China eases restrictions on device imports, charting a win for the industry

Penny Pritzker

As med tech companies set their sails toward China, a new trade agreement between the U.S. and Chinese governments looks to ease restrictions for imports, paving the way for greater expansion by U.S. devicemakers.

China agreed to allow U.S. medical devices and medicines into local markets more quickly and to loosen up its antitrust procedures after bilateral trade talks between the two countries, saying it would "cut red tape for imports of new and innovative pharmaceuticals and medical devices and to deal with the backlog," U.S. Commerce Secretary Penny Pritzker said, as quoted by Reuters.

Chinese officials also agreed to publish the results of administrative proceedings conducted under its antimonopoly laws and to allow U.S. firms to consult with legal counsel, Pritzker noted, a boon for devicemakers who have long criticized the country's trade laws for lacking transparency and unfairly targeting foreign companies.

The news follows on the heels of another China win for med tech companies, as in November, the country's regulatory authority shortened its review process for imported medical devices and in vitro diagnostics under new regulators. Companies that fail to follow the guidelines will not have a second chance at submitting documentation if their application contains mistakes, but the new CFDA standards still bode well for devicemakers looking to expand in China.

Less restriction on device imports comes at a critical moment for companies such as Medtronic ($MDT), Boston Scientific ($BSX) and Johnson & Johnson ($JNJ) as they target China's rapidly growing device market. Last year, Boston Scientific announced its plans to expand in the country despite regulatory and bureaucratic obstacles, setting its sights on new acquisitions and eyeing 30% annual sales increases in China over the next 5 years. In July, Medtronic teamed up with LifeTech Scientific to manufacture and distribute cardiac devices for China's growing cardiovascular market, grabbing a bigger piece of the country's device sector and bolstering its goal of roping in 20% of its revenue from emerging markets by 2016.

But devicemakers could still face some stumbling blocks in China, as the country encourages the development of homegrown products. In August, the Chinese health ministry said it would lay out new incentives for local hospitals to use Chinese-made medical devices, a move that counters "unreasonable increases" in healthcare costs and reduces the burden on patients, the ministry said at the time. Local companies have already cashed in on the trend, charting gains across the board. Shanghai's Kinetic Medical boasts a nearly 50% share in China two years after filing its IPO. Medical device maker Mindray collected $152.5 million in net revenues during the second quarter, a 3.4% gain year over year. The company said it plans to turn to private hospital sales in the coming year to boost profits and chart growth.

- read the Reuters story

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