas markets have advantages in price stability, medical insurance payments, and patient penetration. In recent years, the growth rate of leading companies in overseas markets has surpassed domestic markets. Companies with strong overseas product and channel capabilities are expected to achieve higher growth certainty and market valuation. The focus of the domestic market will shift to innovative high-barrier tracks, supporting policies for innovative products such as artificial intelligence and brain-machine interface, which will continue to catalyze the commercialization of new products. Medical equipment: Future growth will depend on domestic substitution, industry upgrading, and regular updates. Bid growth rate will stabilize. Growth will rely more on domestic manufacturers' technological breakthroughs and expansion into high-end areas, as well as the continuous expansion of grassroots markets such as county-level healthcare. Attention should be paid to the inventory levels of leading companies' channels. It is expected that the inventory adjustment from the fourth quarter of 2025 to the first half of 2026 will gradually come to an end. High-value consumables: The "bulk purchasing" policy is trending towards continuous expansion of varieties and optimization of bidding mechanisms. The focus of the domestic market in 2026 is expected to remain on policies, with attention to specific details related to "anti-internal inversion." In terms of international expansion, attention is focused on the progress of product research and sales in European and American markets. Due to the layout of many companies in overseas channels, acquisitions, and production bases, the sector's overseas market growth is expected to accelerate in 2026. Low-value consumables: With significant changes in global trade environment, to avoid high tariffs imposed by the United States and other regions, and to restore and expand competitiveness in the US market, low-value consumables companies are accelerating the layout of overseas production bases. After the commissioning of overseas bases by leading companies in 2026, they are expected to quickly regain market share lost due to tariff policies in the United States and gain clear profit increases. In vitro diagnostics: The main product joint purchases have been implemented gradually. Although the overall market size has been compressed, domestic leading companies continue to increase market share due to pricing and channel advantages, accelerating import substitution. The price impact of joint purchases and the suppression of inspection volumes due to policies will gradually fade, and the industry's overall inspection demand will continue to grow due to aging trends and increased penetration of residents' inspections. Home medical equipment: Internationalization has become the core strategy for domestic companies in the home medical equipment sector. Leading companies are accelerating their business expansion overseas through mergers and acquisitions and overseas product registrations. In 2026, it is expected that some companies will enter a period of harvesting in overseas markets and innovative products, leading to accelerated growth. It is recommended to focus on the progress of core products such as respiratory therapy and blood glucose management. Risk alerts: Exchange rate risks; volatility in domestic and foreign policies; fluctuations in investment and financing cycles; risks of merger and integration falling short of expectations.