Dive Brief:

• China has established “direct and indirect discrimination” against medical devices and suppliers from the European Union, according to a report from the European Commission published this week.
• The report found China limits EU-based device manufacturers’ access to its market through policies that favor local suppliers in an “unfair and discriminatory way.”
• Officials want to address the situation through “constructive dialogue” with China but warned they may restrict or exclude Chinese companies from bidding on government contracts in the EU if no solution is found.

Dive Insight:

The Commission began an investigation into how China procures medical devices in the public market in April 2024. Officials took the step after seeing evidence that China’s procurement market for medical devices has become more closed for EU companies. The resulting report confirms the concerns, according to the Commission, and sets the stage for retaliatory actions.

Through the investigation, the Commission gathered evidence on the impact of the “Buy China” policy and centralized volume-based procurement. The report describes policy and legal measures related to the “Buy China” policy that the Commission framed as evidence of a bias to local suppliers.

Administrative measures for procuring imported goods follow the principle, “in case of government procurement, domestic products shall be purchased,” according to the report. The Commission said there is a “specific and cumbersome approval procedure for the procurement of imported products when it is ‘really necessary.’”

Procurement procedures in China “suffer from a serious lack of transparency,” the report said, but the information that is available “indicates clearly the systemic and recurrent nature of measures and practices entailing discrimination.” The Commission found “direct and indirect discrimination in 87 % of the tenders” in an analyzed sample.

Discrimination has increased, the report found, with the proportion of tenders with “explicit prohibitions of imported medical devices” increasing from 36% in 2022 to 53% in the first half 2024. The data shows a “sustained increase of the explicit prohibition of imported medical devices among the tenders at stake,” the Commission said. 

The investigation also found volume-based procurement policies that “specifically refer to the aim of supporting domestic products.” Medtech companies based in the EU and U.S. have repeatedly identified volume-based procurement, which is intended to lower prices, as a factor that is constraining growth in recent years.

Believing it has clear evidence of unfair and discriminatory policies, the Commission is considering using the powers it gained through an instrument that came into force in 2022, the International Procurement Instrument, which is designed to enable actions that could be “used as leverage to induce partner countries to withdraw discriminatory measures.”

If the Commission finds actions are in the EU’s interest, it could restrict the ability of Chinese companies to bid on government contracts or exclude them from tenders altogether. The actions must be “specific and based on the principles of proportionality and efficiency” and consider “any possible supply issues,” the Commission said.