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Healthcare Resource Guide: China

 

China Statistics

Flag of the People's Republic of China.svg

Summary
Market Entry

Main Competitors

Current Demand

Registration Process Barriers
Trade Events

CS Contact

Capital: Beijing Population: 1.36 billion GDP: US$ 10.3 trillion Currency: Renminbi

Language: Mandarin Chinese

Summary

The medical device market is one of the fastest growing market sectors in China. The industry has maintained double-digit growth for over a decade. In 2015, the medical device market reached $47.38 billion, an increase of 20.5% when compared to 2014. 70% of this growth is fueled by hospital procurement.

 

2013

2014

2015

2016 (estimated)

Total Market Size

32,612

39,320

47,380

56,860

Total Local Production

27,280

30,008

33,009

36,310

Total Exports

19,300

19,700

20,013

20,413

Total Imports

17,140

18,083

18,487

18,912

Imports from the U.S.

5,920

6,060

6,189

7,551

Source: Industry estimate (Unit: USD million)

Chinese pharmaceutical and health products import and export exceeded $100 billion in 2015 reaching $102.6 billion, growing by 4.73% year on year. Exports reached $56.4 billion, growing 2.7%, and amount of imports reached $46.2 billion growing by 7.32%. The foreign trade surplus was $10.2billion, down by 13.99%. Chinese pharmaceutical trade reflects the new normal, speed growth, with growth in pharmaceutical export continuing to fall, as affected by insufficient international market demand, increased influence of the exchange rate factor on pharmaceutical export, and increased export prices due to environmental protection cost, and transfer of manufacturing industry, etc.

Pharmaceutical Products in U.S. Bn

 

%share

2013

2014

2015

2013

2014

2015

%change 14/15

Total Import

15.1

17.8

19.2

0.77

0.91

1.2

8.32

Import from U.S.

1.8

2

2.7

1.24

1.3

1.85

33.79

Total Export

6.2

6.6

6.9

0.28

0.28

0.31

5.29

Market Size

86.6

98.8

110.1

 

 

 

 

Local Production

76.2

84.9

93.4

 

 

 

 

China’s renewed efforts to deepen healthcare system reform, increasing urbanization, the end of one child policy and more public investment in expanding healthcare coverage, will support the continuous market growth.


In 2015, the medical device market in China reached $47.38 billion, an increase of 20.5% over the previous year, public procurement accounts for 70% with 30% consumed through the retail market.


Market size of the Chinese medical device sector (unit: USD100 million)
Source: 2015 China Medical Device Blue Book

Market Entry

China’s rapidly changing regulatory environment will likely have a short-term negative impact on the overall market. China Food and Drug Administration (CFDA) is the government body responsible for regulating medical devices by testing, evaluating, and giving administrative approval for medical devices to be sold in the Chinese market. Before entry into the Chinese market, U.S. companies should pay attention to:

-Regulations and Standards

In March 2015, CFDA introduced new fee requirements for Class III medical devices and imported Class II medical devices. USD 32,446 (CNY 210, 900) for initial registration of a Class II imported medical device; USD 47,508 (CNY 308,800) for initial registration of a Class III imported medical device ;USD 6,277( CNY 40,800) for registration renewals (every five years).These fees do not include costs for clinical trials, in-country representation, and translation. China Food and Drug Administration (CFDA) issued a number of rules in 2015 and at the beginning of 2016 including “Rules for the Classification of Medical Devices”, “Measures for the Supervision and Administration of Use Quality of Medical Devices”, “Naming Rules for the Generic Names of Medical Devices”, “Good Clinical Practices for Medical Devices”.

-Set up representative office

A great number of foreign companies have selected to set up a representative office to manage product registration, promotion, marketing, training and support while appointing regional or local distributors for sales, actual operation, logistics and receivables with hospitals.

-Set up your own trading company

Models for establishing your own trading company do exist. For example, if you establish a FICE (short for a foreign invested commercial enterprise), it is not necessary to use a local partner. A FICE has the right to distribute in China as well as to export to foreign markets.

-Designate distributors

China is a big market, varying greatly from one region to another. China is normally divided into three major regions: north China, south China, and east China. However, it can be further divided into northeast China and mid-west China. Depending on the type of products, US companies can enter the Chinese market through regional distributors that can broadly cover secondary markets but usually rely on local Tier II or Tier III distributors for sales in each locality. Direct contact with the right local distributors may give foreign companies greater control and better representation. These local distributors are also highly product or department-oriented. Selecting the “right” distributor can be an important key success factor.

  • in technical seminars or exhibit in industrial trade shows in China

Participating in shows/events, ideally with an agent or distributor, offers new-to-market companies greater exposure. This provides networking opportunities with key contacts in their specialized field and provides direction for future market expansion.

Main Competitors

Depending on specific product type, the main competitors include EU countries (specifically Germany) and Japan. Current government policy supports and encourages innovation inside China. Some domestic manufacturers such as Shenzhen Mindray, BGI, and Shandong Shinva etc. now create high-quality products and are beginning to compete against foreign suppliers in medium- to high-level technology niches.

Current Market Demand & Trends

China is the world’s largest producer of pharmaceutical ingredients and China’s pharmaceutical market value is estimated to reach $158 billion in 2016 and $315 billion in 2020. This increase will see China’s pharmaceutical market become the second largest in the world, with surging revenue propelling industry value significantly closer to that of the US, which is forecasted to reach $475 billion in 2020. With government’s increasing investment in healthcare and R&D, China presents great opportunities for innovative products and technologies, and collaboration between international and domestic pharmaceutical companies.

Currently China’s medical device market has two distinct categories: 1) domestic manufacturers who supply low to mid-range products. Over 80% of the domestic manufacturers belong to this category, 2) foreign-sourced, high-end products supplied by large companies like GE, Philips, and Siemens. According to the 2015 China Medical Device Industry Development Bluebook issued by China Medical Pharmaceutical Material Association, by the end of 2015 there were approximately a total of 16,000 domestic medical device manufacturers. 

The United States ranks #1 in the import medical device market, followed by Germany and Japan. These three countries represent the majority share of China’s imports.


Table I below shows an analysis of medical device imports during 2013-2015 based on HS codes under the medical device categories.
 
Table I: 2013-2015 China’s Import of Medical Device by HS code from the Top 3 Countries
(USD millions)

 

2013

2014

2015

Share

Change %

Change %

2013

2014

2015

2013-2014

2014-2015

World

17,140

18,083

18,487

100%

100%

100%

5.50%

2.23%

U.S.

5,920

6,060

6,189

34.54%

33.51%

33.48%

2.36%

2.13%

Germany

3,134

3,181

3,092

18.28%

17.59%

16.73%

1.50%

Japan

2,201

2,303

2,193

12.84%

12.74%

11.86%

4.63%


In 2015, China had about 26,904 hospitals, of which 49.4% are public hospitals. Compared with 2014, the number of public hospitals was decreased by 37 and that of private hospitals was increased by 1,637. The development of private hospitals is benefited from government encouragement of private investment in healthcare during the 12th FYP period. In 2015, National Health and Family Planning Commission’s (NHFPC) released the “Opinions on Promoting and Standardizing Physicians’ Multi-Site Practice,” allowing hospital associations to share physicians internally without requiring the physicians to register their licenses at each facility within the association.
 
Chinese hospitals consider U.S. products to be of superior quality as well as the most technologically advanced and they particularly welcome medical equipment and products with high-technology content.  U.S. firms garner nearly three-quarters of their local revenues from tier three hospitals and the remainder from tier two hospitals. In an effort to capitalize on China’s burgeoning medical device market, U.S. firms have expanded their local presence in China while also targeting the country’s rural population.  At the same time, domestic medical device companies are consolidating, upgrading quality, and beginning to compete in medium- level technology niches. 
 
Significant potential exists for U.S. companies interested in entry or expansion in the Chinese market. China continues to deepen public hospital reform at all levels. The Ministry of Finance has allocated USD 1. 5bn to finance the reform of public hospitals in 2016. However, Public hospitals will continue to be underfunded as an increase in government subsidies will be insufficient to offset a major reduction in their revenue stream as a result of government-initiated reforms. Medical device companies will still face the pressure to cut prices from the public hospitals. In addition, the government’s Made in China 2025 initiative to improve industry efficiency and product quality and brand reputation will help the development of domestic medical device manufacture and will increase the competiveness of Chinese medical device brands in a long term.

The best-selling prospects in the pharmaceutical and medical device sector include:

  • In vitro diagnostic equipment and reagents: clinical and diagnostic analysis equipment, diagnostic reagents, medical test and basic equipment instruments, and point of care testing (POCT).
  • Orthopedics
  • Implantable and intervention materials and artificial organs: Interventional materials, implantable artificial organs, contact artificial organs, stent, implantable materials, and artificial organ assisting equipment.
  • Therapeutic products: Tri-dimensional ultrasonic-focused therapeutic systems, body rotary gamma knife, simulator, linear accelerator, laser diagnostic and surgical equipment, nuclide treatment equipment, physical and rehabilitation equipment.
  • Medical diagnostic and imaging equipment: black & white and colored supersonic diagnostic units, sleeping monitor, digital X-ray system, MRI, CT, DR, and ultrasound equipment.
  • Surgical and emergency appliances: anesthesia ventilation systems and components: high frequency surgical equipment, high frequency and voltage generators.
  • Healthcare Information Technology related equipment and products: medical software, computer-aided diagnostic equipment, and hospital information systems (HIS, CIS, and HLT).
  • Medical equipment parts and accessories.
  • Chronic disease drug
  • Oncology
  • Biotechnology
  • Traditional Chinese Medicine

Registration Process

All imported drugs and medical devices require registration or notify with the CFDA before being sold or distributed in the Chinese market. In China, medical devices are divided into three classes depending on levels of risks similar to but different and stricter than that of USFDA. According to Order 650, all Class II & III are required to be registered with CFDA while Class I products are required to be notified with CFDA. Clinical trials are required for Class III and some Class II medical devices unless they are on the CFDA’s exemption directory for clinical trials.

Generally speaking, the process is complex and time consuming. Depending on the product class, it can take one to three years after submission of all necessary documents and respective samples for testing. U.S. companies are encouraged to register their products through their authorized distributors if they do not have a representative office or subsidiary in China. The CFDA has a comprehensive system for medical device registration and inspection, including product testing and factory audits. A company is required to provide a testing report for the product conducted by a Chinese lab. The company is also required to submit a product standard according to China's “Product Regulation Standard”, for CFDA's record. In addition to the service fee charged by a local company for translation and product standard compiling, the cost varies for registering a product with CFDA, which includes product testing in an authorized Chinese lab, the technical evaluation at the CFDA’s Medical Evaluation Center, and final administrative approval by the CFDA.

Barriers

Barriers exist with an uncertain regulatory environment and extensive delays in registration and re-registration of products. Additionally, pricing control, tender, also play a role of delaying a company’s entry into the Chinese healthcare market.

While reform of the healthcare sector is creating new opportunities, it has not completely opened the market to foreign companies. Despite the enormity of the market, U.S. companies face significant challenges when entering the Chinese healthcare market. Barriers include onerous pricing and reimbursement policies on pharmaceuticals and medical devices, inadequate intellectual property protection, and bureaucratic delays in registering products for sale. Numerous restrictions and an ever-changing regulatory environment add to the challenges faced by US companies trying to enter the healthcare market in China.

The Chinese government has issued new policy giving more support to domestic suppliers by encouraging innovative new products inside China. Domestic manufacturers whose products are defined, by CFDA, as innovative are expected to get an expedited approval in product registration, allowing them more lead time to enter the market and to complete against foreign suppliers in China.

Trade Events

MEDTEC China 2016
October 26-28, 2016
Venue: Shanghai World Expo Exhibition & Convention Center
Sponsored by: UBM
Contact: Mr. Alston Tian
Tel: + 86-10-57652822   
Fax: +86-10-57652999
Email: Alston.Tian@ubm.com

Dentech China 2016
October 26-29, 2016
Venue: Shanghai World Expo Exhibition & Convention Center
Sponsored by: UBM
Contact: Ms. Sandra Shen
Tel: + 86-21-61573953   
Fax: +86-21-61577272
Email: Sandra.shen@ubm.com  
http://www.dentech.com.cn/

 
The 76th China International Medical Equipment Fair (CMEF)
The 23th International Component Manufacturing & Design Show
Date: Oct.29 – Nov.1, 2016
Venue:  Shenzhen Convention and Exhibition Center
Contact: Mr. Gu Ying
Tel: + 86-10-84556603   
Fax: +86-10-82022922     
Email: ying.gu@reedsinopharm.com 
http://en.cmef.com.cn/

  
2017 Dental South China
Date: March 21-25, 2017
Venue:  Pazhou Exhibition Center
Contact: Ms. Christine Su
Tel: + 020-83549150
Fax: +020-83549078
Email: christine@ste.cn
http://www.dentalsouthchina.com/En/

 

Healthcare Expo China West 2017

The 20th Chengdu Western Medical Equipment Expo (CWMEE)

March 2017

Venue: New International Convention & Exhibition Center, Chengdu Century City
Organizer: Tarsus Hope Exhibition

http://www.healthcareexpo.cn/

http://www.cwmee.com/

Contact: Ms. Mikeo Wang
Tel: + 86-21-6427 9089
Fax: +86-21-6427 9169      
Email: mwang@tarsus.co.uk 

The 77th China International Medical Equipment Fair (CMEF)
The 24nd International Component Manufacturing & Design Show
Date: May, 2017
Venue:  Shanghai National Exhibition and Convention Center
Contact: Mr. Gu Ying
Tel: + 86-10-84556603   
Fax: +86-10-82022922     
Email: ying.gu@reedsinopharm.com 
 

The 16th Dental Show West China 2017 (Certified by UFI)

Date: April 2017

Venue: New International Convention & Exhibition Center, Chengdu Century City
Organizer: Tarsus Exhibition & Huaxi Hospital

http://www.wcise.com/

Contact: Ms. Mikeo Wang
Tel: + 86-21-6427 9089
Fax: +86-21-6427 9169      
Email: mwang@tarsus.co.uk 


U.S. Commercial Service Contact Information

U.S. Embassy in Beijing
Ming YANG
Senior Commercial Specialist (Medical Devices)
Email: Ming.Yang@trade.gov
Tel: 8610-8531-4006
 
Huiling SHI
Senior Commercial Specialist (Pharmaceuticals)
Email: Huiling.Shi@trade.gov
Tel: 8610-8531-3419
 
U.S. Consulate in Shanghai
Xiaoli PAN
Senior Commercial Specialist
Email: Xiaoli.Pan@trade.gov
Tel: 86-21-6279-8750
 
U.S. Consulate in Guangzhou
Angela HAN
Senior Commercial Specialist
Email:Angela.Han@trade.gov
Tel: 86-20-3814-5543

 
U.S. Consulate in Chengdu
Mini TIAN
Senior Commercial Specialist
Email: Mini.Tian@trade.gov
Tel: 86-28-8558-3992 ext. 6536

U.S. Consulate in Shenyang
Yang LIU
Senior Commercial Specialist
Yang.Liu@trade.gov

Tel: 86-24-23221198 ext.8143
 
U.S. Consulate in Wuhan

Jing WANG
Senior Commercial Specialist
Jing.Wang@trade.gov

Tel: 86-27-8555-7791 ext.808   


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