Industry Report

Medical technology in China: Market potential and regulation

Over 95% of the Chinese population is medically insured, but not all treatments are covered. The “State Council Order 650” also poses new challenges for the approval of products. A market study indicates the current opportunities, risks and advice for SMEs. An update on the regulations from 2019 is now available in the download area below. 

Medical technology in China: Market potential and regulation

Due to its growing middle class, advancing urbanisation and the aging population, there is still great, even double-digit growth potential in China for medical technology sales of all kinds.

The majority of expenditure is determined by the public health system, on average 650 US dollars per inhabitant: implants and expensive treatments for chronically ill patients are seldom covered by this. Accordingly, manufacturers of medical devices generate more sales than those that manufacture implants. At the same time, a second, purely privately financed system is growing in which high-priced goods are in demand.

New regulation creates higher market entry barriers

In June 2014, the State Council Order 650 came into force. The China Food and Drug Administration (CFDA) now requires that certain innovative product groups be clinically tested. The registration of a MedTech product thus entails higher costs and takes longer, for example between three and five years. For particularly innovative products, there is a fast-track process, for which certain preconditions have to be met.

Most Swiss MedTech SMEs enter the Chinese market with the help of Chinese partner companies in order to benefit from their local expertise and network.

The Chinese government has also launched a “two invoice” system. The codename “two invoice system” means that only two invoices may be submitted from now on: from the manufacturer to the distributor and from the distributor to the hospital. This measure should consolidate the market, fight corruption and ultimately reduce patient prices. In addition, some distributors are appointed by the government to directly cooperate with the hospitals. In the future, foreign manufacturers would interact only with these. Experts expect that the new campaign will initially involve high-quality and high-risk medical technology. Some provinces are already running pilot programs.

The most important questions that medical technology SMEs must clarify before they can begin in China are as follows:

  • Which regulatory path can and must be followed – with or without clinical trials?
  • What should be the approach to public tendering processes?
  • Should you go it alone with your own local company, or enlist the help of a partner?
  • How much technology will be transferred to your partner?
  • What impact does the two invoice system potentially have on the specific market segment, i.e. the specific region of activity?

The full market study regarding the Chinese medical technology market & an update on the regulations can be found in the download area.


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