(Yicai) Dec. 11 -- German medical ventilator maker Dräger has laid off staff at its Chinese arm due to a slump in orders and revenue, a company insider said after an internal letter concerning the unit’s restructuring circulated online.

Confirming that the letter was authentic, the source told Yicai that the company has cut its China headcount by 10 percent to 15 percent.

“The number of affected employees will be in the two-digit mid-range,” according to the letter jointly signed by APAC Chief Executive Andrew Hawke and China Managing Director Hans Ingebrigtsen. “The region’s year-to-date performance is one third below last year and falls short of expectation for this year.

“At this point in time, we don’t see prospects for recovery in 2025 based on the lasting shifts in Chinese market conditions,” they wrote, adding that the “organizational optimization as one of the cost-saving approaches will impact employees in both our medical and safety division across China.”

Lübeck-based Dräger is a well-known supplier of critical care medical devices such as ventilators and anesthesia machines. Its medical device division in Shanghai had about 400 employees.

One of the main reasons for the decline in orders and revenue in China is the falloff in demand for ventilators. During the Covid-19 pandemic, demand outstripped supply. Chinese medical device suppliers are also taking market share, further hurting Dräger's business in the country. 

Shenzhen-based Mindray Bio-Medical Electronics had almost 32 percent of the market in the first half of this year, while Dräger ranked second with 16.4 percent, according to official procurement data for ventilators.

The rise of domestic players has hit the performance of multinational ventilator makers and squeezed their profit margins in China, a local intensive care expert told Yicai. Many of their new products have not been launched in China in recent years because they are uncertain about their competitiveness, the person noted.

Domestically made ventilators account for about half of the total in some large first-tier hospitals in China, they told Yicai.

Editors: Tang Shihua, Martin Kadiev