China MAH Policy Changes and The massive Opportunity for Medical Device OEMs

As medical device manufacturers look for new markets to increase their revenue and solidify their position as industry leaders, China stands out as a valuable opportunity. 

As per the projections of a report by IQVIA, China’s medical device market size was estimated to have reached $110 billion in 2020, registering a growth rate of 14.5% year-on-year.

Furthermore, the report estimates that China’s medical device market is expected to maintain a CAGR of 10-20% between 2021 and 2025, driven by an aging population, rising healthcare expenditure, and the increasing demand for innovative and high-quality medical devices.

As for the ranking of China’s medical device market size globally, it currently ranks second, with the United States being the largest and Japan the third-largest market.

In the past, the Chinese market presented many barriers for foreign companies seeking partnerships with domestic manufacturers, but those challenges have been significantly reduced in recent years providing an opportunity for manufacturers to capitalize on the enormous potential of this powerful emerging economy. With over 1.3 billion people and an economy growing at record rates, China provides boundless potential for medical device manufacturers 

What made the Chinese market difficult to enter in the past?

OEMs had to establish R&D and Manufacturing in China

Previously, in order to set up a commercial operation in China, OEMs had to bear the burden of establishing both R&D and Manufacturing in the country. An OEM that developed a medical device – was granted a single license for R&D as well as manufacture. 

This meant that OEMs had to either set up their own manufacturing facility in China for production and distribution or had to assign a representative for their firm who would be liable for the medical device’s production and marketing.

The Process Was Too Long 

The process took anywhere from a year to five years to get an enterprise registered for production and marketing within China.

The Disadvantage Once In the Market

OEMs that were based outside of China and had received Medical device licenses to market their product, had to label their device as “Imported from ‘country of origin’” This was a disadvantage, since healthcare facilities such as hospitals and clinics have budgets that favor

products made in China. They were allowed only a very small budget for products that were not made in China.

What changed in China that removed the previous barriers and concerns?

In recent years, China has taken considerable steps to advance its medical industry. 

In 2018, it replaced the China Food and Drug Administration (CFDA) with the National Medical Products Administration (NMPA), which was tasked with advancing the industry further. The NMPA was responsible for formulating new regulations, policies and standards to ensure the safety, efficacy and quality of medical products. It also had oversight over the approval and registration processes for drugs and medical devices. This major restructuring effort has helped to increase the transparency of China’s medical industry and improve the overall quality of healthcare within the country.

The Policy That Paves Entry to The China Market for Manufacturers

The Marketing Authorization Holder System policy is perhaps one of the biggest policies the NMPA introduced to support this initiative. The MAH policy facilitates market access for global manufacturers, introducing policies that provide more efficient and simplified pathways for companies to enter and operate in the Chinese medical market – the world’s third largest. As a result of these new policies, it is now much easier for non-Chinese manufacturers to set up shop and sell in China.

The Medical Device Administration’s Manufacture Authorization Holder (MAH) policy provides manufacturers with a viable option to produce a device in China and market it under their own brand name, labeled “Made in China.” MAH has revolutionized the manufacturing of medical devices within the country, offering manufacturers advanced capabilities and business opportunities. With this policy, manufacturers have access to vast expert resources for the production of their products and can establish supply chain operations on a global scale. Moreover, by enabling contract manufacturers to produce their product without having to invest their own money or resources, manufacturers can save time and money associated with the production process. This is an exciting new opportunity for companies looking to expand their presence in the Chinese medical device market.

How Companies Can Capitalize on the MAH Policy

With the MAH Policy, medical device companies have a number of options for accessing the Chinese market. Here are some of the ways in which OEMs and MDMs can operate effectively under the China MAH policy:

1. OEMs are now free to focus on their core competencies of R&D and New Product Development, while they not only outsource but partner with Contract Manufacturers (CM). Partnering enables CMs to be involved beginning at the product development stage. Choosing a CM that’s held by the same parent holding group serves to avoid duplication of manufacturing efforts. 
2. OEMs could continue their partnerships with China-based CMs in order to register and market their products under MAH to hospitals, as “Made-in-China”. True Partnership enables effective collaborations between researchers, engineers and innovative enterprises, across geographical regions.
3. OEMs from the United States have a trade advantage with China-based CMs to continue marketing products as “Made-in China”. Local production of high-end medical devices, at par with international standards, has been highly anticipated by the Chinese market.
4. For Start-up OEMs, partnering with a Contract Development and Manufacturing Organization (or CDMOs) is the quickest and most profitable way to bring new medical devices to market. The Beijing and Shanghai provinces have allowed the delegation of manufacturing to CDMOs based across the provinces of China.  

A Partner Who Can Position Your Organization for Success in the Chinese Market

The China MAH policy thus allows for high-quality, complex medical devices to be manufactured by CMs or CDMOs in China, with all existing and new products being registered afresh with the NMPA, under the MAH Policy. 

OEMs that are Non-China-based or China-based, may operate with any of the listed strategies. So choosing to partner with a CM that has end-to-end complex assembly capability and high volume capacity is ideal. To date, Quasar happens to be the only CM located in China, with such capabilities. Armed with the MAH Policy, Quasar is additionally blazing forward with initiatives to partner with Non-China and China-based OEMs, as its local reputation continues to grow. 

While major Medical Device Companies have already begun to grab this massive China advantage, Quasar is perfectly positioned to help more OEMs leverage the same opportunities in the second largest economy in the world.