Originally Published MDDI January 2005

NEWSTRENDS

Erik Swain

Asian medical device markets have the potential to be very lucrative in the coming years. However, device companies must not expect to have success in those nations until they understand the business culture there. They also must be wary of counterfeiting and other intellectual-property theft.

Asia currently accounts for 30% of new healthcare expenditures worldwide, said Ames Gross, president of Pacific Bridge Inc. (Bethesda, MD) in a session at the annual meeting of the Regulatory Affairs Professionals Society (RAPS) in October. And, he said, Asia's healthcare spending is expected to rise another 45% by 2005. But, he said, some nations have onerous requirements for market entry, sometimes even asking for proprietary information that U.S. firms would consider off-limits.

Taiwan, for example, when registering a plant not only asks for a list of products made at the plant and a layout of the plant, but a manufacturing flow chart for each product. This latter requirement is something to be cautious about, he said.

"Taiwan has a strong tendency to copy products," he said. "I advise changing some steps or ingredients so they can't be reverse-engineered."

Meanwhile, in China, he said, device manufacturers must be very careful about whom they do business with.

"Private companies have only been around for 10–12 years. You need to find out who owns them, how well capitalized they are, and what certifications they have. Many don't make the products they claim to sell, and many are so poorly capitalized that they disappear quickly. But a number of factories are well developed and follow good manufacturing practices. You just have to keep your eyes on everything."

However, he added, the device registration process in China has become more transparent, and good clinical practices are being enforced.

In South Korea, he said, the barrier to entry is not excessive regulation or corruption, but is rooted in the nation's culture. "It is not easy to do business there unless you're doing it with friends," he said. "In the West, if we see a fit, we want to do business right away. In many places in the East, they want to build a relationship first."

"You must understand that each Asian culture is different if you are going to be successful, and remember that whom you know may be just as important as the paperwork," he said.

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