SHANGHAI, March 31 China will increase fines and
toughen oversight of the country's fast-growing medical device
sector as it overhauls decade-old laws to stamp out corporate
The new rules, which will come into effect from June, raise
the top fine for illegal manufacturing or selling of medical
equipment to 20 times the value of the goods, according to a
document published on the website of the State Council, or
cabinet, on Monday. The original law, established in 2000, set a
cap at five times the value.
China's medical device market may double to more than $50
billion by 2020, according to research firm Global Data, and is
a magnet for international firms looking to target the country's
population of nearly 1.4 billion.
Medical device makers in China have drawn the glare of
regulators before, hit by allegations of corruption and bribery.
Some firms were also targeted last year for overpricing.
U.S. authorities have fined AGA Medical Corp and Biomet Inc
millions of dollars for corporate malpractice in China, while
Germany's Siemens AG had faced a lawsuit in the United States
over its China operations, a case which was dismissed last year.
"The new rules increase the range of possible punishments,
and the level of fines for the most serious violations,"
government officials said in a Q&A published on the State
Council's website. Violations include operating without relevant
licences or misleading regulators.
Under the new regulations, authorities will categorise
medical devices into three segments, depending on the level of
potential risk to consumers, with the highest risk products
being put under the greatest scrutiny. Systems to monitor the
industry and recall products will be reinforced.
"In recent years we've seen some issues of illegal
behaviour, and the legal foundation for striking back has not
been clear enough. To resolve the problem, we needed a complete
revision of the existing legislation," the officials added.
In cases where the illegal equipment is valued at less than
10,000 yuan ($1,600), the fine can be up to 100,000 yuan. If the
value of the devices is above 10,000 yuan, the fine can be
between 10 and 20 times the value the goods involved.
In the most serious cases, firms which sell products
illegally could be banned from applying for an operating license
for up to five years.
($1 = 6.2122 yuan)
(Reporting by Adam Jourdan; Editing by Ryan Woo)