Also important is establishing an innovation model that
addresses the needs of India and other emerging markets, with
an emphasis on understanding market dynamics and customer
needs. He cited the example of an unnamed orthopedic trauma
device firm that customized its pedicle screws after gathering
feedback from Indian surgeons.
“The redesigned device required fewer instruments during
surgery, thereby reducing the cost of the loan-sets provided to
A third key, according to Durst, is to strengthen commercial
operations“in ways not practiced in developed economies,”in-cluding elevated attention to training and medical education.
“The country lacks a standard protocol for therapy,” he said,
“and many doctors have little hands-on experience using medical devices.”
Understanding the Process a Must
NPI’s Canfield, whose firm has offices in Shanghai and
Guangzhou, China, as well as Hong Kong, said the most significant barrier for American companies seeking to operate in China
“would be a lack of understanding of the process.”
Part of that understanding would be distribution, a challenge everywhere but a really difficult task in a huge country such as China.
“You can’t pick just one distributor,”said Canfield.“There are
no clear national distributors in the device sector; the distribution
channel has something like 10,000 distributors, sub-distributors
and agents. You have to have a regional distribution strategy.”
The potential payoff is obvious.
“It’s easy to get an idea of how big the market opportunity is,”
he said.“Just break down the China market by segments, mean-
ing people over 55, people with obesity, people with diabetes,
people with heart disease—every one of those segments is grow-
ing as a percentage of the population. When you break down the
demographics and apply numbers to them, every one of those
segments is almost equal to the entire population of the U.S.,
and it’s growing.”
Even though it’s clear that for the orthopedics sector, the“Big
Five”are leading the way, Canfield said the opportunity isn’t lim-
ited to the big guys.
“You can be small or midsized” and enter the Chinese market,
he said. Small or large, however, reimbursement issues abound.
“There are two things you need to know about reimburse-
ment,” Canfield said.“One is that there is a hospital charge list,
and that is how much a hospital can charge a patient for diagno-
sis or treatment. Then there’s the reimbursement list, which is how
much the patient can get reimbursed for a diagnosis or treatment.
You have to be conscious of both of those.”
Insurance packages are built around the reimbursement lists,
and insurance varies from province to province in China, so the re-
imbursement list is not standardized.
“You have the huge populations in sophisticated cities like Bei-
jing and Shanghai and a few others, but then as you get further and
further west and you get the lower and lower income of the more
rural areas, reimbursement is far more limited,”Canfield said.
Gaining Attention as Trial Sites
Michael Winegar, vice president of regulatory affairs for MedPace
Medical Device Inc. in the firm’s Minneapolis, Minn., office, said
that at least some of the BRIC countries offer great potential as
clinical trial sites for U.S.-based firms.
Speaking during the early-May Med Tech Investing Conference
in Minneapolis, Winegar noted that none of those countries are
found on the list of the top international sites for conducting clinical trials, a list overwhelmingly tilted toward the United States
and Western European strongholds of medical technology business. But he said there are lots of reasons Brazil, China, India and
Russia might be given more consideration in the future.
Not the least of those is cost, an increasingly important consideration as companies shape their trials. Clinical trials conducted
in India, for example, cost a little more than one-third— 36 percent—of what they do in the United States. For Russia, the figure
is 41 percent, while Brazil and China ring in at 50 percent, according to Winegar’s figures.
He framed his discussion by noting the pros of conducting trials in the United States, leading with the quality of research, accessibility to trial sites and certainly not least, the credibility of the
data collected. That is offset on the cons side by costs—the United
States is the leader in that regard—along with dealing with the
U.S. Food and Drug Administration and the scrutiny trials get
from instant public visibility.
He singled out India and China as having the potential to be-
come much larger players in clinical trials. For both countries, he
said the pros include much lower costs, large populations from
which to draw study participants, and what he characterized as
On the down side, Winegar said both China and India share
data use and credibility issues, regulatory barriers (including
whether such results would lead to approvals to export to the
United States) and varying standards of care. Additionally in
China, he said it can take a long time to get trials approved.
Nonetheless, it’s apparent that some of the world’s largest
new markets also have potential for expanding their roles in
Jim Stommen, retired editor of industry publication Medical Device
Daily, is a freelance writer focusing on the medical product sector.
54 • ODT