The Korean Medical Device Market: Asia’s Third Largest

This article was also published on Medical Device Daily

The Korean Medical Device MarketThe medical device market in Korea is growing quickly, at an annual average rate of 13.5 percent. It had a value of $3.9 billion in 2012, making it the third largest medical device market in Asia. Korea’s medical device market is expected to maintain its current level of growth from now through 2018.

Korea presents a considerable opportunity for foreign medical device companies. The country has a GDP per capita (in purchasing power parity) of almost $30,000. Its 49.8 million people are growing older and richer, providing a solid base for the expansion of the healthcare market in Korea.

The healthcare market in Korea is concentrated in five main cities — Seoul, Pusan, Daegu, Daejeon and Kwangju. Together, these cities contain nearly 60 percent of Korea’s hospital beds. In 2012, Korea had 277 midsized general hospitals, 40 university hospitals, about 2,450 small hospitals and close to 28,000 clinics. The country also had 15,100 dental hospitals and 12,500 traditional medicine hospitals.

Hospitals each have their own committee dedicated to purchasing medical devices. In most cases, purchasing takes place on an annual basis. Getting a new device onto the purchasing list of a given hospital typically takes at least several months. When it comes to purchasing, doctors have the most influential voices. They are often trained overseas and are typically receptive to new technologies.

New technologies perform well in Seoul and its surrounding metropolitan area. More than 55 percent of the market for high technology imports is located in this region, where there are five major hospitals with special programs for advanced technology: Seoul National University Hospital, Samsung Medical Center, Asan Medical Center, Yonsei Medical Center and Catholic St. Mary’s Hospital.

REGULATORY BODIES

Korea’s Food and Drug Administration (KFDA) is the country’s main body for the regulation of foods, drugs and medical devices. The 1,550 person agency has its headquarters in Osong, 65 miles south of Seoul. The Medical Device Safety Bureau of the KFDA oversees all medical device registration and regulation in Korea.

The evaluation department of the Medical Device Safety Bureau has four separate divisions: orthopedic and rehabilitation devices, cardiovascular devices, high technology devices and oral/GI devices. Starting in 2012, there was also a separate task force set up for the evaluation of in-vitro diagnostics (IVD). Prior to this, some IVDs were regulated under the “drugs” category, while others were simply not regulated. But since January 1, 2013, the KFDA has regulated all IVD products under the “medical devices” category.

NEW MEDICAL DEVICE REGULATIONS

Korea’s Medical Device Act went into effect in April 2012. In addition to modifying the approval process for IVDs, the Act expanded the list of foreign data accepted for clinical trials and other testing. The Act also called for a new system for KGMP certification, applicable to foreign manufacturers. Other changes included:

  • An expedited review process for the registration of some medical devices. Orphan devices and devices using novel or convergent technologies are all covered under the new review process. Medical device manufacturers may request consultation meetings with the KFDA for guidance on the expedited review process.
  • More stringent evaluation standards for high-risk medical devices. According to the Act, non-SE Class III and Class IV medical devices are to be evaluated based on clinical reports specific to the evaluated product. Products with some degree of SE may — in some instances — use clinical data from other, similar medical devices.
  • Shorter registration processes and fewer requirements for low-risk medical devices. Class II medical devices are now reviewed by third party organizations, rather than the KFDA itself.

Most of these changes were implemented in 2012. Some, however, will not go into effect until the end of 2013.

NEW KGMP CERTIFICATION FOR FOREIGN MANUFACTURERS

According to the 2012 Medical Device Act, KGMP certification is now required for some foreign medical device manufacturers before they are allowed to export their products to Korea. Foreign manufacturers of Class II – IV medical devices must be certified, while foreign manufacturers of Class I medical devices are excluded from this requirement.

KGMP certification is good for three years. To get certification, a local agent or importer must submit an application on behalf of the foreign manufacturer. Application materials include copies of applicable ISO certificates, audits from outside inspection bodies and descriptions of the manufacturing facilities. After reviewing these materials, the KFDA decides whether to do a document review or an on-site inspection.

Altogether, the KFDA plans to conduct 25 on-site inspections per year. In 2013, it will focus on Class IV and Class III medical device manufacturing sites. To stretch its limited resources, the KFDA has allowed third party agencies to conduct some Class II manufacturing site inspections. Nevertheless, the majority of KGMP applications will still be approved via document review.

PUBLIC DISCLOSURE OF PRODUCT INFORMATION

Starting August 2012, the KFDA required medical device manufacturers to publicly disclose additional information about their products, including measurement characteristics, operation specifications, precautions, storage and expiration dates.

The KFDA will also require more information on device structure and raw materials when manufacturers apply for product registration. The information collected will then be transmitted to the public through the KFDA main website.

FOREIGN MEDICAL DEVICE COMPANIES

In 2012, more than 50 percent of the medical device market in Korea consisted of imports. Nearly 70 percent of all imports came from the US, Japan and Germany, with the US contributing a total of 42 percent. Japan and Germany each imported about 14 percent of all medical devices on the Korean market.

Top imports include knee implants, stents, X-ray and MRI imaging equipment, soft contact lenses and kidney dialysis devices.

In recent years, many foreign medical device companies have started their own distribution, servicing and manufacturing subsidiaries in Korea. For example, in March 2013, Toshiba Medical Systems of Japan purchased a 75 percent stake in a JV that it started with its Korean distributor back in 2009. Toshiba has plans to turn the company into a subsidiary of its medical imaging division.

Varian Medical Systems in August 2012 announced that it was choosing Korea as the location of its first Asian subsidiary. The new subsidiary will serve as a training center to Varian’s Korean distributor, HDX. It will also support the Korean product launch of Varian’s TrueBeam radiotherapy system.

Other foreign medical device companies have used acquisitions to penetrate the Korean market. Alere, for example, purchased a 75 percent stake in Korean diagnostics manufacturer Standard Diagnostics in February 2010. The deal was valued at nearly $225 million, and it expanded Alere’s product portfolio to include diagnostic devices for hepatitis, tumors and infectious diseases.

CONCLUSION

With new requirements for KGMP certification and high-risk devices, entering Korea’s medical device market can be a challenging process. But trends toward greater acceptability of foreign data and GMP harmonization will make it easier for properly prepared foreign companies to prosper in Korea’s medical device market.