Medical devices regulation in China

How are localisation policies and classification standards impacting both Chinese and foreign medical device manufacturers?

The Chinese government’s core regulatory principles for the medical device industry are classification-based regulation, tiered regulation and lifecycle regulation. The Regulations on Supervision and Administration of Medical Devices, which provides an overarching regulatory framework for the industry, is a set of administrative regulations issued by the State Council. The regulations have been revised three times since first being published in 2000, with the last revision taking place in 2021.

In addition to the core regulatory principles for China’s medical device industry, this paper also discusses the localisation and import substitution of medical devices, issues that have in recent years attracted considerable attention across the industry.

Classification-based regulation

Under PRC laws, medical devices are categorised as medical equipment (including medical equipment for both professional and home use), high-value consumables, low-value consumables and in vitro diagnostics (IVD), including IVD equipment and IVD reagents.

In addition, medical devices are categorised into three classes (I, II and III) based on their risk level. Class I refers to low-risk medical devices subject to routine administration; Class II refers to mid-risk medical devices subject to strict control; and Class III refers to high-risk medical devices subject to extraordinarily strict control.

The classification of medical devices are based on the Rules for Classification of Medical Devices (2015, classification rules). China’s medical product regulator revised the Medical Devices Classification Catalogue in 2017 in line with the classification rules, and adjusted the Classification Catalogue in 2002, 2021 and 2023. According to the Working Procedures for Dynamic Adjustments to the Medical Devices Classification Catalogue (2021), the classification catalogue shall in principle be adjusted at least once a year.

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

Tiered regulation

Tiered regulation of medical devices means the medical product regulator divides medical device manufacturers and distributors into four tiers of regulation according to the risk level of medical devices and the medical device manufacturers’ and distributors’ business formats, quality management and compliance status.

The regulator also takes into account the adverse events of medical devices and any product complaints, and then carries out tiered, dynamic management of medical devices in accordance with the principle of local regulation.

Lifecycle regulation

The lifecycle of a medical device is divided into research and development, registration, manufacturing, distribution and use. China applies lifecycle regulation to medical devices and has issued regulatory rules for each life stage of medical devices.

The research and development, and registration, of medical devices include product development, clinical evaluation, registration (including verification of registration materials and on-site inspection), change to registration and renewal registration.

Clinical evaluation is an important step in medical device research and development. However, the Administrative Measures for Registration and Record Filing of Medical Devices (2021) allows for products falling under the Catalogue of Medical Devices Exempt from Clinical Evaluation (2023), or the Catalogue of In Vitro Diagnostic Reagents exempt from Clinical Trials (2021), to be exempted from submitting clinical evaluation/clinical trial materials.

The manufacturing of medical devices is categorised into in-house manufacturing and outsourcing. According to the Administrative Measures for Supervision of Medical Device Manufacturing (2022), the medical device manufacturer shall obtain relevant qualifications (record filing for Class I; manufacturing licence for Class II and Class III) for in-house manufacturing before proceeding.

As well as having qualified manufacturing sites, equipment, personnel and after-sales service capabilities, what lies at the core of the regulations is the establishment of an acceptable quality management system, including the appointment of management representatives and the self-inspection of the quality management system.

Medical device companies that outsource the manufacturing of products shall assess the quality assurance and risk management capabilities of the outsourcing service provider and have the quality agreement and outsourcing agreement signed.

In particular, if an imported medical device registrant manufactures Class II or Class III medical devices, for which an imported medical device registration certificate has been issued through a foreign-funded enterprise established by the registrant in China, the registrant is eligible for expedited registration pursuant to the Announcement of the National Medical Products Administration on Manufacturing of Imported Medical Devices in China-based Enterprises (2020).

In terms of medical device operation, according to the Administrative Measures for Supervision of Medical Device Distribution (2022), the operators of Class II medical devices shall complete the record filing (excluding the products falling under the Catalogue of Class II Medical Devices Exempt from Filing for Distribution [2021]), while the operators of Class III medical devices shall be licensed for distribution.

Distributors shall establish a quality management system and quality control measures covering the entire process of purchasing, acceptance, storage, sales, shipping and after-sales service, and conduct self-inspection of the quality management system. When marketing medical devices, operators shall use particular care to avoid medical device advertising, because any medical device advertising in China is subject to review by the medical product regulator.

In terms of the use of medical devices, users shall comply with the Administrative Measures for Quality Supervision of Medical Device Use (2015) and the Administrative Measures for Clinical Use of Medical Devices (2021). After the medical device is released to market, the medical device registrant shall carry out adverse event monitoring in accordance with the Guidelines for Adverse Event Monitoring by Medical Device Registrant (2020).

Device localisation, import substitution

In recent years, the medical device industry has ushered in a rarely seen “policy-intensive period” that provides tailwinds for localisation and import substitution. Made in China 2025, issued by the State Council, stated that the localisation rate of large medical equipment must be increased.

The 14th Five-Year Development Plan for the Medical Equipment Industry, published in 2021, envisaged that by 2025 the effective local supply of mainstream medical equipment would be basically achieved, and the performance 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 Review of Government Procurement of Imported Products (2021), which specifies the minimum proportional 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.

Specifically, 137 types of medical devices must be 100% from Chinese companies, 12 types must be 75% from Chinese companies, 24 types 50% from Chinese companies, and five types 25% from Chinese companies.

In July 2022, the MOF issued the Notice on the Re-soliciting Public Comments on the Government Procurement Law of the People’s Republic of China (Exposure Draft for Amendment), which for the first time legislatively set “supporting the domestic industry” as a government procurement policy. In addition, products that are manufactured in China and meet the specified value added ratio requirement will take precedence in the review of government procurement activities.

Driven by pro-localisation policies in recent years, many public hospitals have stated in their bidding documents that they will purchase only Chinese-made equipment. Under the prevailing trend of “localisation and import substitution”, foreign medical device manufacturers have taken various countermeasures in response to China’s “localisation” drive.

According to the author’s observation, these measures are divided into two categories. First, where practically possible, they will set up their own “localisation” product lines; second, through various forms of cooperation with Chinese companies, foreign companies are developing new business models (e.g. equity participation or product co-operation) and profit channels in addition to the traditional business model focused on sale of products.

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