China fines Medtronic $17M in price-fixing crackdown

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China is fining a local Medtronic division $17 million for monopolistic activities.

After looking into a local Medtronic unit for monopolistic activities, Chinese regulators are charging the company 118.5 million yuan ($17.2 million) for price-fixing.

The fines pertain to Medtronic’s cardiovascular and diabetes devices, Reuters reported. The National Development and Reform Commission said that Medtronic quashed competition by requiring its distributors in China to charge minimum prices for its products, according to the Associated Press. Medtronic also had its partners and distributors place lower limits on resale prices to hospitals, Reuters said.

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"Competition in China's high-value consumables and implantable medical equipment market is inadequate," said a statement by the Cabinet's planning agency, as quoted by the AP. Enforcing minimum prices rather than allowing market forces to set them “increases the burden on patients and damages the interests of consumers.”

While more than half of Medtronic’s sales are concentrated (PDF) in the Americas, it reeled in $1.5 billion—5% of its revenues—from Greater China in fiscal 2016. Compare this to $3 billion in sales from the rest of the Asia Pacific and $6.7 billion from Europe, Africa and the Middle East.

The device maker is working on expanding reach in China. To drive up pacemaker use in China, Medtronic’s cardiac rhythm and heart failure unit led multiple training sessions for pacemaker implantation.

Earlier this year, Medtronic revealed plans to build a new manufacturing plant in Chengdu, for the production of diabetes devices. Under a deal with the city, the devicemaker is collaborating with the city government to bring the tech to Chengdu’s citizens as well as people in Sichuan province. The plant is Medtronic’s second site in the city. In 2014, it announced it would create a factory for portable hemodialysis tech.

And though foreign companies—such as those from the U.S. and Japan—reign over the Chinese medical device market, competition from local firms is rising. The rapidly growing Chinese middle class is expected to be a major driver in medical device demand.

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