Capital equipment VBP officially launched, with Category B provincial procurement moving faster than expected
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Capital equipment VBP officially launched, with Category B provincial procurement moving faster than expected
Goldman Sachs believes that China’s capital equipment VBP is advancing more quickly, but the policy focus is not simply on pushing down equipment procurement prices; instead, it emphasizes rational pricing, quality, service, and full lifecycle cost, so pricing pressure on equipment may be milder than on consumables.
- On July 14, the government issued a notice on capital equipment VBP, requiring each province to complete at least one round of Category B equipment procurement by the end of 2026, earlier than expected.
- Some advanced radiotherapy equipment in Category A will be included in national-level VBP; highly customized systems such as heavy ion and proton therapy are not included in the current framework for now.
- The first batch of Category B covers PET/MR, PET/CT, laparoscopic surgical robots, and conventional radiotherapy equipment, with plans to gradually expand to capital-intensive categories with limited competition.
- The policy emphasizes “high quality and reasonable prices,” incorporating lifecycle costs such as consumables, maintenance, and after-sales service into evaluation, helping reduce the risk of destructive low-price competition.
- For covered companies, demand for surgical robots is more affected by the release of installation quotas; for imaging equipment, the provincial PET-CT procurement framework does not change the view on the national competitive landscape.
Report interpretation
Overview
This report discusses the latest developments in China’s VBP policy for medical device capital equipment. The notice issued on July 14 requires Category B capital equipment to complete at least one round of provincial procurement by the end of 2026, implying that detailed local implementation rules may be rolled out more quickly in the coming months. Goldman Sachs believes the policy direction is broadly consistent with prior expectations, against a backdrop of continued pressure on local government finances and hospital balance sheets, fragmented equipment procurement, and the lack of a unified national standard, making provincial VBP more feasible than nationwide centralized procurement.
Core views
The core view is that capital equipment VBP is advancing faster than expected, but its pricing impact should not be simply compared with consumables VBP. The policy explicitly emphasizes rational pricing, technical suitability, product quality, and lifecycle cost, rather than focusing only on one-time equipment purchase prices. Goldman Sachs expects equipment price cuts to be more moderate than for consumables, but the phased rollout could slow short-term tendering activity as provinces prepare for VBP. Leading domestic companies may partially offset price and margin pressure through share gains under VBP and overseas expansion.
Analysis framework
The report uses a policy interpretation plus covered-category impact breakdown approach: it first compares the capital equipment VBP notice with prior expectations, then distinguishes the regulatory scope and procurement level of Category A and Category B equipment, and finally evaluates demand, pricing, competitive landscape, and impact on leading companies across covered areas such as surgical robots and imaging equipment.
Methodology notes
Volume-based procurement
VBP is used to influence medical device pricing and share allocation through centralized procurement and committed purchase volumes. This capital equipment VBP places greater emphasis on quality, service, and lifecycle cost, rather than simply pursuing the lowest procurement price.
Administrative classification of capital equipment
Category A and Category B are administrative classifications used by regulators for procurement approval, quota management, and capacity planning, and differ from the NMPA Class I, II, and III medical device classification based on product risk.
Goldman Sachs factor profile
As described in the disclosure section, Goldman Sachs factor profiles compare stocks with the market and industry peers across growth, financial returns, valuation multiples, and composite metrics, but the main body of this report does not provide specific company scoring under this framework.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Surgical robotsA relevant category in the first batch of Category B capital equipment VBP
- Strengths
- Overseas markets have become the main growth driver for covered companies such as MedBot and Edge Medical, while the domestic market still offers upside optionality.
- Weaknesses
- Domestic demand is more constrained by installation quotas, and price cuts alone may not significantly boost sales volume.
- Comparison
- Compared with pricing factors, quota release in the next cycle is more critical for domestic demand.
- Risks
- If quota release is slower than expected or bidding rules become more aggressive, domestic revenue and margins may come under pressure.
- Imaging equipment / PET-CTInitial coverage under Category B provincial VBP
- Strengths
- The report believes PET-CT will still be procured at the provincial level and that no nationwide unified VBP has been introduced, so United Imaging’s leading position is expected to remain intact.
- Weaknesses
- Provincial rules may still create localized pricing pressure and tendering volatility.
- Comparison
- Compared with nationwide centralized procurement, provincial VBP may have a more limited impact on the competitive landscape.
- Risks
- If subsequent local rules broaden the scope or impose stronger price cuts, assumptions on leading players’ share and margins may need to be reassessed.
- Advanced radiotherapy equipmentSome Category A equipment included in national-level VBP
- Strengths
- MR-Linac and X-ray stereotactic radiosurgery systems, among others, will be managed under centralized VBP organized by the NHC, making the policy path clearer.
- Weaknesses
- High-end equipment carries high unit prices and complex procurement processes, while hospital budget constraints remain a demand limitation.
- Comparison
- Highly customized equipment such as heavy ion and proton therapy is temporarily excluded from the current VBP framework.
- Risks
- If national-level rules place greater weight on price, pressure on suppliers of high-end radiotherapy equipment could increase.
- Medical device consumablesVBP coverage continues to expand and is approaching full coverage
- Strengths
- Past renewal cases show pricing in some categories has stabilized or outcomes have met expectations, and leading domestic players may continue to gain share.
- Weaknesses
- Pricing pressure under consumables VBP is usually greater than for capital equipment.
- Comparison
- The report expects capital equipment price cuts to be more moderate than those for consumables.
- Risks
- If consumables and equipment evaluations become linked, companies’ total supply and service costs may rise.
Key data
- Policy release date2026-07-14The government issued the capital equipment VBP notice.
- Timing for provincial procurement of Category B equipmentAt least one round before the end of 2026Each province is required to complete at least one round of Category B equipment procurement by the end of 2026.
- Category B pilot requirementBefore the end of June 2027Each province must designate at least one prefecture-level city or municipality for a pilot and complete one round of procurement.
- Category A equipment price thresholdInitial purchase price of Rmb50mn or above per unitIncludes large medical equipment such as advanced radiotherapy systems, heavy ion and proton therapy systems; some highly customized systems are not included in the current VBP framework for now.
- Category B equipment price thresholdInitial purchase price of Rmb30–50mn per unitIncludes PET/MR, PET/CT, laparoscopic surgical robots, medical linear accelerators, TomoTherapy, and Gamma Knife, among others.
- First batch of Category B scopePET/MR, PET/CT, laparoscopic surgical robots, conventional radiotherapy equipmentSubsequent plans call for expansion into other categories with high capital intensity and limited market competition.
- Consumables VBP trackingRenewal VBP for dental implants launched in July 2026The table shows Sichuan leading the renewal, covering all provinces/regions and involving both domestic and multinational companies.
Impact & implications
For the medical equipment industry, the policy increases certainty around the rollout of capital equipment VBP and raises time pressure for implementation, but because the evaluation system incorporates quality, service, and lifecycle cost, price competition may be more bounded than for consumables. The short-term impact is mainly reflected in disruptions to tendering pace before local rules are issued; the medium- to long-term impact depends on the final bidding framework, company bidding strategies, hospital installation quotas, and whether leading domestic players can offset pricing pressure through share gains and overseas growth.
Risks
- Final provincial or national tendering rules may place more emphasis on low prices than expected, increasing pressure on pricing and margins.
- During provinces’ preparation for VBP, short-term hospital equipment tendering and procurement activity may slow.
- Continued pressure on local government finances and hospital balance sheets may constrain the release of demand for capital equipment.
- Insufficient release of installation quotas may limit domestic sales elasticity for high-end equipment such as surgical robots.
- If overseas expansion falls short of expectations, the ability of leading domestic players to offset pricing pressure will decline.
What to watch
- Detailed implementation rules for Category B capital equipment VBP across provinces in the coming months.
- The rollout scope, bidding rules, and winning bid prices of at least one round of Category B procurement in each province by the end of 2026.
- Pilot progress in prefecture-level cities or municipalities by the end of June 2027.
- Procurement volume, price declines, and share changes for PET/CT, PET/MR, surgical robots, and conventional radiotherapy equipment.
- The actual weighting of quality, service, maintenance, consumables, and lifecycle cost in the policy evaluation system.
- Whether hospital equipment tendering pace slows noticeably during the policy preparation period.