The volume-based procurement (VBP) policy of the medical devices market (valued at $45bn in 2021) in China is undergoing a reconstruction phase presently. With an intention to integrate a larger purchasing volume with a lower price and check the inflated prices of high-value medical devices, the VBP policy in China is undergoing through a rebuilding phase, finds GlobalData, a leading data and analytics company.

According to GlobalData, the trends of VBP in 2022 include the increase of device types, expansion of geographic coverage, and improvement of procurement rules in China, which will make a significant impact on the high-value devices market.

Tina Deng, MSc, Principal Medical Devices Analyst at GlobalData, comments: “The number of devices on the national or provincial VBP lists will be continually expanding in 2022. The biggest project of VBP that began in 2021 was the national procurement of hip and knee implants. Other provincial VBP programs include surgical staplers, intraocular lenses, hemostatic materials, adhesion barriers, and dental implants. Trauma fixation devices and spinal implants are on the national procurement list in 2022.

“Other devices with high pricing and volume are likely to be targeted by VBP programs, such as interventional cardiovascular and neurovascular devices, surgical energy devices, dialysis disposables, and central venous catheters. Some devices listed in the VBP programs of certain cities or provinces will be added to larger geographic regions at the multi-provincial and national levels.  Specific rules of VBP have been updated to ensure that better products with reasonable prices are used clinically, not only considering the lowest bidding price.”

According to announcement of the procumbent results, there has been a significant price reduction of an average of nearly 80% and a maximum of 97.9% for the covered devices. While VBP caused a sharp drop in device prices, it increased the device penetration in the market. Some patients who were reluctant to undergo surgical treatments because of financial constraints are now able to undergo the procedure.

Deng concludes: “Multinational companies need to optimize the supply chain and control operation costs to gain advantages during VBP bidding. Additionally, creating a diverse product portfolio and making product differentiation strategy helps meet product requirements in VBP. Manufacturers need to keep investing in R&D to improve technology and develop new products, especially for devices that are not on the VBP list.

“Small manufacturers have to lower prices to a minimal profit margin to win the VBP bidding. Without profit for a long time, most are unlikely to survive under VBP. While manufacturers integrate their sales forces and sell to healthcare facilities directly, a most of the distributors who sell the high-value devices on VBP lists are being forced out.”