Recent years have shown a notable increase in the total output value and trade volume of China's pharmaceutical industry. Yet for many, the product recalls of several items in 2007, including one of the largest product recalls in American history, remain fresh in memory. Investigations into the causes of these recalls invariably led back to supply chains in China and Chinese exports.

In response to these very public scandals, the Chinese government last August declared a "special war" against poor product quality and lack of supervision.

Since then, China's Information Office of the State Council conducted a study analyzing the Chinese medical industry and last month released a paper on its findings. The paper, which vets predictions of national growth in the industry, evaluates drug and device production and how authorities have implemented several regulations in order to ensure top-quality products, as well as strict adherence to safety.

According to the study, the Chinese medical drug and device market "jumped to $24.6 billion [in 2007] from $3.4 billion in 1998." This is partly due to the sheer number of products coming out of the country: there are 12,951 Chinese companies producing more than 3,000 types of medical devices, both low- and high-tech. The country's medical industry is set to maintain a 9 percent annual market growth.

This massive upswing in development, however, has met some hurdles on the way.

Although last year's widely publicized product recalls involved only a narrow segment of Chinese imports, the frequency and visibility of recalls created a noticeable backlash that created a wary American public becoming more cautious about Chinese products in general, and food and medical products specifically. This loss of consumer confidence in China-made goods served as a wake-up call to every company sourcing from China.

Conclusions in last month's report cited a lack of oversight due to the absence of government and industry standards enforcement, as well as labyrinthine supply chains that removed accountability.

The report came not long after one of the results of those issues, an agreement signed between the U.S. Department of Health and Human Services (HHS) and China's State Food and Drug Administration (SFDA). The agreement, signed in December 2007, was designed to prevent future problems with Chinese products in the U.S. market.

Agreements included new registration and certification requirements, greater information-sharing, increased access to production facilities, and the implementation of quality benchmarks. The HHS is also encouraging China to become more involved in international regulatory and public-health bodies, like those established by the World Health Organization (WHO).

To comply and avoid repeats of the recall disasters, last month's study reveals that China has established many new government and industry regulatory groups, including "10 national-level centers for medical-device quality testing, which take the responsibility of registration testing of domestic Class III medical devices and import medical devices, as well as sample testing for the quality of Chinese medical devices."

The study goes on to detail "30 provincial-level medical device testing organizations, responsible for sample testing of medical devices... as well as registration testing" and "nine medical-device testing organizations established by specialized universities and research institutes. In addition, there are 22 medical device standardization technical committees for different fields of specialization."

The measures have already produced protective real-world results. So far, these agencies have averted several crises, such as revoking registration certificates for polyacrylamide hydrogel, a type of polymer that may release nerve toxins as it decomposes, and ordering the recall of heparin-treated extracorporeal circulation circuits, transfusion units which have been seen to grow life-threatening bacteria.

Such developments are all a product of China's desire to remain competitive on the world market by producing products cheaply while retaining a seal of quality to mollify consumer concerns. If China's stated desire of raising market share to 25 percent by 2050 is real, these methods go some way towards boosting the possibility.

See also:

Feeling the Heat of Sourcing in Emerging Markets

4 Trends in China Sourcing

Resources

Status Quo of Drug Supervision in China
Information Office of the State Council of the People's Republic of China, July 2008

Pet Food Recall (Melamine)/Tainted Animal Feed
U.S. Food and Drug Administration, Feb. 6, 2008 (last updated)

China: The Growing Dangers of China Trade
by Jyoti Thottam
TIME Magazine, June 28, 2007

Report: Head of China Toy Company Kills Self
The Associated Press, Aug. 13, 2007

Urgent Voluntarily Nationwide Recall of DentFresh Fluoride Mint Toothpaste 9 oz (255g)
U.S. Food and Drug Administration, July 13, 2007

The Pet Food Recall: One Year Later, Has Anything Changed?
by Christie Keith
San Francisco Chronicle, March 15, 2008

United States, China Create Strategic Economic Dialogue
by Jane Morse
Washington File (Bureau of International Information Programs, U.S. Dept. of State), Sept. 20 2006

Medical Device Regulatory Requirements for China
by Jay Biggs
U.S. Dept. of Commerce, August 2004

Regulatory Issues in China's Medical Device Market
by Ames Gross
Pacific Bridge Medical, September 1998

New Agreement Will Enhance the Safety of Drugs and Medical Devices Imported From the People's Republic of China
U.S. Department of Health and Human Services, Dec. 11, 2007

China Medical Apparatuses Industry Report, 2008
China Consulting, March 2008