Medical Device Regulations in China

How do localization policies and classification standards affect Chinese and foreign medical equipment manufacturers?

TThe basic regulatory principles of the Chinese government for the medical device industry are classification-based regulation, multi-level regulation and life-cycle regulation. The Medical Device Supervision and Administration Regulation, which is the overarching regulatory framework for the industry, is a set of administrative regulations issued by the State Council. The regulations have been amended three times since their first publication in 2000, with the latest revision in 2021.

In addition to the basic regulatory principles for China’s medical device industry, the paper also discusses the localization and import substitutability of medical device products – issues that have attracted considerable attention in the industry in recent years.

Classification-based regulation

Under PRC law, medical devices are divided into: medical equipment (including professional and home medical equipment), high-value consumables, low-value consumables, and in vitro diagnostics (IVD), including IVD equipment and IVD reagents.

In addition, medical devices are classified into three classes (I, II, and III) based on the level of risk. Class I refers to low-risk medical devices subject to routine administration; Class II refers to medium-risk medical devices subject to strict controls; and Class III refers to high-risk medical devices subject to extremely strict controls.

The classification of medical devices is based on the Medical Device Classification Rules (2015, classification rules). The Chinese medical device regulator revised the Medical Device Classification Catalog in 2017 according to the classification rules and adjusted the Classification Catalog in 2002, 2021 and 2023. According to the Working Procedures for the Dynamic Adjustment of the Medical Device Classification Catalog (2021), the classification catalog should generally be adjusted at least once a year.

Classification-based regulation of medical devices means that the medical device regulator takes regulatory measures for medical devices according to their classification. For example, to register Class I imported products, registration documentation must be completed with the National Medical Products Administration (NMPA), and to register Class II and Class III imported products, registration certificates must be obtained from the NMPA.

Step adjustment

Tiered regulation of medical devices means that the medical products regulator divides medical device manufacturers and distributors into four levels of regulation based on the level of risk associated with medical devices, business format, quality management and compliance status of medical device manufacturers and distributors.

The regulatory body also takes into account adverse events related to medical devices and any complaints about devices, and then conducts multi-level, dynamic management of medical devices in accordance with the principle of local regulation.

Life Cycle Regulation

The life cycle of a medical device is divided into research and development, registration, production, distribution and use. China has regulations on the life cycle of medical devices and has issued regulatory provisions for each stage of the life cycle of medical devices.

Medical device research, development and registration activities include product development, clinical evaluation, registration (including verification of registration materials and on-site inspection), amendment of registration and renewal of registration.

Clinical evaluation is an important step in the research and development of medical devices. However, the Administrative Measures for the Registration and Submission of Medical Device Dossiers (2021) allow for the exemption of products covered by the Catalogue of Medical Devices Exempted from Clinical Evaluation (2023) or the Catalogue of In Vitro Diagnostic Reagents Exempted from Clinical Trials (2021) from the obligation to submit clinical evaluation/clinical trial materials.

The production of medical devices is classified as in-house production and outsourcing. According to the Administrative Regulations on the Supervision of the Production of Medical Devices (2022), a manufacturer of medical devices must obtain the appropriate qualifications (registration application for Class I; production license for Class II and Class III) for in-house production before proceeding with further activities.

In addition to having qualified production facilities, equipment, personnel and after-sales service capabilities, the basis of the regulations is the establishment of an acceptable quality management system, including the appointment of management representatives and self-monitoring of the quality management system.

Medical device companies that outsource their product manufacturing must evaluate the quality assurance and risk management capabilities of the external service provider and sign a quality and outsourcing agreement.

In particular, if the imported medical device registrant manufactures Class II or Class III medical devices for which the imported medical device registration certificate is issued through a foreign-owned enterprise established by the registrant in China, the registrant is entitled to accelerated registration pursuant to the Notice of the National Medical Products Administration on the Production of Imported Medical Devices by Enterprises Established in China (2020).

In terms of the use of medical devices, in accordance with the Administrative Regulations on the Supervision of the Distribution of Medical Devices (2022), operators of class II medical devices must complete registration documentation (excluding products covered by the Catalog of class II medical devices exempt from the obligation to report for the purpose of distribution (2021)), while operators of class III medical devices must obtain a distribution license.

Distributors must establish a quality management system and quality control measures covering the entire process of purchasing, acceptance, storage, sales, shipment and after-sales service, and carry out self-inspection of the quality management system. When introducing medical devices to the market, operators must be especially careful to avoid advertising medical devices, because all advertising of medical devices in China is subject to review by the medical device regulatory authority.

In the use of medical devices, users must comply with the Administrative Provisions on the Quality Supervision of the Use of Medical Devices (2015) and the Administrative Provisions on the Clinical Use of Medical Devices (2021). After the medical device is placed on the market, the entity registering the medical device must conduct monitoring of adverse events in accordance with the Guidelines on Monitoring Adverse Events by the Entity Registering the Medical Device (2020).

Device localization, import substitution

In recent years, the medical device industry has entered a rare “period of intensive policy,” which provides a tailwind for localization and import substitution. Made in China 2025, issued by the State Council, stated that the localization rate of large medical equipment must be increased.

The 14th Five-Year Development Plan for the Medical Equipment Industry, published in 2021, predicted that by 2025, efficient local supply of widely available medical equipment would be basically achieved, and the efficiency and quality level of high-end medical equipment products would be significantly improved.

In 2021, the Ministry of Finance (MOF) and the Ministry of Industry and Information Technology jointly issued the Standard Guidelines for the Review of Public Procurement of Imported Products (2021), which sets out minimum proportionate requirements for the purchase of medical devices and instruments by government agencies (public institutions), covering monitors, imaging equipment, in vitro diagnostics and high-value consumables.

More specifically, 137 types of medical devices must be 100% Chinese-sourced, 12 types must be 75% Chinese-sourced, 24 types must be 50% Chinese-sourced, and five types must be 25% Chinese-sourced.

In July 2022, the MOF issued a notice of renewed invitation for public comments on the Public Procurement Law of the People’s Republic of China (Draft to be Released for Amendment), which for the first time legally established “support for domestic industry” as a public procurement policy. In addition, products made in China and meeting certain requirements for value-added ratio will be given priority in the review of public procurement activities.

In recent years, many public hospitals, guided by a pro-localization policy, have stated in their tender documents that they will only purchase equipment made in China. Under the prevailing trend of “localization and import substitution,” foreign medical equipment manufacturers have taken various countermeasures in response to China’s drive for “localization.”

According to the author’s observations, these measures fall into two categories. First, where practically possible, they will create their own “localization” product lines; second, through various forms of cooperation with Chinese companies, foreign companies develop new business models (e.g. equity participation or product cooperation) and profit channels in addition to the traditional business model focused on selling products.

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