China’s Medical Device Market Still Growing but Harder to Succeed There

While China’s medical device market is still growing in double digits, several factors have made it harder for foreign companies to succeed there. China wants to make more of its own devices and export them to the rest of the world.  The Chinese government and an abundance of venture capital have dramatically increased local MedTech R&D and the development of more sophisticated devices made locally. Regulations over the last few years have also made it harder for foreign companies to compete. For example, Order 551 restricts the use of foreign devices at many Chinese hospitals. The 2015 Made in China policy also increases the requirements for domestic hospitals to buy devices made in China. MedTech pricing policies with the implementation of Volume Based Procurement (VBP), DRG, and DIP have dramatically reduced pricing and lowered prices in tenders as well.

While very large device companies can set up their own local manufacturing in China, this is difficult if you are not an MNC. Small to midsize device companies can still export unique devices and get decent reimbursement in the short to medium term. Alternatively, a foreign company can set up a legal entity and be their own MAH in China and utilize a third-party Chinese OEM to make their finished products and have “made-in-China” products. In this scenario, the upfront investment by the foreign company is reduced and they can still register their devices under their own name.  However, to do this, your China office as an MAH must meet certain requirements. The MAH must bear all responsibility for the safety and efficacy of its medical device in the China market. The MAH must do a quality check of the outsourced OEM and ensure that their quality system meets appropriate standards. Finally, the MAH must be responsible for after-sales services, be responsible for reporting adverse events, and establish a traceability system.

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 business development and regulatory 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.