China Bulk Purchasing Program Forces Medical Device Companies To Cut Prices

A Chinese government program to buy pharmaceuticals and medical devices in bulk has been expanded to include a larger selection of devices, putting fierce competitive pressure on foreign medical device companies seeking to tap into the vast country’s market.

First launched in 2018 for purchases of urgently needed drugs, the program, known as volume-based procurement (VBP), was extended in 2020 to include a limited selection of medical devices, including coronary stents, some dental products, and hip and knee implants. Since then, prices of devices covered by the program have fallen in China by an average of 75%.

This year, China is gearing up to add to the number of medical devices it purchases through the VBP program. Likely products to be included include spinal implants, central venous catheters, and interventional cardiovascular and neurovascular devices. Some foreign device manufacturers will need to significantly boost production and cut prices to be able to compete with local Chinese manufacturers, partially shielded by the VBP program.

Under the parameters of the program, public hospitals, as well as some military and private medical institutions, join together to agree to stock a large number of particular medical devices and pharmaceuticals,  in exchange for price reductions. China has secured medicines through VBP at an average price cut of about 50%.

Written by: Ames Gross – President and Founder, Pacific Bridge Medical (PBM)
Mr. Gross founded PBM in 1988 and has helped hundreds of medical companies with regulatory and business development issues in Asia. He is recognized nationally and internationally as a leader in the Asian medical markets. Mr. Gross has a BA degree, Phi Beta Kappa, from the University of Pennsylvania and an MBA from Columbia University.

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