Non-Innovative Medtech Companies Are Winning Too Much Venture Capital, Official Says

A Chinese government official has warned medical device companies that their appetite for venture capital is leading to far too much money going to companies that do not have much capacity to innovate.

The situation undermines both the development of the medical device industry and government efforts to spur innovation in a field that has grown into an investor darling, said Sun Lei, director of the Center for Medical Device Evaluation at the National Medical Products Administration (NMPA), during an industry forum in Beijing on Monday.

The problems go back to 2014, when the NMPA instituted a special review process for innovative medical devices so that equipment powered by cutting-edge technologies could get expedited government approval so it could get to market faster.

However, this approval turned out to be something of a litmus test for venture capital funding, leading some companies, Sun said, to “beg” for regulatory clearance via the special review process so that they could secure funding.

At the forum, Sun admitted that the NMPA had failed to give full play to the special review mechanism in the early stage of its implementation. Many medical device manufacturers applied for government approval using documents which only showed that their product patent applications had been accepted for review by patent offices, Sun said.

This prompted the NMPA to fine-tune the innovation-focused approval process in 2018 by adding more eligibility requirements, like asking applicants to have invention patents for products that they wanted to be reviewed. Sun said this move saved the regulator more time and resources for the review of truly innovative medical equipment.

By the end of August, a total of 1,612 applications to the special review process had been accepted by the NMPA, but only 20% of them received approval, Sun said.

Sun also said that more support policies will be rolled out in future to fast-track the approval process for homegrown high-end medical devices.

Contact reporter Ding Yi (yiding@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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