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Two Invoice Policy Will Reshape China Distribution Landscape (1)


“Two Invoice Policy” means that the pharmaceutical production enterprise issues one invoice to the circulation enterprise, and the circulation enterprise issues one invoice to the hospital. It effectively prevent the problem of layer-level price increases. At present, the industry consolidation of medical device in China is far below than circulation. With the nationwide pilot of the “Two Invoice Policy” of medical device consumables, the industry will undergo transformative resource integration, which will ultimately benefit leading enterprises who have the national layout in China?

Fast growth of medical device market in China

With the growth of China’s economy and residents’ medical consumption, the sales revenue of China’s medical device industry has increased from RMB 114.1 billion in 2010 to RMB 370 billion in 2016, with a compound growth rate of 21.67%. The growth rate of medical device is faster comparing with that of the whole pharmaceutical market. At an estimated 20% growth rate, the overall size of Chinese medical device market will exceed 760 billion by 2020. The medical equipment market has the largest proportion, about 130 billion in 2016, followed by in vitro diagnostics, high-value consumables, and low-value consumables at 54 billion, 45 billion, and 40 billion, respectively.



Medical device market consolidation needs to be improved

In the entire medical device industry chain, the commercial circulation of devices plays an important role as a link between medical device manufacturers and medical institutions. At present, among the current medical devices market in China, the bottom price agent is almost the mainstream marketing mode for consumables and diagnostic reagent companies. The reserve price agent sells the product to the terminal through the channel dealers and distributors at a relatively low ex-factory price. In 2016, there were more than 150,000 medical device manufacturers in China excluding large-scale medical equipment. most of high-value consumables, low-value consumables, and diagnostic reagents are sold by reserve price agent.

In terms of concentration, the four largest China medical device circulation companies, China National Pharmaceutical Group, CR Pharmaceutical Group, Shanghai Pharma and Jointown Pharmaceutical accounted for 12% of the total market. Compared with the drugs circulation, the competitive landscape of medical device circulation is more scattered and the consolidation is low.


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About China Med Device, LLC

China Med Device, LLC provides turn-key solutions for western medical device/IVD companies to enter China with regulation and commercialization services. Our CFDA regulatory services cover strategy, premarket submission, clinical evaluation, CRO, QA and post market compliance. We are experienced in handling Innovation Approval and Priority Review. Our commercial services cover market assessment research, reimbursement, partnership, distribution qualification and management. We have offices in Beijing, Suzhou and Boston. Our management team has 100+ years of combined experience in medical device and IVD and has been involved with 1,000+ CFDA certificates and 200+ companies’ success.

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