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Current Regulatory Challenges in Asia Presented by: Ames Gross President of Pacific Bridge Medical www.pacificbridgemedical.com Copyright © 2007 Pacific Bridge Medical. All rights reserved. This content is protected by US and International copyright laws and may not be copied, reprinted, published, translated, resold, hosted, or otherwise distributed by any means without explicit permission. Disclaimer: the information contained in this report is the opinion of Pacific Bridge Medical, a subsidiary of Pacific Bridge, Inc. It is provided for general information purposes only, and does not 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. March 29, 2007
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Page 1: Current Regulatory Challenges in AsiaPersonal Connections (Guanxi) Earning respect and trust should be considered first step to business interaction Find a mutual friend to serve as

Current Regulatory Challenges in Asia

Presented by: Ames GrossPresident of Pacific Bridge Medicalwww.pacificbridgemedical.com

Copyright © 2007 Pacific Bridge Medical. All rights reserved. This content is protected by US and International copyright laws and may not be copied, reprinted, published, translated, resold, hosted, or otherwise distributed by any means without explicit permission. Disclaimer: the information contained in this report is the opinion of Pacific Bridge Medical, a subsidiary of Pacific Bridge, Inc. It is provided for general information purposes only, and does not 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.

March 29, 2007

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Overview of Asia

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Asia Medical Device Markets

$ 82 millionPhilippines

$ 165 millionIndonesia$ 1.5 billionIndia

$ 550 millionThailand$ 1.5 billionTaiwan$ 2.5 billionKorea

$ 450 millionSingapore

$ 330 millionMalaysia$ 25 billionJapan

$ 550 millionHong Kong$ 5 billionChina

Market Size (US$)Country

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JAPAN

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DemographicsPopulation: 130 millionGDP real growth rate: 2.8%GDP per capita PPP: $31,600Unemployment rate: 4.1%

Source: CIA World Factbook

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Healthcare SystemMain regulatory body is Ministry of Health, Labor, and Welfare (MHLW)

Responsible for ensuring good living standards, promoting development of new health programs or innovations to improve lives.

The Pharmaceuticals and Medical Devices Agency (PMDA) is branch under MHLW.

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Consultation Sessions1st Consultation:

Offers applicant initial feedback on their situationTakes place 7-10 days following consultation requestFree of charge

2nd Consultation:Provides assistance with application without prior review of application documents (i.e. new vs. partial change application)Cost: about 36,000 yen (about $350 USD)

3rd Consultation:MHLW gives recommendation on expectations for regulatory processRecommendation provides insight into what the MHLW is likely to do, but is non-binding Cost: about 1,700,000 yen (about $16,000 USD)

There are new consultations types that the PMDA is currently proposing.

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Product RegistrationMAHStrong dossiers, less Q&AMore clinical trials (foreign clinical data)Severe shortage of qualified regulatory professionals

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ReimbursementAfter product registration, one must apply for reimbursement.Four different reimbursement classes:

A, B, C, FProducts are reimbursed based on a service fee or on the cost of the device itself depending on the reimbursement category.

Central Social Insurance Medical Council (Chuikyo) sets reimbursement points and prices for medical devices and drugs; works with MHLW.

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AuditsThere are two types of audits required for foreign manufacturers:

Building and facilities accreditation audit required before product registrationQuality Management Systems (QMS) compliance inspection

In both types of audits, PMDA will do a document review.

In some cases, foreign audits will be done.

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Intercultural CommunicationConsensusNo direct confrontationBowing and gifts

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China

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DemographicsPopulation: 1.31 billionGDP real growth rate: 10.5%GDP per capita (PPP): cities ($6,000); countryside ($3,000)Unemployment rate: 4.2% (urban areas)

Source: CIA World Factbook

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Healthcare SystemIncreased spending on healthcare, but over 80% of population is without health insurance.50% of people who should seek medical care do not.47% of urban citizens and 31% of rural inhabitants self-medicate instead of going to hospitals.Changing epidemiological profile

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Product RegistrationClassificationSpecificationTestingClinical Trials

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Pricing Policy for Medical DevicesSome medical device products can be reimbursed or co-paid by National Essential Medical Insurance and prices are controlled by the government.National Development and Reform Commission (NDRC) issues price caps.NDRC has issued various price caps, such as only allowing the price of disposable medical devices increasing 40% or less from manufacturer to patient.NDRC also plans to strengthen price monitoring and lower sales margins for medical devices sold to hospitals.

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Increased SupervisionSFDA has increased its QA and GMP enforcement with recent bribery scandal of former SFDA head.Increased unannounced GMP inspections, establishment of SFDA’s regional branch responsibilities in terms of daily administration and supervision of medical device manufacturers.Increased inspection to ensure proper labeling and translation of key documents in Chinese.

Page 18: Current Regulatory Challenges in AsiaPersonal Connections (Guanxi) Earning respect and trust should be considered first step to business interaction Find a mutual friend to serve as

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OpportunitiesProduct SalesLocal ManufacturingClinical TrialsR&D

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Intercultural CommunicationPersonal Connections (Guanxi)

Earning respect and trust should be considered first step to business interactionFind a mutual friend to serve as intermediary to introduce you to potential business associates

If you have a strong relationship with your Chinese partner, everything is possible

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China Factories

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India

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DemographicsPopulation: 1.1 billionGDP real growth rate: 8.5 %GDP per capita (PPP): $3,700Unemployment rate: 7.8 %

Source: CIA World Factbook

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Medical Device MarketLocal non-multinational medical manufacturers are small, low tech, generally low cost, and medium quality: some are FDA/CE approved.

There are about 120 significant local medical companies, of which 25 are large companies.Products include syringes, needles, urine bags, gloves, oxygen supply tubing, condoms, stents.

Multinational medical companies also manufacture/import into India.

These include: Bausch & Lomb, Baxter, Boston Scientific, J&J, Becton Dickinson, Siemens, Philips, GE Medical Systems, Zeiss, B. Braun, Terumo.

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Healthcare SystemPublic sector share is 70% and private sector is 30% of healthcare delivery.Healthcare delivery market has recently grown at 13% per year and is expected to grow at 15% per year over the next 5 years.Growth will be in both public and private sectors, though higher in the private sector.As of now only 25% of population has access to allopathic healthcare, as other systems of medicine also used.

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Definition of DeviceThere is NO specific definition for a “device”in the Drug & Cosmetics Act (DCA).DCA defines a “drug” as including any medicine or substance which is used for treatment, prevention, mitigation, diagnosis of disease or condition, and any devices notified as drugs by the Government.

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Product RegistrationCertain devices specified for regulation include disposable hypodermic syringes, tubal rings, perfusion sets, IVD kits for HIV/HCV, surgical dressings etc.After March 2006, new devices were added including cardiac stents, drug eluting stents, catheters, heart valves, orthopedic implants, etc.Device registration uses drug forms and laws as templates.

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Insurance & ReimbursementThere is no single national health insurance system.What exists is a number of schemes of free/ concessional treatments and insurance, mainly for hospitalization.There is no system of pre-approval of drugs or devices for treatment / reimbursement.

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Proposed Structure for Device RegulationCreate a Central Drug Authority of India “CDAI” (like the USFDA) headed by the Drug Controller General of India (DCGI), in place of the Central Drugs Standard Control Organization (CDSCO)All manufacturing and import licensing with CDAI, State FDAswill inspect factories and grant wholesale/ retail licenses.Define Medical Devices and nutraceuticals specifically under the DCA and provide rules and guidelines for their regulation.CDAI has been approved by the Cabinet but legislation still pending.

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Intercultural CommunicationMid-east mentality, not East Asian cultureWho can you trustInfrastructure problems

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KoreaKorea Food and Drug Administration (KFDA), main regulatory body under Ministry of Health and Welfare.Devices MUST be approved in countries of manufacture before product registration in Korea can start.Medical Device Act enacted in 2003, full enforcement planned by May 2007 To sell devices in Korea, you need to have a product license, Korean Good Manufacturing Practice certification and a Device Business License (Class II and III; Class I just needs a notification to government).

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SingaporeCurrently, voluntary registration for medical devices.Main regulatory body is Health Sciences Authority (HSA). New Health Products Bill presented in January 2007.

Regulate manufacture, import, supply, presentation and advertisement of medical products

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Hong KongVoluntary registration under Medical Device Administrative Control System (MDACS).Medical Device Control Office (MDCO) is main regulatory body. Conformity Assessment Framework official for medical devices November 2006.

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MalaysiaOnly radiation-emitting devices such as x-ray equipment have specific requirements for import and registration now.Only recently began regulations on medical devices with introduction of Voluntary Registration of Medical Devices Establishments (MeDVER) in 2006.

Web-based registration system.

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Cultural IssuesIt is important to understand the cultural and business norms that are unique to a specific country or ethnic group

Western Approach Eastern Approach*Do a deal *Build relationships

*Maximize short-term profits *Establish long-term foundations

*Assess competitive capabilities *Assess integrity and trust

*Be frank *Don’t deliver bad news

*Make changes fast *Move when ready

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ConclusionNext few years important as more nations create regulatory authorities to oversee industry.With ever-changing regulations, medical device companies and manufacturers will need to keep abreast of this evolving regulatory climate.In each market, have a well thought-out strategy.

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Thank you for your participation

and attention!


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