This was presented at Canon\'s Bio-Med Boston Convention on April 7th 2011. It concerns the opportunities and obstacles presented by China to the US medical device industry.

1. Waiting for A
Superman
China Could Save Medical Device
Sales
By John Jarowski

2. National Export Initiative
 The NEI is a major part of Obama’s economic
recovery plan.
 Aimed at doubling US exports to developing
markets over the next five years.
 The NEI targets “high growth, high potential
sectors, like medical devices”

3. Medical Device Exports in Crisis?
 US Commerce Secretary Locke and Trade
Representative Ron Kirk visit Memphis in
October 2010 to promote NEI
 The medical device trade surplus has been
reduced from $6 billion in 2005 to $3 billion
in 2010.

4. Minnesota Resounds Alarm
 Minnesota is hub of medical device
manufacturing (home of the medical device
giant, Medtronic).
 Minnesota: Exports of medical and optical
products decreased 10% to $723 million.
 This is the only sector in the Minnesota
economy to register a decline.

5. Why Minnesota (Medtronic) Matters
 Medtronic’s headquarters: Site of a key speech
by president Obama to promote NEI.
 41% of Medtronic’s revenue ($15.8 billion) is
generated by international sales.
 Medtronic CEO William Hawkins suggested in
June 2010 that this percentage would rise to
53% by 2015.

6. Not All Bad
 Recent meetings between president Obama and
Chinese president Hu Jintao renewed
commitment to increasing trade relationship
 China is third-largest export market for US.
 Exports will exceed $100 billion dollars in 2011
 Medtronic sales of spine products in China rose
20% in 2010

7. US Exports At A Glance

8. Why The Boom in China?
 China is one of the largest importer of goods.
 Access to the World Trade Organization (WTO)
China fueling rapid growth.
 China second largest and the second fastest
growing economy in world.
 Healthcare reform is top priority.
 China’s medical device market relies largely on
imports.

9. Growth In US Exports to China

10. Growth In US Exports To China

11. Why China? Fast Facts
 China is spending $123 billion in medical
through 2011
 Preference for Western Technology
 Reduction of the tariff rate to 4% eases trade

12. Why China?: Fast Facts
 US medical device industry exports $1.23 billion
per year to China.
 The market for medical devices in China is at
$14 billion
 This number is projected to double by 2014.

13. Obstacles to China
 Device Registration (SFDA)
 Legal Protection-Intellectual Property
 Distribution
 Cultural Barriers
 Ethical Concerns

14. Device Registration (SFDA)
 Classification of devices is different in China
 Device needs FDA approval before obtaining
SFDA approval
 Devices with electrical wiring require CE mark
 Class III device require clinical trials (lengthy
and expensive)

15. Intellectual Property Protection
 China is one of the world’s largest offenders of IP
violations
 In 2007, the office of the U.S. Trade Representative put
China on watch list
 Shenzen: Progress in IP Protection
 Microsoft lawyer: Progress but still needs improvement

16. Rise in Patent Applications
 Over the last decade, patent applications in China grew
by an average rate of 23% per year.

17. Distribution Channels
 Difficult to build
 Limited in resources
 Tend not to promote or advertise products

18. Cultural Barrier
 Yahoo vs. Baidu:
 Yahoo did not consider its audience.
 Baidu had a live messaging system that was
considered more user friendly to the Chinese.

19. Ethical Concerns
 Bribery: Dept of Justice triples investigations.
 China ranks third in most bribery cases in the
world.
 US Attorney General Eric Holder called the
problem “one of the highest priorities of the
Department of Justice.”
 Johnson and Johnson/Diagnostic Products

20. Resolution: Find all inclusive
services that:
 Are reputable or have reputable partners.
 Know your audience!
 Provide legal assistance for product registration
and IP protection.
 Will advertise your product and give it the best
market exposure possible.

21. Why All Inclusive Services?
 Simplifies the process
 Reduces costs
 All the tools are available
 They are innovative

22. Conclusion: Stay the Course!
 China’s potential value to the medical device industry is
alluring, but the obstacles related to entering the
Chinese marketplace are considerable and the cause of
much consternation. Nevertheless, there are tested
methods available for medical device companies that
want to enter this market that are affordable, efficient,
and effective. China should not be taken off the radar
for international sales projections. Rather, it should be
approached with care and great anticipation of the
opportunities presented by expanding markets there.