HEALTH FOOD IN CHINA: REGULATORY OVERVIEW
Recent estimates indicate that there are over 3,000 health food products sold on the market in China, including nutraceuticals, functional foods, and products based on Traditional Chinese Medicine (TCM). At least one source reports that total sales volume in China’s health food market for 2000 was about RMB50 billion (US$6 billion) and will reach RMB80 billion (US$9.7 billion) by 2010. Health food products with beautifying, blood nourishing, or aging prevention properties and products high in calcium are increasingly popular. Foods enhanced with functional ingredients such as probiotics also see increased sales. Slimming and weight loss products are also becoming popular. Although these products are more common in the West, where obesity is a greater problem, demand is rising in this segment.

China’s Ministry of Health (MOH) regulates China’s burgeoning health food industry. MOH brought health food under its supervision in 1996. Depending on the product, health food or health food supplements may be registered as health food supplements, ethical products, TCM, or as consumer products. If registered as a health food supplement, basic procedures and regulations must be followed. An application for import and marketing approval usually takes between 12-18 months, including testing. Required testing may be performed by any of 31 testing institutions recognized by the MOH. Testing institutions include medical institutions, comprehensive testing centers, and medical colleges and universities. Home-country test results may be used only as a reference -- they may not be substituted for local testing. Products are tested for functionality, toxicology, and food hygiene, among other things, depending on the product and its uses. Testing costs will vary from RMB100,000 to RMB200,000 (US$12,000-24,000), depending on the product and the amount of testing required.

Once testing has been successfully completed, an import registration application must be submitted. The fee is RMB8,000 (US$968). The application includes the product’s name, manufacturer’s name, address, and contact information, and a description of the product’s function. An original application and 13 copies must be submitted, in both English and Chinese. The product’s composition, functional (active) ingredients, a flow chart of the manufacturing process, and quality control information must also be provided, along with packaging and labeling samples, product samples, insert data sheet samples, and related documents and information.

TAIWAN’S PHARMACEUTICAL INDUSTRY: MARKET OVERVIEW
In Taiwan, the term “pharmaceuticals” refers to both Western medicines and traditional Chinese herbal medicines. There are roughly 250 registered herbal medicine producers in Taiwan and 280 registered Western medicine manufacturers. Taiwan’s pharmaceutical industry grossed US$2.52 billion in sales in 2000, up 18% over 1999 figures.

Imports of pharmaceuticals account for about 70% of the Taiwanese market. The U.S. share accounts for roughly 25%. The Taiwanese government expects domestic sales of pharmaceuticals to reach US$3 billion by 2003. A number of factors are responsible for driving this expected growth, including: (1) Taiwan’s recent entry into the World Trade Organization (WTO), which should help lower already low import tariffs and encourage more overseas firms to set up offices in Taiwan; (2) over the past several years, the government has designated special economic areas with low land rental fees to attract investment in the local pharmaceutical industry; and (3) the Taiwanese government recently contributed US$174 million to a proposed pharmaceutical manufacturing site in order to attract U.S. pharmaceutical ventures.

Despite expected market growth, a number of structural problems remain in Taiwan’s pharmaceutical market. The average Taiwan citizen visits the doctors 12-15 times a year, receiving four to five different medications per visit. This abuse and misuse of the healthcare system is the result of (1) low co-payments for patients, which makes doctor’s visits very inexpensive, and (2) low doctor salaries, which encourages over-prescribing as a way to increase revenue (often doctor’s offices have related pharmacies). While contributing to the demand for pharmaceuticals, this cycle of inefficiency in Taiwanese healthcare is unsustainable.

U.S. observers are especially concerned with reference pricing and reimbursement issues. Generic drugs, including very low quality (not bioequivalent) products, are reimbursed at prices similar to (though slightly less than) the products of “R&D” firms. This stifles innovation and in some cases promotes the use of ineffective or less effective pharmaceutical products. With respect to reimbursement, Taiwan’s National Health Insurance law states requires reimbursement at actual transaction costs, but in practice enforcement is low. This allows generic pharmaceutical producers to offer drastic discounts to healthcare providers, providing them with an illegal profit incentive to choose generics over name brands.

SINGAPORE’S MEDICAL DEVICE MARKET: HOME TO BOTH EXPORTS AND MANUFACTURING
The market for medical equipment in Singapore expanded significantly in recent years. Singapore’s economic recovery accounted for much of the improvement. Medical device imports increased from US$412 million in 1999 to US$496 million in 2000 and are expected to rise further (final 2001 figures are not yet available). In 2000, the U.S. was the leading exporter of medical devices to Singapore, accounting for 37% of the market (US$187 million), while Japan earned 17% market share (US$86 million). The U.S. is expected to continue to dominate the market for the next few years, despite growing competition from high quality, competitively priced products from Japan.

In addition to exporting medical devices to Singapore, many U.S. medical companies are investing directly in the country. For example, medical technology manufacturer BD (formerly known as Becton Dickinson) opened a Research & Development hub in Singapore in 1999. In January 2001, Agilent Technologies opened a manufacturing plant for healthcare products, including ultrasound imaging equipment and defibrillators. Products will be shipped worldwide. Companies like Baxter, 3M, Applied Biosystems, and Siemens Medical Instruments also use Singapore as an R&D hub, manufacturing site, and/or as their regional headquarters. Many companies consider Singapore a prime location for manufacturing due to the accessibility of trained engineers, research institutes, and its position as a key hub for Asia.

NEW MEDICAL DEVICE REGULATIONS IN JAPAN: GUIDELINES FOR PACKAGE INSERTS
Effective January 14th, Japan’s Ministry of Health, Labour, and Welfare (MHLW) issued new guidelines for medical device packaging. “The Guideline of Package Insert for Medical Devices” aims to provide physicians and consumers with clearer, more comprehensive product and usage information to prevent potential adverse events. In sum, the new guidelines are geared to make usage information easier to understand for the end-user. Those companies with device products that have already been approved must revise their product inserts to comply with the new regulation by January 13, 2003.

Basic package inserts should be in compliance with the information provided on the shonin (approval) application and should include: (1) date of publication and most recent revision; (2) shonin number; (3) classification and generic name; (4) trade name; (5) warnings; (6) contraindications; (7) shape and structure; (8) performance, indication for use, efficacy and/or effectiveness; (9) instructions for use and/or handling; (1) cautions; (11) principle of operation; (12) clinical records; (13) method and duration of preservation; (14) handling instructions; (15) maintenance instructions; (16) condition for shonin; (17) packaging information; (18) major reference papers and where they might be obtained; and (19) name and address of manufacturer and/or importer.