Overview of regulatory environment in china

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Overview of medical device market and regulatory affairs environment in China including submissions.

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Overview of regulatory environment in china

  1. 1. Overview of the Regulatory Environment in China Tony Hussey & Mingzi Deng, Global Healthcare Innovations, Inc. For more information: tonyhussey@gmail.com or deng.mingzi@gmail.com China is one of the most attractive Medical Device Markets in the world. It promises low price with High Market Volume. In 2010 China announced universal healthcare access to all citizens by 2020, which helped accelerate the pace of growth in device market. The expanded insurance coverage, urban population growth and public and private healthcare investment are the main driving forces for this growth. In November 2011, the Ministry of Science and Technology (MOST) released a five-year program (called Twelveth-5 year plan) to adopt practices to accelerate development of medical device industry and to implement the related regulations and supervisions. The Twelveth-5 year plan: Goals: • Technology target: form approximately 200 core patents to create breakthroughs in cutting edge technique. • Product target: innovate and produce more medical devices for urgent needs, used for clinical prevention, diagnosis, treatment, rehabilitation, and emergency usage. Actively develop devices that can be used in chronic disease screening, minimally invasive surgery, regenerate repair, digital medical and rehabilitation nursing. • Industry target: support large scale medical device enterprises and high-tech enterprises with innovation and creativeness, establish medical device technology industry bases, perfect device chain, optimize industry construction, improve market coverage and promote world competition in the industry. • Ability target: improve the ability of innovation and creativeness in medical device industry, cultivate and import academic pacesetters and set up platforms of technique research, establish national engineering research centers and state key laboratories. Strategies: • Intensify leading innovation by investing in technology, channel resources, and emphasizing talent cultivation. • Perfect policy measures by strengthening inter-section coordination, completing relevant law and regulation, and emphasizing intellectual property protection. Copyright 2013 Global Healthcare Innovations, Inc. All Rights Reserved
  2. 2. • Optimize industry environments by improving environment for products application, promoting enterprise reconstruction, perfecting industry chain, focusing on district development, and enlarging share in international market. The Twelveth-5 year Program emphasizes an increase in size of industry and innovative ability specifically in the area of radiography, X-ray systems; diagnostic devices for cardio-pulmonary disease, diabetes, and neurological disorders; HIV monitor test kits; home-based or self-care; micro- miniature and remote surgery techniques, DNA-based diagnostics and tissue-engineered organs. It encourages the investment in advanced information technologies, which provide solutions to some of the most persistent and debilitating healthcare problems. Implementation of the plan: • The State Council, the highest administrative authority in China, supervises the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) and Ministry of Health (MOH), which then oversees the State Food and Drug Administration (SFDA). • The Ministry of Health, founded in 1949 is an executive agency of the state that plays the role of providing information, raising health awareness and education, ensuring the accessibility of health services, and monitoring the quality of health services provided to citizens and visitors. The MOH is responsible of managing major food safety incidents and overseeing the State Administration of Traditional Chinese Medicine (SATCM). • AQSIQ is an administrative department of under the State Council of the People's Republic of China and in charge of national quality of pharmaceutical products and methods, whose responsibility includes metric technology, inspection, food safety, certification and accreditation, standardization, and administrative law-enforcement. • The State Food and Drug Administration (SFDA) is equivalent to the U.S. Food and Drug Administration. It serves as the ultimate national authority for approval and regulation of human-use drugs, animal-use drugs, nutritional supplements, cosmetics, and food. Challenges of Chinese Medical Devices Regulatory Environment • Big market with uncompleted regulations China needs a large number of qualified medical devices and does not have the regulations in place. The current system is outdated, unclear and irrational. The new system should not only require adhering to a state implementation to adapt changing laws but also a sound scientist panel to review and audit the manufacturing process. • New patent law amendments The Chinese market is flooded with products and technologies in the medical device industry. Chinese market surveillance and labor costs are low On March 5, 2008; its People’s Congress regulating this process passed the third amendment draft of China’s Patent Law. This will help unauthorized and adulterated products. Copyright 2013 Global Healthcare Innovations, Inc. All Rights Reserved
  3. 3. • High expensive on hospital services Chinese senior population is increasing, which will in turn increase demand for medical services and equipment. The government aid in healthcare reduced from 250 Billion RMB in 2000 as compared to 50 billion in 2004. This has put the burden of investment on the hospitals, which in turn pass the coast to the patients or insurance companies. City-specific insurance program differ widely in device coverage and reimbursement rates. Only a few main cities like Shanghai, Beijing, Hangzhou and Suzhou has health care reimbursement from the rate of 50% to 80%. Care in other cities is not reimbursed. • IP protection and trade secrets The strength of IP protection in China is much lower compared to Singapore, Australia and New Zealand. The New Employment Contract Law was released in 2008 to allow confidentiality provisions for trade secrets and intellectual property. Technology owners have rights under various IP laws and the Civil Law, whereas technology contracts are required to contain confidentiality provisions. Market entry strategies must be driven by careful planning, contracting and ongoing operational monitoring. Impact of Western Companies Business practices in China are very different than those in west. • The number of Joint Ventures decreased In 1999, China had 78% foreign companies are joint venture operations, which decreased to 27% in 2005. These problems may be due to unclear law and regulations; corrupt business practice; lack of infrastructure and differences in domestic foreign companies goals. Government agencies have been formed to help foreign enterprises adapt the changing regulatory environment. • Major device companies conducting R&D in China Foreign companies such as General Electric (GE), Philips and Hitachi have moved their R&D center into China. They are attracted by the low salary, low costs and sophisticated manufacturers. A company can hire a chemical scientist from the top of Chinese universities at salary of $10,000 annual in China compared with $50, 000 in US. The cost of conducting clinical trials is lower in China. Today China has more R&D centers in device industry rather than the drug industry. • Issues of manufacturing Ownership rights and regulations must be very clear so that correct decisions may be made by the right person to avoid business mistakes. Legal documents should be regulated accordingly avoid extra re-registration fee and unnecessary cost on supervision and approvals. • Dealing with Chinese competitors Western companies focus more on innovation often adapted and used by Chinese domestic companies Sometimes this may be due to delay in paperwork requiring re-registration. Western companies need to file patents in a timely manner to avoid this situation. Copyright 2013 Global Healthcare Innovations, Inc. All Rights Reserved
  4. 4. • Regulatory challenges National Development and Reform Commission (NDRC) is looking to expand a policy requiring direct sales for all medical devices in china. The introduction of this policy would heighten competitive barriers for foreign suppliers, who would be forced to make significant investments in domestic direct sales networks. Copyright 2013 Global Healthcare Innovations, Inc. All Rights Reserved

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