Karl Storz to emphasize localization, innovation in Chinese market

German medical device company Karl Storz will enhance collaboration with Chinese frontline doctors to create more localized innovations as the company prepares to deepen its roots in China, which has become the company's second-largest and fastest-growing market, said the head of the company's China operations.

Founded by physician Karl Storz of Germany in 1945, the company manufactures and sells endoscopes, surgical instruments and medical devices. It was one of the first to introduce an endoscope that delivered light using fiber optics in 1963.

In 2006, the family-owned company established Karl Storz Endoscopy Shanghai in Zhangjiang, Pudong New Area, and has since seen its products used in more than 4,700 secondary and tertiary hospitals across China.

"China has become Karl Storz's second-largest market after the United States and it is still fast-growing," said Joy Ruan, general manager of Karl Storz Endoscopy Shanghai. "We expect the Chinese market to surpass that of the US in five to 10 years."

Endoscopes are an indispensable tool for minimally invasive surgical procedures and can be classified into two types — rigid endoscopes and flexible endoscopes. The former is mainly entered by surgical incisions of tissue for surgical procedures, while the latter enters the body through natural orifices for examination, diagnosis and treatment.

Karl Storz has been a leading supplier of rigid endoscopes both globally and in China, where it has a market share of more than 40 percent. The company has continued to dominate the market with innovations such as the IMAGE 1 S Rubina, which combines the latest 4K, 3D and fluorescence imaging technologies (NIR/ICG) into one product. The IMAGE 1 S Rubina will make its China debut during the upcoming 5th China International Import Expo in early November, along with the company's other new products and solutions.

When Karl Storz first entered China, minimally invasive surgeries were novel practices and few hospitals in the country were able to perform them due to a lack of both equipment and skills, Ruan said.

"Karl Storz China has helped advance China's minimally invasive surgical technologies and skills together with Chinese clinicians, which is what we are most proud of," Ruan said.

Over the past two decades, technological advances in the field of endoscopy have boosted the development of minimally invasive surgery, which in many cases allows doctors to perform surgery through 1-2 centimeter incisions. This greatly reduces pain and shortens the recovery times of patients following surgery.

While the US is the largest market for medical devices, China's spending on healthcare is growing rapidly. The Chinese government's spending on healthcare expanded more than 18-fold from 111.7 billion yuan ($15.54 billion) in 2003 to 2.07 trillion yuan in 2021.

Currently, nearly all tertiary medical centers in China can perform minimally invasive surgeries, but only around 20 to 30 percent of secondary hospitals, including urban district hospitals and rural county hospitals, are equipped for this purpose, according to Ruan.

"The market potential is huge," Ruan said. "We expect to see market growth of more than 10 percent in five years thanks to demand for technological upgrading and growth of the minimally invasive surgery market."

To sustain its rapid growth in the Chinese market, Karl Storz has been deepening its operations in the country. In December 2020, the company established its China headquarters in the China (Shanghai) Free Trade Pilot Zone. The 10,000-square-meter headquarters is the company's largest in the Asia-Pacific region and houses offices, a simulation hospital and training center, spaces for procurement, logistics, after-sales maintenance and more.

"With the new headquarters, we hope to work closely with Chinese frontline doctors," Ruan said.

She added that it is localized innovation that has given Karl Storz an edge over the competition in the market.

"Collaboration with surgeons is in Karl Storz's genes as most of our innovations are the result of such collaborations. Our gynecological Campo hysteroscope, for example, is a product developed in cooperation with Dr Rudi Campo," Ruan said.

"Many doctors in China have a good amount of experience with these surgeries. We hope to cooperate with Chinese surgeons and make products suitable for Chinese doctors. Localized innovation is definitely the direction we're heading for."