The Chinese market is quickly getting the attention of foreign implant manufacturers—and for good reason. As the economy grows, more people are willing to spend money on dental health. China’s population is also becoming more familiar with the benefits of dental implant restorations, and the number of dentists offering implant dentistry is growing too.
However, with new policy putting foreign dental implant companies at risk, it’s becoming a more difficult market to understand and compete in. A new regulation by the NMPA in China, the chief administrative authority, is now publicized and took effect as of June 1, 2021, with an enforcement date of January 1, 2022. Our assessment of the new policy is that it’s a step in the direction of stricter regulation of foreign implant manufacturers' access and ability to operate in China.
We predict it will be imperative to become classified as a "domestic" brand in China, acting as the legal manufacturer to be able to sell dental implant products in future—especially in the lucrative public hospital sector.
Why adapt to get domestic brand status?
The new policy is currently exclusively affecting the public sector. And with more than 50% of the dental implant business originating from the public sector and the majority of dentists wanting to work at public hospitals, it's not something that should be downplayed. Foreign brands can still enter the private market sector, but the expectation is that this will also change in future to consolidate regulations, essentially pushing foreign brands out.
Continued access to public hospitals is critical for Class I and Class III products, as it is the most lucrative sector for dental implants in China.
Inaction could lead to foreign brands being forced out of the Chinese public sector and losing growth potential, brand value, and ultimately revenue. Worst case, it may even mean foreign dental implant companies risk being pushed out of the market entirely in the future.
How to attain domestic brand status
The prerequisites to being considered a domestic brand in China are complex and time-consuming. One of the biggest challenges is that the Legal Manufacturer has to be located in China: a task not easily overcome and a financial burden for many.
The policy treats some aspects of production for Class I and III medical devices the same, but a few key differences are essential to understand.
For both Class I and Class III devices, the Legal Manufacturer can outsource manufacturing until the component / semi-product stage. This production phase can be conducted by the Seller (manufacturer for Class I) or an Entrusted Partner (manufacturer for Class III).
A key point for Class I device regulations is that complete manufacturing cannot be outsourced. The Legal Manufacturer (Buyer) and registrant of the products must perform the final manufacturing stages (packaging, labeling and an additional procedure like cleaning) in China to be considered a “domestic” brand. In other words, the Legal Manufacturer either needs to be located in China and perform all of the production stages itself or outsource only the component / semi-product stage; if one of these is not the case, then “foreign” brand status will be applied.
For Class III devices, there is a bit more flexibility: the Legal Manufacturer (Entrusting Party) and registrant of products can either perform the complete manufacturing process itself or outsource the entire process (including the final stages) to an Entrusted Partner located in China.
Working with an Entrusted Partner
If the manufacturer wants to handle the production stages itself, there is a high level of transparency in the documentation required by the NMPA, and there are also future policy risks and unknowns to contend with.
Before the new policy was enacted, the Legal Manufacturer (Entrusting Partner) needed to submit all documentation to the National Medical Products Administration (NMPA) during the establishment of the production plant in China, which meant that the Legal Manufacturer had to give away rights to the technical files as well. This is still the case for those wanting to establish a plant in China and handle the production themselves.
However, under the new regulations, the Legal Manufacturer must apply for the Products Registration Paper under their brand from the NMPA and list the real producing site and Entrusted Partner to the NMPA for the site inspection. They also still need to provide the production files for any stages being outsourced but only to the Entrusted Partner / Supplier—not to the NMPA.
The key advantage of working with an Entrusted Partner: your production files do not have to be provided to the NMPA.
Faster time to market
Elos Medtech is already set up in China to be an Entrusted Partner and can transfer all the benefits of obtaining a domestic license without having to wait years or make costly investments in building local manufacturing plants.
As Elos Medtech has a manufacturing site in Tianjin, established in 2010, we can act as your entrusted partner. We are flexible and can handle partial or complete manufacturing of Class I and Class III components in China, depending on your needs. We already work with leading global implant manufacturers worldwide, who trust us and our quality.
Disclaimer: The information contained herein is presented in good faith and is, to the best of our knowledge and belief, true and reliable. It is offered solely for your consideration and is subject to change without prior and further notice unless otherwise required by law or agreed upon in writing. There is no warranty being extended as to its accuracy, completeness, correctness, non-infringement, merchantability or fitness for a particular purpose. All rights reserved.