Devicemakers Look for Leg Up in Rapidly Evolving Chinese Market

There is a big market in China for medical technology, such as orthopedic implants and spine devices, particularly as the population ages. Still, many of the multinational corporations have a corner on the premium market in more cosmopolitan areas over local rivals.

The reason, according to Jian Q. Yao, CEO of Shanghai Ketai Medical Device Co. in Shanghai, is quality. For example, many in the joint arthroplasty sector are reverse engineering imported products — often erroneously — resulting in inferior products. While many local companies would like to acquire advanced technology, doing so can prove difficult, Yao told attendees during a session at the Regulatory Affairs Professionals Society Regulatory Convergence Conference last week.

Compared with MNCs, local firms have gaps in research and development in terms of technology innovation, talent development and design control, as well as in quality, related to process technology, manufacturing QA/QC, supply quality management and postmarketing surveillance.

Possible steps to remedy the situation are identifying specific technologies for transfer, licensing these technologies, evaluating and understanding regulatory pathway considerations, instituting manufacturing and quality control processes and making sense of marketability and reimbursement considerations.

In terms of getting a product through the China FDA, firms must consider that the regulatory pathway is evolving. “Sometimes, we don’t know what’s going on,” he said. For a company looking to transfer a technology, it is imperative to have someone on the ground in China to make sense of the evolving landscape. He also noted that there are testing requirements that may not make sense, but firms must adhere to them.

For local companies eyeing technology transfer, they must make sure that the benefits from the transferred technology can be clearly communicated. Further, all parties must keep in mind that profitability is challenging, given that companies negotiate with provinces on pricing. If a firm negotiates too low of a price in one province, it is stuck with that rate in others. Some people may choose to pay out-of-pocket, but the private health insurance market is limited.

“Regulations are evolving really fast,” said Yao, but they also are becoming more logical and transparent. In fact, the state has offered one option in particular that can help devicemakers get their products to market faster.

The Green Channel Policy went into effect in March 2014 and is intended to encourage innovation in the medical device space through expedited registration. “There are a lot of privileges with this sort of submission,” said Amra Racic, principal, global regulatory affairs, policy and advocacy specialist at Medtronic. In particular, CFDA aims to complete reviews within 40 working days. Further, companies may pursue the Green Channel and regular registration simultaneously. If its Green Channel submission is refused, the company doesn’t lose its place in line for regular registration.

Despite the fanfare, there is an approval rate of less than 15 percent, as of early October. Three foreign companies have received approvals — Abbott Vascular, Endologix International Holdings and Medtronic. One international company was refused, Racic said.

Initially, many international companies believed that was only for China-based organizations, but an audience poll indicated that this perception is changing.

Key requirements potential applicants must meet include acquiring the intellectual property rights in China. “That patent is really important here,” Racic said. In addition, the product must be a meaningful innovation, and the sponsor must have finished preliminary studies beyond the concept phase.

Racic closed by providing recommendations for those interested in the program:

• Start the patent process as early as possible;
• Prepare novelty search as early as possible;
• Have a local technical expert;
• Establish a work flow for future applications;
• Create templates for required documents; and
• Create best practices for collaboration among internal teams. — Elizabeth Hollis