China Healthcare Corruption Crackdown Affects Foreign Medical Device Businesses too

In our September newsletter, we outlined how crackdowns on corruption are affecting China’s drug market. This crackdown is also affecting China’s medical device business. Last summer, Beijing initiated a crackdown which has led to health facilities being more guarded on device procurement and doctors getting in trouble for accepting device kickbacks for recommending specific devices. Such policies may lead to Chinese health facilities reducing their purchases of foreign state-of-the-art or upgraded devices, allowing Chinese device competitors with less updated products to gain market share.

Given the slower Chinese economy, this may be a way for China to reduce overall healthcare costs. To date, close to 200 hospital executives have been scrutinized – more than twice the amount from last year. Several months ago, Shanghai authorities began offering rewards for identifying unlawful healthcare practices. According to a National Health Commission study, of the 3,000 corruption cases over the last 10 years, about 40% were related to purchasing medical equipment.

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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