China

Japan

ASEAN

Domestic Production vs Importation

China remains to be the global manufacturing hub for medical devices despite the current challenges.

The outbreak of COVID-19 has led to a surge in domestic demand for testing kits, medical masks, protective suits, ventilators, infrared thermometers and other anti-pandemic supplies.

 Some non-epidemic-related medical devices, such as surgical supplies and in vitro diagnosis and treatment equipment not required by the pandemic, have suffered a sharp drop in demand and sales. As the pandemic abates, the distribution of medical device production will gradually return to normal.

Domestic players are the preferred and would sometimes receive subsidies from the local governments to win bids under volume-based procurement (VBP).

in 2020 the top 3 domestically produced products are: medical mirrors, cannulae/catheters and body fluid guide tubes and devices substitute internal function.

The market relies largely on imports, notably pacemakers, PTCA catheters, and orthopaedic implants.

MD production is increasing over the past few years, however the latest data (2020) shows decrease in 3.8% from the last year. The data shows that the pandemic did yet not impact the overall amount of MD production.

 Ministry of Economy, Trade and Industry included local medical device manufacturers into the "Core Industry," which makes local medical device manufacturers easier to receive foreign investment

The ASEAN region is also a significant importer of medical equipment. Following the epidemic, the ASEAN Comprehensive Recovery Framework strives to prioritize and accelerate trade and investment among member countries. Digital transformation is also part of this strategy.

Medical Reimbursements

Reimbursement is a long, tricky and complicated process.

Most medical equipment must be included in Japan's reimbursement system in order to be successfully marketed in Japan. The MHLW reimbursement rate, or price, provided to a certain medical equipment is valid under all insurance systems, whether public, private, or employer-based.

 ASEAN member states are gradually committed to universal healthcare. Indonesia and the Philippines have successfully implemented national insurance schemes; Indonesia's programs are the world's biggest, covering over 180 million people.

Almost the whole Thai population is insured for primary and hospital care, while Singapore provides the highest sophisticated levels of healthcare for its inhabitants, including heart transplants and neurological operations.

Other Challenges and Pitfalls

The stress of demand brings the risk of overcapacity.

Domestic device competition has increased dramatically over the last few years.

 The development of enterprises without strong R&D strength and core competitiveness will encounter great challenges.

There are more imported products than domestically produced products.
In some segments, domestic products are weak because imported products cover those segments who has greater market share.

The lack of institutional support and funding continues to threaten the improvement of the healthcare system of low-income countries.

Regulatory Barriers

Five to 10 years ago, registration in China was easier.
Product registration requirements have grown in recent years, more paperwork is required (such as quality system documents shall be submitted instead of an ISO 13485 certificate only), and more standards have been implemented.

Local testing, a critical phase in the registration process, now takes around 6 months, when it used to take around 3 to 4 months.

The period it takes to register a Class 2 imported device is now 12–18 months and to register a Class 3 imported device is now 16 - 20 months

Japan's planned transition from biannual to yearly pricing revisions would put considerable downward pressure on prices for new medical equipment and medicines, damaging investment planning for capital-intensive research and development in Japan. For medical products, Foreign Average Pricing (FAP) combined with techniques like the R-Zone calculation may increase these pressures (involving medical device discounts to hospitals).

Recent GMP audits of medical device manufacturers may now be performed without prior notice, while before, GMP inspections had to be planned.

Most member states are still transitioning towards the full implementation of the ASEAN Medical Device Directive (AMDD). The risk-based classification has increased the amount of requirements for high-risk medical device products. Stakeholders must be careful to tailor-fit submissions according to country-specific requirements.

Fast Market Routes

Innovative device pathway
Medical devices must first belong to either Class II or Class III, and satisfy three main criteria:
1. Domestic invention patent of core technologies granted within five years;
2.Novelty of such product in the PRC, is in a leading position worldwide, and demonstrates significant clinical practical value; and
3.The applicant has a prototype of the products after completion of early stage research and has complete and traceable research data to back it up.

Hainan Medical Tourism Pilot Zone
Medical devices are subject to the following preferential policies:
1. Expanded scope of overseas imported medical devices allowed to enter the Pilot Zone;
2.Greater access for urgently needed medical devices entering Hainan via the emergency review pathways, and devices can be stored in bonded warehouses in Pilot Zones before approval is obtained; and
3. More leeway given to enterprises to collect and apply real-world clinical data for the trial of medical devices, to expedite approval processes and shorten time of marketing.

“Sakigake” fast-track approval for innovative therapies. This includes software as a medical device if it is to be used to analyze patient data.

COVID-related supplies remain under priority review for most of the member states.

Regulatory reliance has also been increasing where abridged routes are available for devices previously reviewed by a regulatory body of a member state.

Best Opportunities for Foreign Companies

Concentrate on selling unique products that are in demand, where reimbursements are excellent, and VBP will not lower pricing, while still generating huge sales.  Chinese patients generally still prefer Western goods as long as they are offered at modest prices.

Increase exports or establish manufacturing or partner with manufacturing operations in China to produce items for the Chinese market.

In 2020, China encouraged foreign companies to invest into a new set of medical device category. This includes AI medical assistance equipment, advanced radiation and surgical instruments, rehabilitation tools, wearable iot - based health equipment, mobile and telemedicine technology, and so forth.

Advanced new medical technology and treatments, including minimally invasive medical devices

Regenerative medicine

IT for Health

Healthcare currently accounts for about 4% of GDP in the area, and this figure is anticipated to rise as consumers grow more health-conscious.

Diabetes and cardiovascular illness induced by sedentary lifestyles are growing increasingly prevalent throughout ASEAN. New options include the utilization of robotic surgery, 3D printing, and implanted devices, as well as other preventative breakthroughs that will significantly revolutionize the sector.

High-end manufacturers may target rich Singapore as well as the middle-income countries of Thailand and Malaysia, although lower-end gadgets would perform better in the price-sensitive markets of Indonesia, Vietnam, and the Philippines.