Anna Fischer, Business Consultant at Cisema, Hong Kong, sets out the key challenges that foreign manufacturers of medical devices face in obtaining approval for and access to the Chinese market
China’s medical device industry continues to grow and was valued at US$46.6 billion in 2016 and is projected to reach more than US$66 billion by 2019. The medical device market in China is boosted by its health and disease profile, stage of development, rising incomes, and changing lifestyles.
Healthy China 2030, a long-term government action plan for the health sector, prioritises universal healthcare access and domestic innovation as an essential mechanism for controlling costs while raising quality. Nevertheless, Healthy China 2030 also stresses the strengthening of international cooperation and exchange. The ageing population, rising incidences of noncommunicable and chronic disease, diseases of affluence and lifestyles, and air pollution contribute to the significant demand for high-end medical devices. Furthermore, an expanding, mobile urban middle class continues to gain more health awareness and insists on better care. Domestic manufacturers mainly supply low- and mid-tech medical devices.
This, in turn, leads to opportunities for Western manufacturers that produce sophisticated technology or tap into the digital health industry, medical self-sufficiency at home, or preventive and distance medicine. Chinese healthcare providers and hospitals continue to depend heavily on the import of foreign innovative and high-tech medical devices.
Medical devices must attain approval by the CFDA prior to being imported, traded or used in China. Domestically produced products can apply for certification in their provincial FDA, while foreign manufactured products have to go through the CFDA in Beijing. The CFDA is responsible not only for the administration and registration of medical devices but also cosmetics, pharmaceuticals, infant formula, health foods and food for special medical purposes.
The process for approval depends on the respective classification of the product, based on the potential risk and use of the device. Class I only requires filing with CFDA, whereas Class II and Class III need to undergo a more elaborate registration application.
There are two major challenges medical device companies must conquer – cost and time. The registration process and associated timeline are illustrated in accordance with our long experience in the market. Please note that, depending on the applicable requirements, the below may vary.
|Class I||8 -9 weeks|
|Class II||75 – 80 weeks|
|Class III||81 – 90 weeks|
The biggest cost impact occurs where a clinical trial has to be conducted for a Class II or III device, as it adds between 1 and 5 million RMB and one to two years to the above figures. Avoiding a clinical trial in China is considered a crucial task.
The good news is that the CFDA is moving towards standardisation and now adopts a format more consistent with global practices. In stages, the CFDA publishes batches of Clinical Trial Exemption Lists with medical devices that no longer require clinical trials for CFDA registration. Moreover, as of January 2018, overseas clinical trial data is accepted (CFDA Notice No. 2018-13). As a last resort, companies can try to obtain legal access to sufficient clinical data of an equivalent product in China.
In 2014, the CFDA introduced a special ‘green channel’ for the registration of innovative medical devices, which enjoy prioritisation in the registration process. However, it is difficult to meet the demanding requirements. In 2017, only 12 applications were approved through the Green Channel process.
I’m often confronted with people who believe that China’s regulatory policies are self-serving and protectionist. In reality, the CFDA treats domestic and foreign medical device manufacturers equally. Standard fees for registration of imported medical devices are more expensive than for domestic medical devices. On the other hand, domestic manufacturers have to undergo factory inspections and foreign manufacturers have been spared such audits so far. All in all, China’s regulations do not discriminate against foreign products.
One has to remember that language and cultural barriers affect Western companies wanting to enter China’s market just as much as it affects Chinese companies wanting to enter the US or EU. The application documents must be submitted directly to the CFDA in Chinese.
China’s regulatory environment and approval procedure are different to that of the US or EU. Therefore, a CFDA Legal Agent who is familiar with the regulatory framework and experienced in dealing with the relevant authorities is invaluable. Apart from the scattered nature of regulatory news, the rumours surrounding them cause insecurity in foreign medical device companies.
More than that, regulations are fast-changing and often come with little or no prior warning. One example of an unforeseeable change was the abolition of type test fees through the State Council with a notice of two weeks (No. 2017-15). China’s laboratories went on strike, almost all tests came to a stop and no new test orders for imported medical devices were accepted. One year later, the CFDA reintroduced test fees again – this time under a different name ‘sponsored tests’ so not to undermine the State Council’s failed administrative order.
This brings us to the next challenge: The choice of a suitable CFDA Legal Agent. The CFDA Legal Agent is a legal entity residing in China, who is responsible for the CFDA registration of medical devices, the supervision of tests, administrative procedures, post-market surveillance etc. For instance, the CFDA recently released the Measures for Monitoring and Reassessing Adverse Events of Medical Devices (CFDA Decree No. 1), which will take effect on 01.01.2019. The main purpose of this new regulation is to strengthen the post-marketing supervisions, such as monitoring of medical device adverse events and re-evaluation of the approved medical devices. It also clarifies the responsibilities of CFDA Legal Agents and medical device manufacturers. According to the new regulation, the manufacturer shall conduct continuous research on the medical devices that are already approved in order to evaluate risks and monitor adverse events. The regulation also lists penalties in case the manufacturer fails to comply with the regulation. When choosing your CFDA Legal Agent, foreign manufacturers of medical devices have three choices:
However, if the distributor also acts as the CFDA Legal Agent, he handles highly confidential product information. Also, the manufacturer cannot import products into China, or change and renew the certificate without the support of the distributor. A service provider is a neutral solution and ensures independence for future decisions.
Many manufacturers are concerned about revealing confidential product information as part of the registration. In our experience, data security with the CFDA is assured – we haven’t heard of any case in which CFDA officials have been caught leaking confidential information to third parties. To counter these rumours, the CFDA introduced new, even stricter regulations in 2017, which clearly prioritized Intellectual Property rights. In addition, China is increasingly committed to strict criminal prosecution for corruption. In our experience IP theft is more likely to be from the distributor acting as CFDA Legal Agent, or violation of IPR after the approval process, when the product is on the market.
In conclusion, there are two keys areas that companies wishing to break into the Chinese market should bear in mind. The first is timing. Plan well in advance and determine which risk class your products fall into and whether they are exempted from clinical trial to anticipate duration and cost of the registration procedure. Secondly, find the right facilitator. Foreign medical device manufacturers are advised to pay special attention to finding the right partners in China. The majority of companies, especially SMEs, should seek external support.
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