GE Healthcare, a leader in the high-end medical devices market, is targeting China's 70,000 community hospitals due to a shift by the central government to focus on grassroots healthcare system.

Due to this, GE Healthcare has developed more competitive products such as the Brivo CT 325/315 and is planning to sell the "created in China" machines globally.

According to Marcelo Mosci, president and CEO of GE Healthcare China, GE Healthcare's business in China has kept a 20 percent compound annual growth in recent years. He said revenue of the company in China would cross the $1 billion barrier in 2010.

"A county hospital can afford to run the equipment (refers to the Brivo CT 325/315) with as few as five patients a day," said Steven Gray, vice-president and general manager of GE global computed tomography and advantage workstation.

China issued a new healthcare reform plan last April to broaden residents' access to healthcare, and has allocated financial subsidies to small hospitals in some regions since last year.

"When the government is moving in that direction, when the hospitals, the clinics and the doctors are moving in that direction, we are preparing ourselves to give full solution to these people," said Mosci.

To promote sales among grassroots hospitals, GE Healthcare has planned a package solution, which includes equipment, service and financing, and is organizing a 500-strong team to train doctors on using the medical devices and technologies. GE Healthcare's 100 sales staff are in contact with more than 2,000 hospitals.

In addition, the company is considering tracking the operation of devices and guiding doctors through cable or wireless remote monitoring.

"A large percentage of the growth within China's medical device market is going to occur in rural areas so it makes sense for GE to target sales to these markets," said Ben Cavender, a senior analyst at China Market Research Group.

According to China Market Research Group's interviews with 1,000 respondents divided between several regions and city tiers across China in late 2009, healthcare providers, staff, and patients would be ready to pay up to 20 percent more for medical devices from foreign brands that they believe to be safe.

"However, GE has to be careful in how it approachs these markets because they do not want to devalue the brand," he said.

He added GE might solve the problem by cooperating with local producers like Shinva Medical Instrument to sell some devices at more affordable prices, while still maintaining the brand and sales of cutting edge technology.

However, Zhou Jing, an analyst at Guolian Securities said it might not be a worthwhile venture for GE Healthcare because the profit from selling products to community hospitals would be very little as local competitors are suppressing prices.

China's emerging players like Shinva and Yuyue Medical Equipment and Supply are heading to the tomography business aggressively, she added. "Domestic players have more advantages in terms of network across the country especially in underdeveloped areas and have established communication with local organizations."

She estimated that the total revenue of GE Healthcare in China would increase as it extends businesses to all levels, but profitability might be affected due to lower priced products from competitors and rising of marketing, training and after-sales service costs.

Mosci said GE Healthcare has done its homework and high costs could be offset successfully because they have a package of solutions, "which makes it easy and affordable to do the right job such as training doctors and provide supporting products," he said.

He also believed that the quality and brand trust of GE at an affordable price would attract these hospitals.

"No matter how much the price difference is, our products share the same high level of quality under the same production standard," said Chen Jinlei, GE Healthcare General Manager of CT China.