China cracks down on bogus med tech websites

Despite China's massive investment into modernizing its healthcare infrastructure and services, the market still has a bit of a Wild West feel that can jeopardize the reputation of med tech companies and place patient safety at risk. Xinhuanet (part of the Xinhua News Agency) reported that the country's main regulatory agency determined that 10 websites published fraudulent medical device information, including fake devices for sale.

China's State Food and Drug Administration, or the SFDA, has already forwarded its discoveries to the authorities, according to the article, and further action is expected. These websites sold products such as blood-pressure meters, plus equipment to treat epilepsy and prostate problems, the story explained.

Part of the challenge comes from Chinese consumer habits. According to the story, 618 million people shopped online by the end of 2013, and so there will always be some questionable sales sites seeking to capitalize on such a market base. But these cases are of particular concern to the global med tech industry, considering that some of the bogus websites allegedly forged the names of (unnamed) medical equipment makers and posted fake medical devices. The global med tech industry has worked hard to expand its presence in China both through organic growth and acquisition. And in an emerging market with enormous revenue potential, reputation and safety means everything.

China continues to matter a great deal to the industry. In March, for example, Stryker ($SYK) closed its $764 million acquisition of Trauson Holdings, getting an instant and major foothold into China's orthopedics device industry. Boston Scientific ($BSX) continues to pursue a major expansion in China, and Medtronic ($MDT), Covidien ($COV) and many other med tech operations have invested major amounts of money and personnel into building their presence in the world's most populated country. They'll likely be watching closely in the months ahead how the SFDA and Chinese authorities enforce the integrity of med tech sales.

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