Medical Device Industry: Increased R&D and Innovation are the Way Forward

The medical device industry is facing the strictest regulations in history; whether these regulations can curb industry chaos remains to be seen.

To comply with the "Regulations on the Supervision and Administration of Medical Devices" (hereinafter referred to as the "Regulations"), the State Food and Drug Administration announced on the 1st the newly revised "Regulations on the Registration and Management of Medical Devices," "Regulations on the Management of Instructions and Labels for Medical Devices," and "Regulations on the Supervision and Management of Medical Device Operations," among other five regulations, which will come into effect on October 1.

It is understood that the aforementioned "Regulations" have been officially implemented since June 1 this year, marking the first revision of China's medical device supervision regulations in 14 years.

"The introduction of new regulations has played a huge role in regulating the research, development, production, operation, and use of medical devices and strengthening the supervision and management of medical devices." Xia Long, a researcher at Zhongyan Puhua, said in an interview with a reporter from China Economic News.

Currently, the high volume of medical device imports in China is a significant factor contributing to high medical costs. Statistics show that in Class-A hospitals, domestically produced high-end medical equipment accounts for less than 10%, with most equipment imported from abroad.

According to the "2013 China Medical Device Industry Development Blue Book" released by the China Medical Materials Association, China's high-end medical devices primarily rely on imports, and imported medical equipment is priced 50%-100% higher than in the original countries such as Europe, America, and Japan. For example, TOMO radiotherapy systems cost around US$2.5 million in Europe, America, and Japan, but over US$5 million when imported into China.

Reporters learned during interviews that in the domestic medical device market, foreign products hold a monopoly in most high-end product markets, and China spends hundreds of millions of US dollars annually importing large quantities of medical equipment.

Liu Shan, a researcher at Zhongshang Information Network Industry Research Institute, said that many small and medium-sized enterprises exist in the medical device industry. Due to inadequate supervision and inconsistent production standards, some medical devices are "three-no" products (products without manufacturer, address, or product name), seriously infringing on consumer rights. In addition, illegal production by small enterprises reduces production costs, leading to price wars and low-price sales, resulting in a phenomenon where "bad money drives out good money" in the market.

Currently, China's medical device industry is characterized by numerous, small, high-tech, and weak enterprises. Xia Long said that by the end of 2013, there were 15,361 medical device manufacturers nationwide, with relatively small scales. In 2013, the total output value of the medical device market was 200 billion yuan, with an average output value of approximately 12 million yuan per enterprise. The concentration of both production and sales in China's medical device market is generally low.

Previously, reporters learned during interviews that the reason why foreign high-end medical devices occupy the vast majority of the Chinese market is largely due to the lack of innovation among Chinese medical device companies.

Liu Shan suggested that medical device companies should increase R&D investment, focus on technological research and development, and innovation, break the monopoly of foreign companies in the high-end equipment field, and allow consumers to use high-tech products produced by domestic enterprises.

The implementation of the new regulations is a very favorable external factor for the healthy development of China's medical device industry. However, the real improvement of the chronic diseases in China's medical device industry still depends on the industry's own efforts. How to innovate, how to occupy the high-end market, and how to export China's medical devices to developed countries are all worthy of consideration and exploration by the entire industry.