Medical sales bribery: offenders to be named and shamed

by Michael Woodhead

Companies and individuals found to be involved in bribery related to the sales or purchasing of medical and pharmaceutical supplies will be banned for two years and their details added to a public blacklist, the National Health and Family Planning Commission has announced.

From this year, all provincial health departments will be required to investigate and take strong action against bribery in the purchasing and sales of medical products the NHFPC says. Offenders must be listed publicly on a 'blacklist' that is made available for the public on the website of the provincial health department. Details must be added within 5 days of  being found guilty, and the offenders will be banned from buying or selling medical goods to public hospitals and clinics for a period of two years, the NHFPC statement says. The national office of the NHFPC must also be notified of any bribery cases within one month, and it will compile a summary at the end of the year.

China healthcare: huge market, huge risks for western multinationals

by Barry S. Cohen
It's little wonder that multinational health care companies (MNCs) may be salivating at the opportunities in China:

1) By 2016 China is expected to be the second-largest drug market, forecast to reach nearly $165 billion that year

2) During the next several years the Chinese drug market is supposed to grow at a rate of 15% to 18% a year compared to little or no gains for the Western countries

3) Growing affluence is permitting many Chinese to pay out of pocket or pay high insurance deductibles to gain access to innovative Western medicine

4) China needs new drugs to treat higher than average incidences of hepatitis B and neck and head cancers. China also has growth potential for drugs to treat arthritis, diabetes, osteoporosis, high blood pressure, high cholesterol, depression HIV/AIDS.

However, all that glitters may not be gold. The chance of a recession as well as internal politics could make it difficult for the multinational pharmaceutical companies to make strong headway into the Chinese market. Nowhere in the world are the pressures greater to expand access to better health care while at the same time controlling costs.

Examples abound. One policy decision eliminated differential pricing on approximately 100 drugs MNCs sold into China. For nearly two decades, these drugs had benefited from special pricing as part of an agreement between the Chinese government and the pharmaceutical industry. Furthermore, a blind bid and tender process reduced prices on some drugs by up to 90%. MNCs watched as domestic Chinese pharmaceutical companies bid prices down in an effort to use volume gains to offset collapsing margins.

Despite the caution flags, large MNCs continue to devote substantial resources to cracking the Chinese market. Both Pfizer and GlaxoSmithKline have made major moves to re-orient sales resources away from developed economies towards China. Eli Lilly and Novartis , among others, have opened new R&D facilities in China, primarily in Shanghai. And given the country's mammoth diabetes problem, Sanofi is moving deeper into the country. The company's Lantus insulin product is estimated to have 17% of the Chinese market.

Large pharmaceutical companies hoping to stake a claim in China may be eyeing two of the country's largest medical research testing companies as a vehicle to gain entry. Both WuXi PharmaTech  and ShangPharma have been mentioned as possible takeover targets.

Even insurance company WellPoint has announced its entry with the hopes that it can develop a private healthcare insurance business. And medical device companies like Boston Scientific, Johnson & Johnson and Medtronic are also aggressively expanding into China. For more information about stocks in this space, our real time trading reports help investors identify opportunities before they happen.
Source: MSN Money

Western medical device companies seek expansion in China

Medical equipment companies such as Medtronic have invested heavily in China

Foreign investors are targeting China's ageing population as Western medical companies dash to fill the nation's demand for medical devices geared for China's 181 million senior citizens.
Moving to tap into the potential market for medical devices aimed at treating seniors, US-based medical companies are investing millions into easing the aches and pains of old age.
In September, Medtronic, a Minneapolis-based medical device maker paid $755 million (584 million euros) for Kanghui Holdings Inc, one of China's top three manufacturers of spinal support and artificial joints.
"The integration of Kanghui provides Medtronic a strong position in China's rapidly expanding orthopedics segment, as well as a high potential platform for the development of a global value segment in orthopedics," said Chris O'Connell, executive vice-president and president of Medtronic's Restorative Therapies Group, in early November.
The takeover is the largest overseas acquisition the medical device maker has made as it targets growth in China's less competitive second and third-tier cities.
With sales of orthopedic devices in China expected to increase to more than $2.7 billion by 2015, the move indicates how important China's senior market is for Western companies.
Medtronics is just the latest in a string of US-based medical device companies investing to expand in China's commercial realm.
Last year, Boston Scientific, one of the US' largest device-making companies, pledged to invest more than $115 million in expanding its commercial presence in China.
In late October, BG Medicine, a US producer of cardiac diagnostic tests, formed a partnership with Kindstar Diagnostics Co Ltd, the largest esoteric diagnostic testing company in China.
The move will grant BG Medicine access to more than 2,000 hospitals throughout China.
The increased focus by Western medical companies on the China market suggests that as China's economy continues to expand, so does the desire to offer world-class medical treatment.
For foreign investors looking to establish high-acuity medical care centers for seniors, having access to the latest in medical devices and procedures can mean the difference between success or failure.
"Foreign investors that have their strength in senior care expertise know how to design, build and operate senior care facilities," says Qu Qun, a lawyer with Shanghai Co-Effort Law Firm and editor of China Senior Housing and Care Newsletter.
"One of their biggest strengths compared with the domestic competition is their access to first-class technology used in senior care facilities and in-home care services."
Qu estimates that the senior housing and care market will be worth 1.8 trillion yuan ($290 billion; 220 billion euros) a year by 2020 and 7.6 trillion by 2050 and that the money spent on devices geared toward assisting the ailing elderly is only beginning to grow.
And as investors begin to renew their efforts to establish businesses in China, the timing for foreign medical device makers expansion could not be better.
"There is no reason they shouldn't come and invest here," Qu says.

China's medical equipment makers face 'prejudice' overseas

Chinese manufacturers such as Mindray must tackle the 'prejudice' against cheap Chinese exports

 Chinese healthcare equipment maker Mindray continues to gain recognition overseas despite some ongoing prejudice, reports Cecily Liu in London
David Yin, managing director of Europe at the Shenzhen-based Mindray Medical International Ltd, says that Mindray is now a large player in the medical devices industry, exporting products to 190 countries and regions.
In 2011, it had $881 million in net revenue, more than half of which was generated overseas.
"We are committed to international expansion, especially in Europe and the United States," Yin said. "These two markets are like two fortresses we have to conquer to become a truly global leader.
Mindray was established in Shenzhen, Guangdong province, in 1991, originally as a trade company that sold medical equipment produced by foreign companies in China.
But the founders of the company, Xu Huang and Li Xiting - who had both worked in the 1980s as engineers at a State-owned maker of medical instruments - had ambitions to have Mindray produce its own medical equipment.
Under that impetus, the company began to invest heavily in research and development and developed its first patient-monitoring device in 1992.
Mindray began to prepare itself for international expansion later that same decade after recognizing that the market for medical equipment was smaller in China than in advanced economies such as Europe and the US, where healthcare is a priority of the public sector. One important step it took toward that end was making sure its products met regulatory standards abroad.
Most of the company's devices and equipment bear the European Economic Area's CE marking, meaning they can be sold in the countries that make up European Union, plus in Iceland, Liechenstein and Norway. Some of its products have also won approval from the US Food and Drug Administration.
However, one obstacle Mindray still must overcome is the prevailing prejudice against Chinese products, Yin said.
"This is particularly a challenge when it comes to customers of developed markets like Europe and the US," Yin said.
"We had to continuously explain to them that Chinese products are not just cheap exports, but because China has many high-tech companies, it has many highly skilled employees. And it has many companies that understand clients' needs and are keen to solve clients' problems."
Read more: China Daily

Medtronic acquires China Kanghui for $775 million

Medical equipment company Medtronic Inc has completed its $755 million acquisition of Jiangsu-based China Kanghui Holdings, a Chinese provider of orthopedic devices.
Chris O'Connell, executive vice-president and president of Medtronic's Restorative Therapies Group, said that China is one of the fastest-growing medical device markets with significant scale opportunities.
"Medtronic will establish a bigger and more direct local presence. Kanghui brings Medtronic a broad product portfolio, a strong local research and development and manufacturing operation, a vast China distribution network and an exceptional management team," he said.
Kanghui brings a strong product portfolio and new products pipeline in trauma, spine and joint reconstruction.

Read more: China Daily

Doctors say face masks have no proven health benefits

Doctors say consumers should be wary of claims that masks filter out tiny PM2.5 particles as China so far has no regulations governing the masks and some may cause respiratory problems.
Many different masks are available, such as medical masks, activated carbon masks and industrial masks, in drugstores, supermarkets and online for "PM2.5 protection."
In a Shanghai drugstore on Jiangning Road, a medical mask with activated carbon costs 10 yuan (US$16). A sales clerk said she didn't know whether the mask can stop PM2.5 particles.
In some online stores, however, vendors boast that masks costing from 3 to 20 yuan stop PM2.5 particles. None, however, have the certificates that could help prove their claims.
"Right now there is no quality standard or guideline on PM2.5 protection masks and most so-called protection masks just use ordinary materials without proof of their effects," said Zhao Danqing from Shanghai Sinotextiles Co, which makes masks.
"With the public awareness of air pollution, making masks is such a profitable business. The government must issue a quality guideline to regulate the market and ensure public health," said Zhao.
Activated carbon masks and ordinary medical masks can't stop PM2.5 particles, while activated carbon itself produces particles, doctors warned.
Some industrial masks can block PM2.5, but they are not for daily use.
They may cause adverse reactions in people with heart disease or respiratory illness because they can limit air intake, experts said.

Read more: Shanghai Daily

China's medical equipment market shows huge growth

The Chinese healthcare and medical equipment market is on a growth spurt that has Western OEMs salivating over its sales potentials, and priming their supply chain for profit opportunities in the world's most populous nation. Danger looms in the $357 billion market, however, and failure to understand the challenges of China's evolving healthcare industry could lead to missed opportunities and losses for medical equipment vendors, according to a research firm.

Researcher and market consultancy McKinsey projects the Chinese healthcare sector will nearly triple in value to $1 trillion by 2020 (from $357 billion in 2011) on demographic changes, increased investment under the country's latest 5-year plan, and the increased involvement of the private sector in healthcare delivery. The mouthwatering growth has attracted Western multinationals in droves, but according to McKinsey, an inevitable shakeout in the industry could leave many late starters and losers disappointed.

Read more: EBN