China's medtech market remains under pressure, but global company earnings calls are sending mixed signals of recovery and bottoming

Overview

This report focuses on how global medtech companies described the China business environment during their January to March 2026 earnings calls. Overall, the Chinese market remains affected by healthcare cost control, volume-based procurement, distributor inventory adjustments, and Buy-China policies, but company performance is clearly diverging: IVD and diagnostics-related businesses face the greatest pressure, while some higher-value consumables and device businesses are showing signs that price impacts have bottomed, volume has recovered, or localization is contributing to improvement.

Core views

The core view is that China's medtech market has not fully recovered and policy pressure may persist or intensify, but the industry is not deteriorating in a straight line. Business mix determines resilience: IVD, diagnostics, and import-sensitive businesses are under heavier pressure; companies with local manufacturing, local channels, direct sales capabilities, or exposure to surgical-volume recovery are more likely to see bottoming improvement first. Goldman Sachs is paying particular attention to progress on Sysmex's unified testing pricing policy discussion and to the contribution of Olympus's China-manufactured products to recovery.

Analysis framework

The report takes a cross-sectional earnings-call review approach, comparing public earnings-call comments from Japanese, US, European, and Chinese medtech companies on the China market and extracting common signals around policy pressure, volume changes, price impacts, localization, domestic substitution, and company guidance. The valuation section uses the global medtech sector FY3/28E EV/EBITDA average as the basis for the individual stock target-price methodology, combined with company discounts or peer averages.

Methodology notes

• valuation methodEV/EBITDA relative valuation

  Using the global medtech sector's FY3/28E EV/EBITDA average as the base, apply peer-average multiples or discounts to different companies to determine 12-month target prices.

  Sysmex's target price is based on the global medtech sector FY3/28E EV/EBITDA average of 11.0x with a 20% discount; Olympus's target price is based on the same average with a 10% discount; Terumo's target price is based on the global medtech sector FY3/28E EV/EBITDA average of 11.0x.

• research frameworkGS Factor Profile

  Goldman Sachs's factor profile compares individual stocks with the market and sector peers across growth, financial return, valuation multiples, and composite factors.

  Growth is based on forward sales, EBITDA, and EPS growth; financial returns are based on ROE, ROCE, and CROCI; valuation multiples are based on P/E, P/B, dividend price ratio, EV/EBITDA, and EV/FCF; composite factors combine growth, returns, and lower valuation multiples.

• M&A assessmentM&A Rank

  Goldman Sachs uses levels 1 to 3 to assess the probability that a covered company becomes an acquisition target.

  Level 1 indicates a relatively high probability, level 2 a medium probability, and level 3 a low probability; for level 1 or level 2 companies, Goldman Sachs typically includes M&A factors in the target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Olympus (7733.T)

  Its China gastrointestinal solutions business is under pressure, but China-manufactured products could become the driver of a FY3/27 recovery.

  Strengths

  The company expects its China business to recover in FY3/27, and its three-year management strategy targets low- to mid-single-digit growth in China.

  Weaknesses

  Q4 sales in the China GIS business fell 19% year over year, indicating that demand and the policy environment remain weak.

  Comparison

  Compared with IVD companies, Olympus's pressure is concentrated in device businesses and the pace of localization, with the recovery path more dependent on volume growth in China-manufactured products.

  Risks

  Changes in the China medtech market, regulatory changes, infectious disease spread, yen appreciation, inflation, manufacturing and sales activity, R&D, and shifts in the competitive environment.

• Sysmex (6869.T)

  Its China IVD business is under multiple blows from policy and channel inventory issues, making it one of the most pressured Japanese companies in the report.

  Strengths

  Medium- to long-term testing demand in China remains solid, the company believes the value of its testing solutions will be re-recognized, and it plans to strengthen direct sales.

  Weaknesses

  China sales fell 38.5% year over year in Q4, and FY3/27 guidance also incorporates uncertainty from possible unified testing pricing.

  Comparison

  Compared with Olympus and Terumo, Sysmex is more directly exposed to IVD cost control, reagent pricing, and testing-pricing policy.

  Risks

  Unified testing pricing policy, minimum-necessary principle, distributor inventory adjustments, volume-based procurement, geopolitical risk, supply chain changes, global cost control, intensifying competition, and foreign exchange.

• Terumo (4543.T)

  Volume-based procurement is driving price declines, but volume growth in some businesses has already exceeded the negative price impact.

  Strengths

  The neurovascular business is offsetting price declines through sales-channel expansion and volume growth.

  Weaknesses

  The company still faces risks from more aggressive healthcare cost control, competition, and staffing shortages at medical institutions.

  Comparison

  Compared with Sysmex, Terumo's policy impact in China is more like trading price for volume, and earnings flexibility depends on whether volume can continue to cover price declines.

  Risks

  Cost control exceeding expectations, deviation in core product sales, manufacturing quality issues, surgical volumes affected by staffing shortages at medical institutions, inflation, and yen volatility.

• Asahi Intecc (7747.T)

  The impact of guidewire price declines has largely run its course, but other products are beginning to feel cost-control pressure.

  Strengths

  Management expects the high mortality rate of cardiovascular disease to support growth in Chinese surgical and consumable demand.

  Weaknesses

  Shanghai still faces guidewire pricing pressure, and policy effects are gradually emerging for other products as well.

  Comparison

  Similar to Terumo, the investment case depends on whether volume growth is sufficient to offset price declines.

  Risks

  Regional price pressure, wider cost-control measures, product price declines, and intensifying competition.

• Johnson & Johnson (JNJ)

  China volume-based procurement remains a more visible headwind in 2H26, especially as it may expand to electrophysiology products.

  Strengths

  The surgical business still posted 1Q growth of 1.2% year over year, showing that other growth factors can partially offset policy pressure.

  Weaknesses

  Management expects the headwind from volume-based procurement to become more pronounced in 2H26.

  Comparison

  Compared with Boston Scientific, JNJ's comments on second-half policy pressure are more cautious.

  Risks

  Expansion of volume-based procurement, price pressure on electrophysiology products, and slower growth in the surgical business.

• Abbott Laboratories (ABT)

  Its China core laboratory business has moved from a deep decline in 2025 to flat in 1Q, signaling stabilization.

  Strengths

  1Q performance was better than the full-year guidance for a low-single-digit decline, and management views this as a positive development.

  Weaknesses

  The company still cannot confirm that China headwinds are over, and about 80% of its China business mix is affected by volume-based procurement.

  Comparison

  Compared with Roche, Abbott's China core laboratory business shows clearer sequential improvement.

  Risks

  Continued impact from volume-based procurement, new areas of policy coverage, and renewed weakness in full-year sales.

• Boston Scientific (BSX)

  Its China business delivered strong double-digit growth despite the headwind from volume-based procurement.

  Strengths

  Sales growth was strong, and the impact of volume-based procurement on the arterial business is expected to ease in Q2.

  Weaknesses

  Urology stone management and arterial businesses are still affected by policy pressure.

  Comparison

  Among overseas companies, BSX has the most positive tone on China growth.

  Risks

  Volume-based procurement pressure easing less than expected, and price pressure persisting in related businesses.

• Roche (ROPC.S)

  Its China diagnostics business continues to be pressured by healthcare cost control.

  Strengths

  Excluding China, diagnostics and core laboratory growth is more resilient.

  Weaknesses

  Diagnostics sales in China fell 14% year over year, dragging on global diagnostics performance.

  Comparison

  Roche illustrates that the China diagnostics market remains a major drag on global diagnostics companies.

  Risks

  Prolonged cost control in China, and limits on diagnostic reagent pricing and usage volume.

• Revvity Inc. (RVTY)

  The decision to divest the China immunodiagnostics business reflects significant pressure in the China diagnostics market.

  Strengths

  Resources will be concentrated on the life sciences business, which is growing faster in China, and the reproductive health business, where localization has already been established.

  Weaknesses

  The divested China immunodiagnostics business accounts for about 6% of total sales, showing that policy pressure has already affected portfolio allocation.

  Comparison

  Unlike Mindray, which continues to invest in expanding China IVD share, Revvity is optimizing its portfolio by exiting lower-margin pressured businesses.

  Risks

  Price pressure, demand shifts, divestiture execution risk, and the risk of changing the focus of the China business.

• Mindray (300760.SZ)

  One of the direct beneficiaries of China's IVD domestic-substitution trend.

  Strengths

  Against the backdrop of accelerated import substitution at tertiary hospitals, the company aims to raise share in immunology, biochemistry, and coagulation from 10% to 20% over three years, and it has already increased to 13% in 1Q.

  Weaknesses

  The industry is still constrained by funding, reagent pricing, and usage controls.

  Comparison

  Unlike pressured multinational diagnostics companies, Mindray benefits from domestic substitution and breakthroughs with high-end customers.

  Risks

  Tighter cost control, rising domestic competition, and share gains falling short of target.

Key data

• Olympus China GIS business Q4 salesdown 19% year over yearThe previous quarters were 1Q -16%, 2Q -15%, and 3Q +6%; the company expects a recovery in FY3/27, partly driven by growth in China-manufactured products.
• Sysmex China business Q4 salesdown 38.5% year over yearAffected by healthcare cost control, distributor inventory adjustments, the minimum-necessary principle, volume-based procurement, and possible unified testing pricing.
• Terumo China neurovascular businessvolume growth more than offset price declinesVolume growth from channel expansion brought by volume-based procurement is sufficient to offset lower prices.
• Asahi Intecc China guidewire price pressurelargely digestedExcept for Shanghai, the impact of guidewire price declines has largely run its course; management expects volume growth to accompany lower unit prices.
• Johnson & Johnson China surgical business 1Q salesup 1.2% year over yearThe negative impact of volume-based procurement was partly offset by other growth factors, and electrophysiology products will also be affected by volume-based procurement in 2H26.
• Abbott China core laboratory 1Q salesflat year over yearCompared with quarterly year-over-year declines of 15%-30% in 2025, management views this as a positive development; about 80% of the China business mix is affected by volume-based procurement.
• Boston Scientific China salesstrong double-digit growthGrowth was achieved despite volume-based procurement pressure on urology stone management and arterial businesses; the impact on the arterial business is expected to ease in Q2.
• Roche China diagnostics salesdown 14% year over yearGlobal diagnostics sales were up 3% year over year, or up 5% excluding China; core laboratory sales were up 4% year over year, or up 8% excluding China.
• Revvity China immunodiagnostics businessaccounts for about 6% of total sales and is planned for divestitureThe divestiture is driven by price pressure and demand changes in China's diagnostics market, and the company will focus on life sciences and reproductive health.
• Mindray IVD share targetfrom 10% to 20% over three years, already at 13% in 1QBenefiting from accelerated domestic substitution at tertiary hospitals, with a focus on expanding high-end customers in immunology, biochemistry, and coagulation.
• Sysmex target price and ratingBuy; about ￥1,700Based on the global medtech sector FY3/28E EV/EBITDA average of 11.0x with a 20% discount.
• Olympus target price and ratingBuy; ￥2,050Based on the global medtech sector FY3/28E EV/EBITDA average of 11.0x with a 10% discount.
• Terumo target price and ratingNeutral; ￥2,400Based on the global medtech sector FY3/28E EV/EBITDA average of 11.0x.

Impact & implications

The investment implication is that China medtech exposure needs to be repriced by subsegment rather than treated as a single policy risk. IVD, diagnostic reagents, and products with high import dependence still face pressure from prices, volume, and domestic substitution; companies with local manufacturing, localized product portfolios, channel expansion, or the ability to offset lower unit prices with volume growth may be the first to show earnings resilience in 2026. In the short term, investors should watch the timing of policy implementation and earnings volatility; over the medium term, the focus should be on how localization and direct-sales capabilities reshape market share.

Risks

• China healthcare cost control, volume-based procurement, and unified testing pricing policies could persist longer or intensify.
• In IVD, reagent pricing and usage controls could further compress revenue and profits.
• Buy-China and accelerated domestic substitution could weaken multinational companies' share and pricing power.
• Distributor inventory adjustments could cause short-term revenue volatility.
• Volume growth may be insufficient to offset price declines, causing price-for-volume substitution to fail.
• FX, inflation, supply chain issues, geopolitics, and regulatory changes could affect the earnings of Japanese and global medtech companies.
• Competition is intensifying, especially as local players in emerging markets rise and push prices lower.

What to watch

• When and how Sysmex's unified testing pricing policy is implemented, and its impact on FY3/27 earnings volatility.
• Whether Olympus's China-manufactured products can drive a FY3/27 recovery.
• Whether Terumo and Asahi Intecc can continue offsetting revenue pressure through volume growth after price declines.
• Whether Abbott's flat China core laboratory business can evolve into a genuine bottoming recovery.
• Whether the impact of volume-based procurement on Boston Scientific's China arterial business eases as expected in Q2.
• Whether pressure on Roche and Revvity diagnostics business further passes through to expectations for the global diagnostics sector.
• Whether Mindray's progress with high-end tertiary-hospital customers and IVD share gains proceeds according to the three-year target.