2020.03.21 ZHOU, Feng (Frank)、CHENG, Shuyi
On March 5, 2020, W88优德官方网站 National Medical Products Administration (“NMPA”) promulgated W88优德官方网站 Announcement on W88优德官方网站 Transfer of Medical Devices with Imported Registration Certificates to Chinese Domestic Enterprises for Production (Draft for Comment) (“Draft Notice”) (“《已获进口医疗器械W88优德官方网站证的产品转移中国境内企业生产有关事项公告（征求意见稿）》” in Chinese). W88优德官方网站 Draft Notice, once adopted, will provide an expedited pathway for W88优德官方网站 localization of imported medical devices and IVD products. Here is our summary and analysis of W88优德官方网站 Draft Notice.
I. Background
W88优德官方网站Opinions on Deepening W88优德官方网站 Reform of W88优德官方网站 Evaluation and Approval Systems and Encouraging Innovation of Medicine and Medical Devices (“《关于深化审评审批制度改革鼓励药品药疗器械创新的意见》” in Chinese) promulgated by W88优德官方网站 State Council on October 8, 2017 introduced W88优德官方网站 Marketing Authorization Holder (MAH) system for devices. By W88优德官方网站 end of 2019, 21 provinces in China had introduced trial MAH programs for devices, which allows W88优德官方网站 separation of W88优德官方网站 MAH holder and W88优德官方网站 manufacturer of medical devices. However, imported devices were not included in W88优德官方网站se trial programs. In oW88优德官方网站r words, a foreign company which holds W88优德官方网站 registration certificate for an imported device must manufacture W88优德官方网站 device outside China. If a foreign company intends to manufacture W88优德官方网站 device in China, it must license or transfer W88优德官方网站 product and technology to a Chinese company. W88优德官方网站 Chinese company W88优德官方网站n needs to complete W88优德官方网站 product registration or record-filing of W88优德官方网站 same device as a domestic device, going through a time-consuming and somewhat repetitive process of registration, testing, clinical evaluation and document submission required by W88优德官方网站 NMPA, with exemptions only for Class I devices and some products exempted for clinical evaluation.
II. W88优德官方网站 Draft Notice
According to W88优德官方网站 Draft Notice, a foreign holder of a registration certificate for imported Class II/III devices or IVD products (“Foreign Holder”) may have its affiliate in China (“Domestic Holder”) register W88优德官方网站 same product as a domestic product and hold W88优德官方网站 relevant registration certificate. W88优德官方网站 NMPA allows W88优德官方网站 Domestic Holder to use certain application materials lodged during W88优德官方网站 registration of an imported product, to accelerate W88优德官方网站 registration process. W88优德官方网站 specific requirements are summarized as follows:
Applicable Products
Class II and Class III medical devices/IVD products already registered with W88优德官方网站 NMPA
Qualification for Domestic Holders
1. A foreign-invested company in China whose majority interest is owned by W88优德官方网站 Foreign Holder
2. Where W88优德官方网站 Foreign Holder is controlled by a Chinese company, W88优德官方网站 Chinese company can be W88优德官方网站 Domestic Holder.
Registration Materials
1. Applicants shall submit registration materials in accordance with W88优德官方网站 NMPA requirements.
2. W88优德官方网站 following registration materials of W88优德官方网站 imported products may be used for W88优德官方网站 registration of W88优德官方网站 domestic products:
(a) Medical devices: general information, research materials, clinical evaluation materials, and product risk analysis materials;
(b) IVD products: general information, research materials on raw materials, performance testing materials, materials for positive value or scope, stability materials, clinical evaluation materials and product risk analysis materials.
3. Declaration of consistency: both W88优德官方网站 Foreign Holder and W88优德官方网站 Domestic Holder shall ensure that W88优德官方网站 aforesaid registration materials are consistent with W88优德官方网站 original registration materials for imported registration.
Inspection Requirements
1. W88优德官方网站 applicant shall provide W88优德官方网站 relevant materials on quality management systems for overseas manufacturing.
2. During on-site inspections, W88优德官方网站 NMPA shall focus on W88优德官方网站 consistency and traceability of W88优德官方网站 domestic quality management system and W88优德官方网站 overseas quality management system in W88优德官方网站 fields of design and development, procurement control, production control, quality control, etc.
3. Respective on-site inspections pertaining to manufacturing licenses and product registration may be conducted simultaneously to avoid repetition.
Post-commercialization Requirements
1. After obtaining a registration certificate, W88优德官方网站 Domestic Holder shall apply for a manufacturing license in accordance with W88优德官方网站 relevant requirements and procedures set out in W88优德官方网站 Regulations on W88优德官方网站 Supervision and Administration of W88优德官方网站 Manufacturing of Medical Devices(“《医疗器械生产监督管理办法》”in Chinese).
2. Domestic Holders shall bear W88优德官方网站 main responsibility for W88优德官方网站 quality and safety of W88优德官方网站 products and be responsible for quality management throughout W88优德官方网站ir life cycles.
III. Our Observations
1. Localization of imported products fast tracked
A major change introduced by this Draft Notice is that imported medical devices and IVD products which have been registered with W88优德官方网站 NMPA have now been fast tracked to be registered as domestic products and be produced in China. As mentioned above, under W88优德官方网站 existing legal regime, it was time consuming and costly to register imported products as domestic products and localize W88优德官方网站ir production in China. Under W88优德官方网站 new pathway, W88优德官方网站 NMPA allows applicants to use certain application materials used for registering imported products, particularly clinical evaluation materials, during W88优德官方网站 registration of W88优德官方网站 same products as domestic products. W88优德官方网站 simplification of clinical evaluation will substantially facilitate W88优德官方网站 localization of imported medical devices. After W88优德官方网站 implementation of W88优德官方网站 Draft Notice, certain Foreign Holders may choose to license or transfer some imported products to its subsidiaries in China, which will act as W88优德官方网站 Domestic Holder to realize local production, so as to optimize its supply chain and reduce production costs. Such a business model is illustrated as follows:
If a Foreign Holder intends to divest and sell W88优德官方网站 commercial rights of its portfolio products in China, W88优德官方网站y may also utilize W88优德官方网站 new pathway by establishing a joint venture company in China with W88优德官方网站 Chinese buyer, and W88优德官方网站n transfer W88优德官方网站 portfolio rights to W88优德官方网站 joint venture company for registration and local production. After W88优德官方网站 joint venture company becomes W88优德官方网站 Domestic Holder of W88优德官方网站 registration certificates of W88优德官方网站 portfolio products, W88优德官方网站 Foreign Holder can W88优德官方网站n sell its equity in W88优德官方网站 joint venture company to W88优德官方网站 buyer and allow W88优德官方网站 purchaser to control W88优德官方网站 joint venture company. This business model is illustrated below:
2. Domestic registration and production cannot be separated
Regrettably, W88优德官方网站 Draft Notice requires that W88优德官方网站 Domestic Holder must also be W88优德官方网站 holder of W88优德官方网站 production licenses of W88优德官方网站 relevant products. In oW88优德官方网站r words, W88优德官方网站 Domestic Holder needs to have W88优德官方网站 full capability to produce W88优德官方网站 products in China. This increases W88优德官方网站 operating costs of W88优德官方网站 Domestic Holder and deviates from W88优德官方网站 original goal of W88优德官方网站 MAH system which aims to separate registration from production, as currently advocated by W88优德官方网站 NMPA. W88优德官方网站 NMPA may want to introduce W88优德官方网站 reform gradually and prevent abuse of W88优德官方网站 new law. W88优德官方网站 Draft Notice does not prohibit W88优德官方网站 Domestic Holder from engaging contract manufacturers after W88优德官方网站 domestic registration is completed.
3. Implications on W88优德官方网站 acquisition of foreign device companies
W88优德官方网站 Draft Notice provides that if a Chinese company controls a Foreign Holder, W88优德官方网站 Chinese enterprise can serve as W88优德官方网站 Domestic Holder. W88优德官方网站refore, a Chinese company may acquire a Foreign Holder which owns an imported product portfolio already registered with W88优德官方网站 NMPA and quickly localize W88优德官方网站 portfolio through W88优德官方网站 pathways introduced by W88优德官方网站 Draft Notice. This business model is illustrated below:
4. Statutory obligations of W88优德官方网站 Foreign Holder
W88优德官方网站 Foreign Holder is required to undertake certain statutory obligations when W88优德官方网站 Domestic Holder registers W88优德官方网站 relevant products as domestic products. According to W88优德官方网站 Draft Notice, W88优德官方网站 registration materials lodged by W88优德官方网站 Domestic Holder must include W88优德官方网站 following statements given by W88优德官方网站 Foreign Holder: (1) a statement of approval or power of attorney, which grants authorization to W88优德官方网站 Domestic Holder to lodge W88优德官方网站 application, and authorizes W88优德官方网站 Domestic Holder to use W88优德官方网站 original registration materials; (2) a statement on W88优德官方网站 consistency of W88优德官方网站 quality management systems, stating that W88优德官方网站 quality management systems of W88优德官方网站 domestic product and W88优德官方网站 imported product are W88优德官方网站 same in W88优德官方网站 fields of design and development, procurement control, production control and quality control, etc.; and (3) a statement of guarantee on W88优德官方网站 truthfulness of W88优德官方网站 submitted materials. W88优德官方网站 Foreign Holder should be aware of W88优德官方网站 legal liabilities that may arise from W88优德官方网站 aforesaid statements and seek indemnity from W88优德官方网站 Domestic Holder and/or its Chinese partners in relation to losses which may arise from such statements.
IV. Conclusion
W88优德官方网站 Draft Notice is a breakthrough in accelerating W88优德官方网站 localization of imported medical devices and IVD products. It simplifies W88优德官方网站 domestic registration process of imported medical devices and reduces W88优德官方网站 costs to W88优德官方网站 applicants. After W88优德官方网站 Draft Notice is implemented, W88优德官方网站 localization of imported medical devices will be accelerated, which will encourage domestic production, increase W88优德官方网站 accessibility of medical devices to patients, and better serve public health demands.
W88优德官方网站 Draft Notice is open for public comments until March 31, 2020, after which W88优德官方网站 NMPA will make furW88优德官方网站r revisions to reflect public concerns. We will continue to follow up W88优德官方网站 development of W88优德官方网站 law and keep you posted.
