OMTEC-2015 Gross Asia

Asian Update and Orthopedic
Market
June 18, 2015
OMTEC Conference, Chicago, Illinois
Presented by Ames Gross, President

Pacific Bridge Medical
7315 Wisconsin Avenue, Suite 609E, Bethesda, MD 20814
www.pacificbridgemedical.com
Copyright © 2015 Pacific Bridge Medical. All rights reserved. This content is protected by US and International copyright laws and may not be copied,
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constitute professional advice. We believe the contents to be true and accurate at the date of writing but can give no assurances or warranties regarding the
accuracy, currency, or applicability of any of the contents in relation to specific situations and particular circumstances.
About Pacific Bridge Medical
 PACIFIC BRIDGE MEDICAL (PBM) is a leading Asia
medical consulting firm dedicated to assisting international
medical companies in Asia.
 We have helped over 500 medical companies with business
development and regulatory affairs in Asia since our founding in
1988.
 We have offices in Shanghai, Tokyo, Singapore and Hong Kong, and
affiliate partners in other Asian markets.
 http://www.pacificbridgemedical.com
Copyright © 2015 Pacific Bridge Medical

www.pacificbridgemedical.com 2
Overview of Asia

Asia Economic Statistics
Three tiers of wealth and advancement
GDP (PPP) Per capita GDP (PPP) Real GDP Growth Rate
China $13.4 trillion $9,800 7.7%
Hong Kong $381.3 billion $52,700 2.9%
India $4.99 trillion $4,000 3.2%
Indonesia $1.29 trillion $5,200 5.3%
Japan $4.73 trillion $37,100 2.0%
Korea $1.7 trillion $33,200 2.8%
Malaysia $525 billion $17,500 4.7%
Philippines $454.3 billion $4,700 6.8%
Singapore $339.0 billion $62,400 4.1%
Taiwan $926.4 billion $39,600 2.2%
Thailand $673.0 billion $9,900 2.9%
Vietnam $358.9 billion $4,000 5.3%
Source: International Monetary Fund www.pacificbridgemedical.com 4
Asian Ethnic Diversity
 Japan and Korea: very homogenous; small minority populations
 China: 92% Han, Over 50 national minority groups for other 8%
 Singapore: 77% Chinese, 14% Malay, 7% Indian, 2% other
 Malaysia: 50% Malay, 24% Chinese, 7% Indian
 Indonesia: 40% Javanese, over 300 ethnic groups for other 60%
 Thailand: Majority Thai, 14% Chinese
 Philippines: Very diverse population in terms of language, religion
and ancestry
 Tagalog 28%, Cebuano 13%, Ilocano 9%, Bisaya/Binisaya 8%,
Hiligaynon Illonggo 8%
 Vietnam: over 50 ethnic groups
 Almost 90% Vietnamese
 Chinese (Hoa) around 1%
 India: 3 major groups
 72% Indo-Aryan, 25% Dravidian, 3% Mongoloid and other
Why do Western medical companies
want to go to Asia?
 This is where the growth is
 Over 4 billion people
 Rising middle class, with more money to spend
on healthcare
 Aging populations in Japan, Korea, China
 Richer Asians demanding better drugs, devices,
and healthcare services

Medical Device Markets
Global Medical Device Markets Asian Medical Device Markets
Region Market Size (US$) Growth Country Market Size (US$)
U.S. $140 billion 3% China $20 billion
EU $130 billion 2%
Hong Kong $850 million
Japan $27 billion 1.5%
Asia Pacific $34 billion 20% India $3.5 billion
Indonesia $780 million
Latin America $12 billion 10%
Korea $3.9 billion
Global Medical Device Markets
Latin America Malaysia $1 billion
Asia Pacific 3%
10% Philippines $300 million
Japan Singapore $530 million
8% U.S.
41% Taiwan $2.5 billion
Thailand $850 million
Vietnam $630 million
EU
38%

Asian Orthopedic Market
 Asia accounts for 60% of the world’s
population but the region only holds 15% of
the global orthopedic devices market now
 Asia is the fastest growing market for
orthopedic implants and soft tissue repair
 Orthopedic software market will have strong
growth through 2020

Asian Orthopedic Competitors
 Strong Asian competitors now making orthopedic products
 Products are 80% as good, but 60% of the price
 United Orthopedic Corporation (Taiwan) is the first Asian
orthopedic company to receive FDA approval for joint
reconstruction
 Dr. Thomas Ferro, Medical Director of The Bone and Joint
Center in California said, “In addition to quality joint
replacement…their [United Orthopedic Corporation] products
are very surgeon-friendly, which saves time on the operating
table.”

Chinese Medical Device Market Growth
15%
growth

Is There a Market for Your Device in
China?
 Research has to be well thought out
 Secondary research – not normally that accurate; government
statistics not reliable
 Primary research is the best way to go
 Researcher should have worked for foreign device companies
before
 Big research companies send out 20 year olds, may not have
enough experience to get answers you need; maybe a few
quality interviews will do.
 Determine if there is a market before product registration

China Distributor Search
 Have you done lots of due diligence
before selecting?
 Meeting groups at trade shows will
almost never work
 Are you building long term
relationships of trust?
 Are you giving your distributor proper support? Training?
 Is the distributor attending the right trade shows?
 Do the distributor’s people at an exhibitor booth really know your
products?
 What do hospital purchasing managers think about your
distributor?
 Lots of small players; some good regional players
 Are the small distributor companies going to
survive?
 Conflict of interest – 3 sales teams
 Do bigger national Chinese distributors really have
branch offices?
 Do distributors really do what they say they are
doing? Double check! Don’t be “blind” to the
market!
 Is your distributor really only a distributor or do they
have a copycat manufacturing partner down the
street?
 Copying is rampant, so please watch out

Chinese Medical Device Registration
 Getting a lot tougher and longer for
approvals
 New standards released
 Testing delays (only 10 centers)
 More supplementary reviews
requested
 Class 2 and 3 medical devices need more local clinical trials /
New exempt list too
 Approval in county of origin still required
 IVDs approval in county of origin or where manufacturing
site is located Copyright © 2015 Pacific Bridge Medical
Chinese Medical Device New
Regulations
 2000 Regulations only 6 chapter and 48 articles
Now 2014 Regulations 8 chapters and 80 articles
 Class 1 – Notification, not registration, but more
documentation needed than previous class 1 registration
 Class 3 device clinical trials require CFDA protocol approval
 Class 2 and 3 IVDs must have local clinical trials
1000 sample size, comparison study required (Gold Standard)
 Registrations now good for 5 years not 4
 More information required on outside labels in Chinese

Registration Timeframe for Imported
Class II and III Devices

Registration Timeframe for Imported
Class II and III Devices
(Class 2)
90 working days (Class 3)

China: Medical Device
Registration Timeframes
 3 years ago:
 Class II and Class III products 18-24 months to
register, foreign data accepted
 Today
 Class II and III products 24-48 months to register,
and likely local clinical trials required
 Local trials can range between $150k-750k depending
on product type and take about 1 year

Chinese Competitors: Look Out!
 Local Chinese medical devices compete with foreign-made
products (Lepu, MicroPort, etc.)
 Chinese government is financially incentivizing local device
companies to make innovative products
 Chinese hospitals are encouraged to buy China-made devices
 Locally made innovative product -- fast track registration
 Chinese locally-made products compete globally with Western
products in Brazil, Indonesia
 Chinese companies will acquire more Western device companies in
the future
 MicroPort purchased Wright Medical’s OrthoRecon business
for almost $300 million; this is just the beginning
20
Chinese Drug Eluting Stent Market
 5 years ago, foreign imported products accounted for 75% of
the DES market in China – Medtronic, Abbott, Boston
Scientific and JNJ were the major players. Local Chinese
manufacturers accounted for just 25% of the market.
 5 years later, 75% of the DES market is controlled by local
Chinese DES manufacturing companies. Just 25% of the
market is controlled by foreign medical device manufacturers.

Chinese Device Companies Seeking FDA
Approval (Not just staying in China)
1. Hua Medicine (Shanghai, China)
 Developing a new treatment for diabetes
 Drug Sinogliatin 4th generation licensed from Roche
 Doing Phase II trials in China; also filing an IND in U.S. soon
2. Lepu Medical (Beijing, China)
 1.3 billion sales
 Main Class 3 products: stents, PTCA balloons, prosthetic heart valves
3. Mindray Medical International Ltd. (Shenzhen, China)
 1.2 billion sales (20% sales increase in Western Europe last year)
 Advanced IVD and medical imaging systems

China Orthopedic Market
 Very high growth (15-20% per year)
 Aging population: Over 200 million people over the age of 60
 Now, about 10 million people added every year
 Frost & Sullivan estimates the Chinese orthopedic implant
market will surpass Japan this year
 BCG estimates the Chinese Orthopedic implant market will
grow from 1.3 billion in 2013 to 4.1 billion in 2020
 Local orthopedic manufacturers: Tianjin Walkman, Shenzhen
Bone, Shanghai Bojin, Suzhou Kang Li, Shanghai Ortho
King, Hangzhou Zhegda, Beijing Bonovo

China Orthopedic Market Share 2014
Trauma MNC Local 60%
(40%) Companies
Joint MNC Local 35%

(65%) Companies
Spine MNC Local 40%

(60%) Companies

“B” Line of Products
 Western triple AAA products may not work in China
 Western medical device companies are increasing
sales to China with basic models and lower prices
compared to their top of the line Western products
 Many more local Chinese medical device
manufacturers are now making more sophisticated
products with better quality components, as demand
increases in China, the region, and globally

Bottled Water Story

Japan
 Medical device market about $27 billion (2nd
largest in the world for now)
 May be easier to crack today than China
 Japanese are very conservative
 Things move slowly – distributor search
 Japanese KOL’s are still “King”
 Open to new innovative technology and with
Japanese patents, copying is reduced
PMDA Consultation Meetings
for Medical Devices
Copyright © 2015 Pacific Bridge Medical 28

Japanese Distributor Search
 Will take more time than signing up distributors in
other Asian markets
 Japanese will only do business after building some
level of trust

Quality in Japan: Raincoat Story

Japan: Medical Device Registration
1. New Japanese regulations November 2014
2. Dossier: includes STED, QMS + FMA
3. More Class 3 devices – certification, not PMDA
approved
4. Normally risky products (Class 3/4) need expensive
local clinical trials in addition to foreign data for
PMDA approval
5. Stand alone software; Cellular and Gene Therapy
new regulation
Japan: Review Process with PMDA
Application for approval PMDA
Applicant 1. Submitting application
(Marketing 2. Document Review
Authorization
Holder) 5. Approval Document review based
on application for
approval, STED and
attachments.
4. On-site or document
inspection 3. Reliability Inspection
Manufacturing
Site On-site or document
(Manufacturer) 6. Periodic inspections inspection on conformity
(after approval) with reliability standards,
GLP, and GCP.

Can Overseas Clinical Data be Used for
Medical Device Approval in Japan?
FY2007 FY2008 FY2009 FY2010 FY2011 FY2012

Foreign clinical 20 26 32 29 38 23
data only
Both foreign and 4 2 6 2 5 3
Japanese clinical
data
Japanese clinical 24 14 14 19 14 23
data only
 Good foreign data can reduce the number of local clinical trials required in Japan
Source: PMDA Annual Report FY2012

Third Party Certification Will be Expanded
 Currently Class II products can be Ninsho (third party)
or Shonin (PMDA), depending on risk
 Obviously, certification easier with third party
certification
 Since November 2014, more certifications by third
parties for all Class II medical devices and some Class
III products
 However, PMDA will increase supervision of third
parties such as through yearly audits, and more QMS
data required to be reported to the PMDA and the quality
of the auditors and reviewers will also be ensured,
training provided
Medical Software to be Regulated in
Future
 Currently only a combination of software with hardware is regulated in
Japan
 This has made it difficult for companies who have had software
upgrades, as sometimes the entire device must then be submitted for
approval
 Software not in a medical device is not regulated
 As of November 2014, software will be regulated independently
 Software can be registered as a standalone product
 Standalone diagnostic software will need to apply for pre-market
product approval depending on the product’s risk – i.e., either
notification (todokede), certification (ninsho) or approval (shonin)
 No longer have to get approval for the entire device (software and
hardware) when there is just a software upgrade
New Regulations for Cellular and Gene
Therapy
 Cellular and tissue therapeutic products will be categorized differently
– getting them to market faster
 Current system: both gene therapy products and regenerative
and cellular therapy products are categorized under the drug
or medical device categories
 New system: both gene therapy products and regenerative and
cellular therapy products will be a separate categorization
(currently 4 categories – drugs, quasi-drugs, cosmetics, MDs
 future, 5 categories – drugs, quasi-drugs, cosmetics, MDs,
gene therapy products/regenerative and cellular therapy
products)
 Less clinical studies needed to get on market, more PMS
required than final approval
Taj Mahal, Agra, India

India’s Medical Device Market
 India’s medical device market is growing faster than at any time in the last
decade, with a projected growth rate of 12-16% over the next several years.
 If these rates hold, India’s medical device market -- currently valued at
$4.5 billion -- will be worth nearly $12 billion by 2022.
 With a population of 1.2 billion and a growing middle class, India has the
potential for strong growth.
 In 2012, Indians spent an average of $64 annually on healthcare,
compared to just $21 in 2002.
 India’s medical device market is dominated by foreign device companies,
which control roughly 70% of the market.
 US and European companies provide most high technology products like
bio-absorbable stents and diagnostic imaging equipment. But some
domestic Indian device companies now make Class 3 products

India’s Medical Device Market
 Local non-multinational medical manufacturers are small, low tech,
generally low cost, and medium quality; some are FDA/CE approved
 There are about 200 decent sized local manufacturers of medical
devices, of which 25 are large companies.
 Products include cardiac stents, syringes, needles, urine bags,
gloves, oxygen supply tubing, catheters, condoms.
 Multinational medical companies also manufacture/import into India
 These include: Bausch & Lomb, Baxter, Boston Scientific, J&J,
Zimmer, Smith & Nephew, Becton Dickinson, Siemens, Philips,
GE Medical Systems, Zeiss, B. Braun, Terumo.
 Multinationals have set up registries for products including
medicated stents and zyoptic surgery

India: Market Characteristics
 Quality of service in the private sector is good
 Government sector is low on quality and availability: patients
prefer private treatment if they have money
 85% of hospital costs arise from cardiology, oncology, trauma,
infections and maternity

Current List of Notified Medical Device
Families Requiring Registration in India
As of 2010, the CDSCO replaced a list of individual devices requiring registration
with a list of 14 product “families” or categories – no longer listing individual items
S.No Name of the Device Notification Date of
Number Notification
1 Disposable Hypodermic Syringes GSR 365 (E) 3-17-1989
2 Disposable Hypodermic Needles GSR 365 (E) 3-17-1989
3 Disposable Perfusion Sets GSR 365 (E) 3-17-1989
4 In vitro Diagnostic Devices for HIV, GSR 601 (E) 8-27-2002
HBsAG and HCV
5 Cardiac Stents S.O. 1468 (E) 10-6-2005
6 Drug Eluting Stents S.O. 1468 (E) 10-6-2005
7 Catheters S.O. 1468 (E) 10-6-2005
8 Intra Ocular lenses S.O. 1468 (E) 10-6-2005
9 IV Cannula S.O. 1468 (E) 10-6-2005
10 Bone Cements S.O. 1468 (E) 10-6-2005
11 Heart Valves S.O. 1468 (E) 10-6-2005
12 Scalp Vein Set S.O, 1468 (E) 10-6-2005
13 Orthopedic Implants S.O. 1468 (E) 10-6-2005
14 Internal Prosthetic Replacements S.O. 1468 (E) 10-6-2005
Current List of Notified Medical Device
Families Requiring Registration in India
 The following products are also regulated as 'Drugs’ under the
Drugs & Cosmetics Act
1. Blood Grouping Sera
2. Ligatures, Sutures and Staplers
3. Intra Uterine Devices (Cu-T)
4. Condoms
5. Tubal Rings
6. Surgical Dressings
7. Umbilical Tapes
8. Blood/Blood Component Bags

Product Registration Process for
Foreign Manufacturers
 Verify whether your product requires registration
 Develop a medical device registration strategy
 Appoint an Indian agent
 Prepare the Form 40 Application
 Ask your agent or PBM for a detailed list of the required documents
 Verify the list of documents against the DCGI check list related to your product
 Pay the required government fees (TR6 Challan)
 Submit your application to the DCGI
 Wait for your turn, provide clarifications to the queries generated from DCGI during the
review.
 Wait for the approval -- no official approval timelines are provided
 The product registration of medical devices can take 6-18 months if there are no clinical
trials
 Clinical trials generally not required in India for product registration
Re-registration in India / PMS Data
Required
 More and more re-registrations will require good PMS data
 If you can not rely on distributor to do this, utilize an outside
third party
 If you can’t get re-registration…..
 Can not sell product / competitors will say you are an unreliable
supplier and take your market share
 PBM has just set up a call center to collect PMS data in India

Attempts to Pass Comprehensive
Medical Device Regulation
 In August 2013 the Drugs and Cosmetics Bill (2013) was proposed by the Ministry of Health
 It has since been sitting in a Parliamentary Standing Committee that was
supposed to submit its recommendations to Parliament in December 2013.
 The proposed bill from India’s Ministry of Health (MOH) would:
 Require the comprehensive regulation of all medical devices manufactured in or imported
into India. (Not just the devices that require registration now)
 Create a new category of medical devices, regulated with a risk-based classification system.
 Introduce a 19 member Central Drug Authority (CDA) that would replace the
CDSCO; the CDA would appoint medical device officers and oversee the
licensing of all drugs, devices and cosmetics manufactured in or sold in India.
 Expand the current Drugs Consultative Committee to become the Drugs,
Cosmetics and Medical Devices Consultative Committee to advise regulators
and governments
 Give India’s Ministry of Health the power to create new rules regulating medical devices.
 Establish the Medical Device Regulatory Authority (MDRA) as the regulatory and
enforcement body for medical devices.
India Orthopedic Market
 Increasing middle class demands better health
care
 Growth is about 15% per year
 Quality not good, but improving; price is 40%
of Western-made products

Doing Business in India
“I do understand that many of you may have [a] difficult time in
doing business in India… I think, you need to stay the course.
You need to be there. We are a work in progress, because we are
a developing country. We still need to improve our systems and
we will continue to move in that direction. I can assure you that
as time goes by, doing business in India will not be as messy as
you think it is today.”
-- Arvind Mayaram, Indian Ministry of Finance

Nizamia Hospital (public) - Hyderabad

Saifee Hospital (private) - Mumbai

Business in Asia Done Through
Relationships, Not Lawsuits
 Relationships in the West are oftentimes different
than relationships in Asia
 Is the Western medical device company global or
really U.S. centric with a branch office in Asia?
 Understanding Asian business practices are different
than those in the West
 How do you send emails to Asian counterparts?
 Hand written holiday cards are a good way of
maintaining relationships

Business Cultural Issues
 Mr. Wang, was your father at Pearl Harbor?
 It is difficult to call you Tetsuya, can I call you Ted?
 I am going to Japan next week, can you set up
meetings for me?
 In Chinese companies, the boss calls the shots – In
Japanese companies, consensus

Pacific Bridge Medical
Thank you for your participation and attention!
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Connect with us today.

address: 7315 Wisconsin Avenue, Suite 609E
Bethesda, MD 20814
website: www.pacificbridgemedical.com
e-mail: info@pacificbridgemedical.com
Ames Gross e-mail: adgross@pacificbridgemedical.com
also: link to our blog/twitter from the website

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Asian Update and Orthopedic

Presented by Ames Gross, President

Copyright © 2015 Pacific Bridge Medical

Copyright © 2015 Pacific Bridge Medical

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Joint MNC Local 35%

Spine MNC Local 40%

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FY2007 FY2008 FY2009 FY2010 FY2011 FY2012

Source: PMDA Annual Report FY2012

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