(Adds context, analyst comments)
SHANGHAI, April 1 A healthcare unit of General
Electric Co has recalled hundreds of incubator-like
infant "warmers" in China over safety concerns as Beijing
tightens oversight of the country's fast-growing medical device
GE Healthcare recalled 223 of the U.S.-produced warmers
after uncovering a potential safety issue that could restrict
oxygen supply to the child, the China Food and Drug
Administration (CFDA) said in a statement on Tuesday.
The cot-like warmers are used in hospitals to regulate the
body temperature of tiny infants unable to keep themselves warm
due to a lack of body fat. The devices also regulate airflow and
monitor vital signs.
The recall announcement coincides with tough messages from
China's Cabinet this week that the government would increase
oversight and fines in the medical device sector to address
The crackdown could intensify the challenge for
international medical device makers such as UK-based GE
Healthcare, as well as rivals Siemens AG and
Medtronic Inc, as they look to tap into the sector. The
Chinese market is estimated to double to more than $50 billion
by 2020, according to research firm Global Data.
Chinese firms who fail to meet the tougher regulations could
also be forced out of business, consolidating the industry and
strengthening larger local players, analysts said.
GE Healthcare has issued a warning note to clients about the
problem and will replace the affected units free-of-charge, said
the CFDA, which is overseen by the country's Cabinet.
Neither party gave a total value of the recalled goods, but
infant warmers can cost anywhere from a few thousands dollars to
more than $20,000 per unit.
The CFDA said the oxygen and air fittings on the back panel
of the warmers had been reversed in some cases during assembly,
which could prevent the efficient regulation of air and oxygen
flow to the infant.
This could lead too little or too much oxygen being
delivered to the child, a potentially fatal issue.
GE Healthcare's China unit said in an emailed statement that
it had moved "swiftly to resolve the issue" and acted in
accordance with Chinese laws and regulations.
"While site inspections are still ongoing, to-date no
reversion has been found in inspected units in China, and no
patient injuries have been reported," GE Healthcare said.
GE has been forced to recall similar products in other
markets including the United States, where it recalled warmers
and resuscitation units late last year because of issues with
the supply of oxygen to the baby, according to the U.S. Food and
GE reported the voluntary recall to Chinese regulators
earlier this month after identifying the potential safety issue,
and it has already taken measures to resolve it, the CFDA said.
It had earlier flagged the potential issue to clients.
The recalled warmers include "Panda" and "Giraffe" branded
warmers, which were manufactured in the United States and
imported to China, GE Healthcare said.
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.
China's medical products market currently stands at around
$20 billion and is expected to grow at up to 20 percent annually
over the next few years, according to McKinsey & Co.
This has attracted firms including Siemens, GE, Koninklijke
Philips NV, Johnson & Johnson and Medtronic,
which compete with local companies such as Mindray Medical
International Ltd and China Resources Wandong Medical
Equipment Co Ltd.
An increasing focus on product quality and safety has raised
the regulatory scrutiny firms operate under in the market, which
analysts and lawyers say would spur an industry shake-out.
"At the end, poor and incapable companies will be
eliminated, while large local players can focus their strength
on R&D and innovation, perhaps taking over market share from
foreign players," said Jason Loh, a Shanghai-based medical
expert at research firm SmithStreet Solutions.
(Reporting by Adam Jourdan; Editing by Ryan Woo)