Bbk korea medtech market report 2012 neu

Market Study – Medtech Industry in Korea.

December 2012. osec.ch

Medtech Industry in Korea.

Title.

Medtech Industry in Korea.

Language.

English

Number of pages.

75 pages

Content.

The report provides insights into Korea’s growing market for medical devices. This includes an overview, outlook, such as the shift from treatment to prevention, characteristics, policy and strategy.

The role government plays is discussed and information on key regulations as well as information on import procedures are included in the report.

The section on the Korean Medtech sector includes the Dental Industry, Orthopedics and Trauma, Disposable Goods, Reusable Instruments, Rehabilitation Machines, Laboratory Machines & InVitro Diagnostics and Ophthalmologic Devices (market data, key players, incl. foreign).

A full section of the report is dedicated to show where market opportunities for Swiss SMEs in the medical device market in Korea exist. Recommendations for market entry are given.

With an import dependency of 65% and considerable market growth from USD 2,019 million in 2006 to USD 2,956 million in 2011 and a projected USD 4,030million in 2016, a number of opportunities exist in the growing Korean medical device market for dedicated Swiss SMEs with a long-term market view.

Author.

Other Industry Reports.

2

| Medtech Industry in Korea

Mr. Yongha Na, President, Medipert

Are you interested in other industry reports for other sectors and countries? Please find here more of them.

Content.

1.

EXECUTIVE SUMMARY .................................................................................................. 7

2.

MEDICAL DEVICE INDUSTRY OVERVIEW & TREND ................................................... 8

2.1 2.1.1 2.1.2

MEDICAL DEVICE INDUSTRY TREND .................................................................................................................... 8 Paradigm Shift ................................................................................................................................................. 8 Industry - Technology Trend ............................................................................................................................ 9

2.2 2.2.1 2.2.1.1 2.2.1.2 2.2.2 2.2.2.1 2.2.2.2 2.2.2.3 2.2.2.4 2.2.2.5 2.2.2.6 2.2.3 2.2.4 2.2.5

OVERVIEW AND OUTLOOK FOR MEDICAL DEVICE M ARKET IN KOREA................................................................... 9 Overview ......................................................................................................................................................... 9 Demographics and National Medical Expense ............................................................................................. 11 Health Workforce and Medical Institutions Trend ......................................................................................... 12 Overview of Korea Medical Device Market ................................................................................................. 13 Korea Medical Device Market Size ............................................................................................................... 13 Ratio of Medical Device Industry among Total Industry ................................................................................ 15 The Number of Companies in Medical Device Industry ................................................................................ 15 The Number of Employees Working in Medical Device Companies ............................................................ 15 The Number of Registered Medical Device Products ................................................................................... 16 Medical Device Production by Classification ................................................................................................ 16 Medical Device Trade Trend ......................................................................................................................... 17 Medical Institutions’ Domestic Medical Device Purchasing Rate.................................................................. 19 Korean Medical Devices by Sector ............................................................................................................... 19

2.3 2.3.1 2.3.2 2.3.3 2.3.4

DISTINGUISHED CHARACTERISTICS OF KOREA MEDICAL DEVICE INDUSTRY ....................................................... 21 Vulnerable Industry Structure & Trade Deficit ............................................................................................... 21 Immature Technology Level .......................................................................................................................... 21 IT Convergence Medical Information System, Oriental Medicine Device Development .............................. 22 Conglomerates Entering into Medical Device Market ................................................................................... 22

2.4 2.4.1 2.4.2 2.4.2.1 2.4.2.2 2.4.2.3 2.4.2.4 2.4.3 2.4.4

POLICY AND STRATEGY ................................................................................................................................... 22 Medical Device Registration Regulation Improvement ................................................................................. 22 R&D Project Plan .......................................................................................................................................... 23 Consumer Affiliated Core Strategy Product Development Expansion .......................................................... 23 Business Support Infrastructure Establishment ............................................................................................ 23 Medical Device Win-Win Forum .................................................................................................................... 23 Advanced Clinical Trial Capability Establishment ......................................................................................... 24 rd Propulsion of IEC60601-1 3 Edition ............................................................................................................ 24 Rebate Dual Punishment .............................................................................................................................. 25

3.

THE ROLE OF GOVERNMENT ..................................................................................... 27

3.1 3.1.1 3.1.2

GOVERNMENT ORGANIZATIONS FOR MEDICAL DEVICE INDUSTRY ...................................................................... 27 Medical Device Organization within KFDA ................................................................................................... 28 Umbrella Organization of KFDA .................................................................................................................... 28

3.2 3.3 3.3.1 3.3.2 3.3.2.1

HISTORY OF MEDICAL DEVICE M ANAGEMENT SYSTEM ...................................................................................... 29 MEDICAL DEVICE REGULATIONS ...................................................................................................................... 29 Key Regulations on Medical Devices ............................................................................................................ 29 Definition of Medical Device and Its Classification........................................................................................ 30 The definition of Medical Device ................................................................................................................... 30

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3.3.2.2 Classification of Medical Device.................................................................................................................... 30 3.3.2.3 Classification by Name of the Product .......................................................................................................... 31 3.4 3.4.1 3.4.1.1 3.4.1.2 3.4.1.3 3.4.1.4 3.4.1.5 3.4.1.6 3.4.2 3.4.2.1 3.4.2.2 3.4.2.3 3.4.2.4 3.4.2.5 3.4.3 3.4.4 3.4.4.1 3.4.4.2 3.4.4.3

IMPORT PROCEDURE OF MEDICAL DEVICE ........................................................................................................ 32 Product Registration ...................................................................................................................................... 32 Products Subject to Approval vs. Notification ............................................................................................... 32 Product Approval Review Period & Fee ........................................................................................................ 33 Pre-market Notification .................................................................................................................................. 33 Pre-market Approval ..................................................................................................................................... 33 Required Documentation for Product Approval Evaluation ........................................................................... 35 Requirements for Clinical Trial Application .................................................................................................... 36 GMP Procedure............................................................................................................................................. 37 Overview ....................................................................................................................................................... 37 History of Korean GMP ................................................................................................................................. 38 GMP Inspection Standards ........................................................................................................................... 38 GMP Inspection Type .................................................................................................................................... 38 Dossier for GMP Inspection .......................................................................................................................... 38 Device Business License (DBL) .................................................................................................................... 39 Medical Device Handler ................................................................................................................................ 39 Medical Device Manufacturer and Importer .................................................................................................. 39 Medical Device Refurbisher .......................................................................................................................... 40 Medical Device Distributor or Renter ............................................................................................................ 40

3.5 3.5.1 3.5.2 3.5.3

HEALTH INSURANCE ........................................................................................................................................ 40 Health Insurance Medical Treatment Materials ............................................................................................. 40 Treatment Material Registration Procedure .................................................................................................. 42 Treatment Material Reevaluation .................................................................................................................. 42

4.

KOREAN MEDTECH SECTOR ...................................................................................... 44

4.1 4.1.1 4.1.2 4.1.3

HOSPITAL INSTALLATIONS ................................................................................................................................ 44 Hospital Installations Market Size ................................................................................................................. 44 Number of Companies in Hospital Installations Market ................................................................................ 45 Key Player ..................................................................................................................................................... 45

4.2 4.2.1 4.2.2 4.2.3 4.2.4

DENTAL INDUSTRY ........................................................................................................................................... 45 Dental Market Size ........................................................................................................................................ 45 Number of Companies in Dental Market ....................................................................................................... 46 Key Players ................................................................................................................................................... 46 Major Foreign Suppliers of Dental Devices ................................................................................................... 46

4.3 4.3.1 4.3.2 4.3.3 4.3.4

ORTHOPEDICS AND TRAUMA ............................................................................................................................ 47 Orthopedics and Trauma market size ........................................................................................................... 47 The Number of Companies in Orthopedics and Trauma market .................................................................. 47 Key Players ................................................................................................................................................... 47 Major Foreign Suppliers of Orthopedics and Trauma market ....................................................................... 48

4.4 4.4.1 4.4.2 4.4.3 4.4.4

DISPOSABLE GOODS ....................................................................................................................................... 48 Disposable Goods Market Size ..................................................................................................................... 48 Number of Companies in Disposable Goods ................................................................................................ 49 Key Players ................................................................................................................................................... 49 Major Foreign Suppliers of Disposable goods market .................................................................................. 49

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| Medtech Industry in Korea

4.5 4.5.1 4.5.2 4.5.3 4.5.4

REUSABLE INSTRUMENTS ................................................................................................................................ 50 Reusable Instruments Market Size ............................................................................................................... 50 Number of Companies in Reusable Instrument ............................................................................................ 50 Key Players ................................................................................................................................................... 50 Major Foreign Suppliers of Reusable Instruments market ............................................................................ 50

4.6 4.6.1 4.6.2 4.6.3 4.6.4 4.6.5

REHABILITATION M ACHINES ............................................................................................................................. 51 Rehabilitation Machines Market Size ............................................................................................................ 51 Number of Companies in Rehabilitation Machines ....................................................................................... 51 Key Players ................................................................................................................................................... 52 Major Foreign Suppliers of Reusable Instruments Market ............................................................................ 52 Level of Technology in Rehabilitation Devices .............................................................................................. 52

4.7 4.7.1 4.7.2 4.7.3 4.7.4

LABORATORY M ACHINES & IN-VITRO DIAGNOSTICS .......................................................................................... 53 Laboratory Machines & In-Vitro Diagnostic Market Size............................................................................... 53 Number of Companies in Laboratory Machines & In-Vitro Diagnostics ........................................................ 53 Key Players ................................................................................................................................................... 53 Major Foreign Suppliers of Laboratory Machines & In-Vitro Diagnostic ....................................................... 53

4.8 4.8.1 4.8.2 4.8.3 4.8.4

OPHTHALMOLOGIC DEVICES ............................................................................................................................ 54 Ophthalmologic Devices Market Size ........................................................................................................... 54 Number of Companies in Ophthalmologic Devices ...................................................................................... 54 Key Players ................................................................................................................................................... 54 Major Foreign Suppliers of Ophthalmologic Devices .................................................................................... 55

5.

OPPORTUNITIES FOR SWISS SMES........................................................................... 56

5.1

Overview ...................................................................................................................................................... 56

5.2 5.2.1 5.2.2 5.2.3 5.2.4

SWISS COMPANIES IN KOREAN MEDICAL DEVICE M ARKET ................................................................................ 56 Korean Medical Device Market Size & Swiss Medical Device Export to Korea ........................................... 56 Korea’s Medical Device Import Value and Amount by Product Classification .............................................. 56 Import Value & Amount by Product Classification ......................................................................................... 57 Top 30 Swiss Companies present in Korea .................................................................................................. 58

5.3 5.3.1 5.3.2 5.3.3

SUGGESTIONS AND RECOMMENDATIONS FOR SWISS COMPANIES PLANNING TO PENETRATE KOREAN M ARKET... 59 Understanding of Regulatory Requirements ................................................................................................. 59 Preparation to GMP Inspections for Manufacturing Site ............................................................................... 59 Preparation to IEC 60601-1 3rd Edition ........................................................................................................ 60

5.4 5.4.1 5.4.2 5.4.3 5.4.4

OPPORTUNITIES .............................................................................................................................................. 60 Market Entry through Multi-National Clinical Trial ......................................................................................... 60 Strategic Alliance through OEM with Korean Medical Device Manufacturer ................................................ 60 Technical Partnership with Korean Medical Device Manufacturers .............................................................. 61 Prospective Products .................................................................................................................................... 61

6.

CONCLUSION. ............................................................................................................... 63

7.

APPENDIX...................................................................................................................... 64

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Appendix1.

Appendix2.

Appendix3.

Appendix4.

Appendix5.

Appendix6.

6

Top 30 Production Products by Value Top 30 Export Products by Value Top 30 Import Products by Value Product Categories Scope of Acceptable Economic Benefit based on Enforcement Regulation of the Medical Dice Rebate Dual Punishment The documents to be submitted Technical file review Application Source and Reference Site

| Medtech Industry in Korea

1. Executive Summary.

As Korea enters into aging society, and peoples’ demand for better health and welfare as well as higher quality of life increases, the expense for health and medical treatment in Korea is growing every day. As the medical device in modern society is the essential element in providing health and welfare services, the expense spent to purchase medical devices is also increasing.

Since the medical device paradigm is shifting from treatment to prevention and health care, the medical expense and medical device market size is continuously expanding and is expected to grow in the future, also.

- Medical Device Market Size (Espicom) : 2006 USD 2,019 million -> 2011 USD 2,956 million -> 2016 USD 4,030million.

Korean medical device industry in 2011 recorded USD 3,038 million of production and USD 1,673 million of export.

However, it still depends 65% of its demand on imported products due to its low competitiveness generated from its lack of technology, capital, and awareness. There are around 2,000 medical device manufacturing companies. 78% of them produce less than USD 0.9 million amount, and 70% of them are hiring less than 100 employees. Korea’s chronic trade deficit is persisting that in 2011 it recorded USD 848 million.

To cope with the business environmental change such as FTA, Korean government is improving the medical device registration regulation, and establishing business support infrastructure to secure competitiveness. The Korean medical device market is still considered as a challenging market for foreign companies, however such challenge can be easily overcome by understanding its market trend (which is continuously expanding) and device related regulation.

In this report, applied exchange rate is referred to Korea Exchange Bank’s Annual Average Exchange Rate. Some figures are rounded off by its marking unit that the total may not be exactly match to original figure.

Currency 1 USD

2004 1,144.67

2005 1,024.31

<Annual Average Exchange Rate by Year> (unit : KRW) 2006 2007 2008 2009 955.51

929.20

1,102.59

1,276.40

2010 1,156.26

2011 1,108.11

Source: Bank of Korea

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2. Medical Device Industry Overview & Trend.

2.1 Medical Device Industry Trend 2.1.1 Paradigm Shift From Treatment to Prevention The aging population, quality of life, and welfare policy is a rising issue in the world. Korea is not an exception. It is expected the population growth will show negative figure from 2030, and the people over 65 will account 25% of total population, indicating that Korea will become super-aged society. The health life expectancy was 71 in 2007, shows dramatic increase that it reached to 80.4 (10 years gap) only in 2009.

This is expected to shift the medical device industry focus from treatment to prevention. The industry had been centered on treatment and post-treatment, however the central focus will move around preventive, self health-care sector. Especially the demand for diagnostic device will increase consistently.

Trauma Treatment Reinforcement As the society structure becomes complex and industrialized, along with the accelerating climate change, the demand for ability to cope with increasing number of accidents and disaster is increasing. Also, spread of lifecentrism and strengthened indemnification for industrial accident increased the demand for first-aid skills. A number of trauma centers have been established, and therefore the needs for new regulation that improve trauma treatment capabilities are increasing.

The Cause of Death Changes in Korea The life quality improvement driven by rapid economic growth, the reform of environmental hygiene, and the advancement of medical service in both quantity and quality has led noticeable change of individuals’ health as well as entire population’s health and their illness aspect. Korea also experienced such so-called ‘Dynamic Transition’ until 1970 that the disease type and its morbidity had changed. This resulted that the acute infectious disease has decreased while chronic regressive disease including cancer has stood out as the major health and welfare issue of the country.

Such diseases have changed the major cause of death in Korea. After 1960s, the cause of death is transforming into those of westerns. Until 1960s the major cause of death was infectious disease such as pneumonia, tuberculosis, th and gastroenteritis. Cancer (malignant neoplasm) was only ranked 5 among other causes. However in 1980s nd circulating system disorder including stroke has taken the 2 place of overall causes of death in Korea.

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| Medtech Industry in Korea

2.1.2 Industry - Technology Trend Convergence of IT, BT, NT and MT The development of IT, BT, NT and MT led into value added convergence of advanced medical technology such as cell/molecular level imaging using 3D 4D computed tomography and molecular imaging technology. Laser diagnosis and treatment, micro robot, biochip, and biosensor are also good examples of such convergence.

Ubiquitous Healthcare Realization As the information technology advances, the development of healthcare system that allows individuals to monitor their health conditions and to diagnose diseases in early stage regardless of location and time is at the center of high interest.

Unfortunately, the u-Healthcare service is getting delayed because of the conflicts among professional groups.

However through model projects, the infrastructure for u-healthcare service is sufficiently prepared. As the society trend moves forward to ubiquitous, and related Medical Law is being amended with the rapid development of IT system, the era of u-healthcare will soon arrive.

Aged-friendly Market Expansion The aged society changed the structure of disease to be centered on chronic disease. It also increased the demand for such disease diagnosis, which resulted in demand increase for long-term medical service as well. With community welfare reinforcement projects, the demand for welfare kits and disabled aid instruments will expand together in the aged-friendly market.

2.2 Overview and Outlook for Medical Device Market in Korea 2.2.1 Overview Table 1. Basic overview of the Korean Medical industry Expenditure on Health Korean GDP Per Capita GNI Total Health Expenditure Per Capita Health Expenditure Hospital Expense for people over 65years old Health Expenditure as a % of GDP

$1,014,700million(2010) $20,562(2010) $71.7 billion(2010) $1,451 (2010) $11.9billion(2010) 7.1% of GDP(2010)

Personnel in Health Industry Total Population of Korea Medical Doctors Doctors per thousand people

50 million (2012) 101,443 (2010) 1.94 (2009)

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Dentist

25,390 (2010)

Nurses

270,274 (2010)

Pharmacists

60,956 (2010)

Health Facilities General Hospitals

312 (2010)

Hospitals & Clinics

29,337 (2010)

Dental Hospitals & Clinics

14,262 (2010)

Korean Traditional Hospitals & Clinics

11,963 (2010)

Sickbeds

523,327 (2010)

People per Sick beds per thousand people Access to Medical Equipment

5.6 (2009)

CT Scanners per million people

37.1 (2009)

MRIs per million people

19 (2009)

Social Factors Affecting Health Life Expectancy people over 65years old Smoking rate: ratio of smokers who had consumed over 5 packs (100 cigarettes) and still smokes, over 19 years old.

Men : 77.20 (2011) Women : 84.07 (2011) 5.45 million (2010) Men : 48.3% (2010) Women: 6.3% (2010)

Prevalence Rate of Obesity: ratio of people whose BMI(Body Mass Index,(kg/ă&#x17D;Ą) is over 25 Source : Ministry of Health & Welfare, chronological list of Health & Welfare statistics2011 Korea Health Industry Development institute, Health Industry White Paper, 2011 OECD Health Data, 2011 Korea Statistics, Future Demographics Forecast 2010 2010 National Health Statistics, Korea Centers for Disease Control and Prevention, The Ministry of Health and Welfare

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| Medtech Industry in Korea

Men : 36.3 % Women : 26.8 %

2.2.1.1

Figure 1. Population Ratio by Age

Demographics and National Medical Expense

Age of 0~14

Group Age of 15~64

Over 65

(1) Demographics Society’s aging degree is classified by the share of population over 65 – i.e. 7%, 14% or 20%. With low birth rate and expansion of average life expectancy, Korea is aging rapidly.

As the society aging progress rapidly, the share of population over 65 is expected to progress as follows: 3.1% in 1970 → 7.2% in 2000 → 14% in 2017 → 20.8% in 2026.

(Statistics Korea, Estimated Future Population, 2010)

(2) National Medical Expense Ratio Among OECD major countries, Korea ranks the lowest with 6.9% of medical expense ratio against national GDP in st 2009. The 1 ranking country with the highest medical expense ratio is the US with 17.4% of GDP, followed by France with 11.8%, Germany with 11.6%, Canada with 11.4%, UK with 9.8%, and Japan with 8.5% (2008). Although Korea’s level of medical expense is very little compared with advanced countries, its growth rate is increasing rapidly that it is expected to reach to the level of advanced countries in the near future.

Table 2. National Medical Expense

Countries Canada France Germany Japan Korea UK US OECD

2001 9.3 10.2 10.4 7.9 5.1 7.2 14.3 8.0

2002 9.6 10.5 10.6 80 4.9 7.6 15.2 8.3

2003 9.8 10.9 10.8 8.1 5.2 7.8 15.7 8.6

2004 9.8 11.0 10.6 8.1 5.3 8.0 15.7 8.6

2005 9.8 11.1 10.7 8.2 5.7 8.2 15.7 8.7

2006 10.0 11.0 10.6 8.2 6.0 8.5 15.8 8.6

2007 10.0 11.0 10.5 8.2 6.3 8.4 16.0 8.6

2008 10.3 11.1 10.7 8.5 6.5 8.8 16.4 8.9

(unit: %) 2009 11.4 11.8 11.6 6.9 9.8 17.4 9.6

Source: OCED Health Data, 2011

(3) Annual Average Per Capita Health Expenditure

(Unit: USD)

Figure 2. Per Capita Health Expenditure

In 2010, per capita health expenditure was estimated USD 1,451, a 23.6% increase from the previous year.

Although the expenditure seems to be decreasing in 2006 and 2007, this is only due to weaken dollar and the actual market has been consistently increasing since 2005.

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Figure3. Health Expenditure Over 65

(4) Health Expenditure Over 65

(USD billion)

As the population over 65 is increasing and the interest for health is expanding, the ratio of health expenditure of population over 65 out of total medical expense has been gradually growing.

In 2010, the total health expenditure for the elder was accounted at USD 11.9billion which is around 16.6% of total medical expense.

This is 11% increase from the previous year.

2.2.1.2

Health Workforce and Medical Institutions Trend

(1) Health Workforce Koreaâ&#x20AC;&#x2122;s health workforce trend indicates that the professional medical experts have been increasing steadily. As of 2010, registered nurses are 270,000, doctors are 100,000, and pharmacists are 61,000.

Table 2.Health Workforce Doctor Year

(Unit: Person) Dentist

Oriental Doctor

Pharmacist

Maternity Nurse

Nurse

2001

75,295

18,887

12,794

51,872

8,801

170,845

Medical Record Officer 8,150

Optician

2002

78,609

19,672

13,662

53,168

8,920

181,800

8,819

24,010

2003

81,328

20,446

14,553

54,381

8,996

192,480

9,317

24,017

2004

81,996

20,772

14,421

53,492

8,628

202,012

10,140

24,652

2005

85,369

21,581

15,271

54,829

8,657

213,644

10,818

26,000

2006

88,214

22,267

15,918

55,845

8,572

223,781

11,413

27,300

2007

91,475

23,126

16,732

57,176

8,587

265,687

12,448

28,712

2008

95,066

23,924

17,541

58,363

8,565

246,840

13,630

30,237

2009

98,434

24,639

18,401

59,717

8,603

258,568

14,447

31,681

2010

101,443

25,390

19,132

60,966

8,578

270,274

15,424

33,218

21,360

Source: Health and Welfare Statistics, The Ministry of Health and Welfare

(2) Medical Institutions & Number of Beds The number of medical institutions and their beds are consistently increasing in Korea. As of 2010, the total number of medical institutions is accounted at 56,244, a 14 times to the number institutions in 2001 (40,276). As more institutions has been established the number of beds has also increased that in 2010 the total number of beds are estimated to be 523,327.

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| Medtech Industry in Korea

Table 3. The Number of Medical Institutions Hospitals Clinics Year

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total

40,276 44,029 45,772 47,378 49,566 51,286 52,914 54,165 56,769 56,244

General Hospital 268 284 283 282 290 295 302 313 312 312

Hospital

Clinic

599 691 798 855 971 1,213 1,538 1,754 1,891 2,003

20,819 23,299 23,502 24,491 25,412 26,078 26,265 26,581 27,104 27,334

(Unit: number, %)

Special Hospital 75 78 94 100 106 111 111 122 134 147

Dental Hospital and Clinic Dental Dental Hospital Clinic 60 10,556 80 11,120 99 11,890 107 11,968 123 12,520 134 12,808 151 13,280 184 13,618 178 14,071 188 14,074

Oriental Hospital and Clinic Oriental Oriental Hospital Clinic 131 7,499 135 8,097 151 8,734 154 9,196 146 9,765 142 10,294 138 10,895 139 11,248 151 11,705 159 11,804

Hospitals in Affiliation

Maternity Clinic

169 169 150 158 187 172 182 175 185 186

100 75 71 67 46 39 52 31 38 37

Source: Health and Welfare Statistics, The Ministry of Health and Welfare

Table 4. The number of Beds

(Unit: number, %)

Hospitals Clinics Year

Total

General Hospital

Special

Hospital

Clinic

Hospital

Dental Hospital

Oriental Hospital

and Clinic

and Clinic

Dental

Dental

Oriental

Oriental

Hospital

Clinic

Hospital

Clinic

Hospitals in Affiliation

Maternity Clinic

2002

316.089

115,779

75,392

83,987

30,787

74

6

8,321

1,215

415

113

2003

340.988

111,801

87,208

96,338

35,628

168

19

8,742

730

281

73

2004

353.289

117,323

97,342

91,702

36,682

171

13

8,887

698

338

133

2005

379.751

120,728

115,968

93,972

38,625

225

22

8,538

672

848

153

2006

410.581

124,090

141,564

95,224

39,802

247

7

8,379

344

819

105

2007

450.119

125,840

179,119

96,292

39,087

249

17

8,245

455

660

155

2008

478.645

128,673

199,624

97,842

41,914

253

14

8,610

777

862

76

2009

498.302

130,601

220,291

91,752

44,055

291

39

8,694

944

1,548

77

2010

523.327

132,961

243,497

88,204

46,599

328

45

9,491

1,312

803

87

Source: Health and Welfare Statistics, The Ministry of Health and Welfare

2.2.2 Overview of Korea Medical Device Market 2.2.2.1

1

Korea Medical Device Market Size

The global medical device market was accounted at USD 258.4billion (Espicom, 2011) in 2010. This is a 10% increase from 2009. From 2005 to 2008, the market has shown 11% of growth rate, however, in 2009 with global financial crisis, the growth rate was sluggish. Overall, from 2005 to 2010, the annual average growth rate was 7.5%, and the market is expected to grow at 4.9% of CAGR, accounting USD 310.9 billion by 2015. (Espicom, 2010) Korea ranks 14th in global medical device market with the value of USD 3.4billion (2010), accounting 1.3% of total 1

Source: 2011 Medical Device Production & Trade Statistics, Korea Medical Devices Industry Association

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medical device market. In 2011, the market is estimated to be USD 3,886 million, showing 9.4% CAGR from 2004 to 2011.

Due to the weaker dollar in 2006 and 2007, the figure looks like the market has been decreasing in 2008 and 2009, however, the actual market size in Korean Won has been continuously increasing.

Figure4. Korean Medical Device Market 4'500 4'000 3'500 million USD

3'000 2'500 2'000 1'500 1'000 500 0

2004

2005

2006

2007

2008

2009

2010

2011

1'291

1'664

2'040

2'386

2'290

2'166

2'564

3'038

Exports

570

699

817

1'032

1'132

1'190

1'454

1'673

Imports

1'285

1'509

1'799

2'154

2'123

1'879

2'266

2'521

Market Size

2'007

2'474

3'021

3'508

3'281

2'855

3'375

3'886

Production

Market Size: Production-Exports+ Imports Unit: USD million

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| Medtech Industry in Korea

2.2.2.2

Ratio of Medical Device Industry among Total Industry

The medical device industry ratio among total GDP in 2011 is accounted at 0.27%. It has been continuously increasing since 2004 except the year of 2010. Its ratio against manufacturing production was accounted to be 0.97% which is also in increasing momentum.

Table 5. Ratio of Medical Device Industry among Total Industry Medical Device GDP Manufacturing GDP Gross Production Year (CAGR 6.4%) (CAGR 8.2%) (CAGR 13.0%) 2004 722,385 179,812 1,291 2005 844,706 208,576 1,664 2006 951,056 231,227 2,040 2007 1,049,303 256,792 2,386 2008 930,946 232,371 2,290 2009 834,406 208.852 2,166 2010 1,014,715 276,128 2,564 2011 1,116,430 313,481 3,038

2.2.2.3

(Unit: USD million, %) Ratio to Ratio to GDP Manufacturing GDP 0.18 0.72 0.20 0.80 0.21 0.88 0.23 0.93 0.25 0.99 0.26 1.04 0.25 0.93 0.27 0.97

The Number of Companies in Medical Device Industry

The number of companies reported production results in 2011 are 1,958 which is 5.4% increase from 2010â&#x20AC;&#x2122;s 1,857.

The number of importers was estimated to be 1,570, a 4.9% increase from 2010 (1,496). The number has been consistently increasing since 2004, however, 78% of manufacturing companies produce less than USD 0.9 million amount, and 70% of them are hiring less than 100 employees.

Table 6. The Number of Companies in Medical Device Industry 2004 2005 2006 2007 Year

2008

2009

2010

2011

Manufacturers

1,500

1,596

1,624

1,662

1,726

1,754

1,857

1,958

Exporters

383

422

435

447

473

518

583

619

Importers

997

1,157

1,281

1,381

1,456

1,466

1,496

1,570

2.2.2.4

The Number of Employees Working in Medical Device Companies

The number of employees working in medical device companies was accounted at 32,255 for manufacturing, 17,712 for importing in 2011. The number has been consistently increasing since 2004, showing 6.8% and 2.9% growth respectively from previous year.

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15

Table 7. The Number of Employees Working in Medical Device Companies 2004 2005 2006 2007 2008 2009 Year

2010

2011

Manufacturer

25,287

25,610

26,399

26,936

27,527

28,167

30190

32,255

Export

13,776

14,412

15,206

13,571

14,327

15,456

16,913

18,171

Import

12,242

12,469

14,634

17,429

16,866

15,677

17,219

17,712

2.2.2.5

The Number of Registered Medical Device Products

The number of medical device products that were endorsed registration by Korea Food and Drug Administration, KFDA has been extremely increasing in all aspects (i.e. manufacturing, export and import) since 2004. Especially the number of exporting products has doubled from 2004, indicating productâ&#x20AC;&#x2122;s diversification, also.

Table 8. The Number of Registered Medical Device Products 2004 2005 2006 2007 Year

2008

2009

2010

2011

Manufacturer

5,862

6,392

6,639

6,899

7,367

8,003

8,704

9,086

Export

1,834

2,104

2,327

2,377

2,497

2,879

3,269

3,598

Import

14,062

14,901

16,624

16,567

16,612

16,833

18,495

19,179

2.2.2.6

Medical Device Production by Classification

KFDA classifies medical devices into 4 classes depending on its potential risk to human body. It is reported that 60% of domestically produced devices are lower risk products such as Class I and II. The portion of Class III and IV production was relatively small. However, production of Class III has sharply increased in recent years and the production of Class IV products has also started to increase since 2010. Considering production of higher class products requires more advanced technology, this trend can be interpreted that Koreaâ&#x20AC;&#x2122;s technology has improved at certain level.

Table 9. Medical Device Production by Classification 2007

KFDA Classification

Production Value

Ratio (%)

Production Value

2009 Ratio (%)

Production Value

2010 Ratio (%)

Production Value

2010 Growth Rate from Ratio (%)

2009 (%)

Class 1

453

19.0

434

19.0

417

19.3

510

19.9

10.9

Class 2

1087

45.6

1,033

45.1

981

45.3

1089

42.5

0.6

Class 3

719

30.1

698

30.5

700

32.3

888

34.6

14.9

Class 4

126

5.3

124

5.4

67

3.1

76

3.0

2.6

Total

2385

100.0

2289

100.0

2165

100.0

2563

100.0

7.2

Source: 2011 Medical Device Industry Analysis Report, KHIDI, 2011

16

(Unit: million USD, %)

2008

| Medtech Industry in Korea

2.2.3 Medical Device Trade Trend Figure 5. Trade Balance and Import Ratio

Import Ratio: (Import / Market Size) x 100, Trade Balance: Export- Import Source: 2011 Medical Device Production & Trade Statistics, Korea Medical Devices Industry Association

In 2011, the export value of medical device accounted USD 1,673million, a 15% increase from the previous year.

The import was USD 2,521million which is 11% increase from 2010. This made the trade balance increase by 0.2% with USD 848million. In 2011, the imported devices market share accounted 64.9%, however it is a 3.4% decrease from 2010.

Among top 30 production products in 2011, items with high growth rate are: compression system sequential pump (70.9%), blood glucose test strip (67.5%), implant endosseous hand instrument (68.5%), and spinal internal fixation cage (55.8%). The top 5 exporting products are ultrasound imaging system, soft contact lens, sight corrective spectacles lens, blood glucose test strip, and medical probe. These productsâ&#x20AC;&#x2122; total export value was USD 703million, accounting 42% of total medical device export value.

Major imported products are stent, soft contact lens, CT system, MRI system, and artificial knee joint. The top 30 imported products value was estimated to be USD 1,246.9million. This is 16.9% increase from 2010.

(Appendix 1 Top 30 Production Products, Top 30 Export Products, Top 30 Import Products) The top countries that Korea exported the most in 2011 are the US, Germany, Russia, and China in order and th Switzerland ranked 25 . Major importing countries are the US, Germany, Japan, China and Switzerland in order. th Switzerland is the 5 exporter to Korean medical device market, which values USD 107 million in 2010.

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Figure 6. Top 10 Export Countries

※ % of Share: The country’s export value share out of Korea’s total export value of the year. ※ Rank: Ranking of the country among total export countries of the year. ※ Growth Rate (%): Growth rate of export value compared with the previous year for each country

Figure7. Top 10 Import Countries

※ Rank : Ranking of the country among total import countries of the year. ※ % of share : The country’s import value share out of Korea’s total import value of the year

18

| Medtech Industry in Korea

2.2.4 Medical Institutions’ Domestic Medical Device Purchasing Rate rd

According to hospital device purchasing trend analysis, among medical institutions the 3 tier hospitals has higher nd imported medical device ratio than the 2 tier hospitals.

nd

Table 10. Domestic Medical Device Purchasing Ratio among 2 Medical Institution

rd

and 3 tier medical institutions (2011)

Domestic Medical Device Purchasing Rate

Imported Medical Device Purchasing Rate

nd

2

12 %

88%

rd

3

9.6%

90.4%

2 Tier Medical Institutions 3 Tier Medical Institutions Source: KHIHI Brief Report

Korea’s medical devices purchasing trend shows that majority of purchased local products are less than USD 10,000.

Domestic products’ purchasing ratio in high-end advanced medical device sector is relatively low. Also, majority devices with higher risk to human body or devices for precision diagnosis are imported. That is, the outpatient clinics purchases domestic devices, but intensive care unit, diagnosis centers, operation rooms favors imported devices.

However, as the local companies’ development becomes vitalizing, devices with price competitiveness such as surgical laser, digital x-ray system, patient monitor system and centrifuge are purchased from local manufacturers.

2.2.5 Korean Medical Devices by Sector The Korean medical device industry is segmented into 26 categories by the KFDA. Note Appendix 2 for a complete list of these product categories. In this report, selected 8 classifications are listed here in order of market size: • Hospital Installations • Dental Industry • Orthopedics and Trauma • Disposable Goods • Reusable Instruments • Rehabilitation Machines & Tools • Laboratory Machines & In-vitro Diagnostics • Ophthalmology and Therapeutic Eye Medicine The Sectors of interest classified by the Swiss Business Hub Korea are different from the KFDA’s organization of the Korean medical device Industry. In this report, KFDA’s product categories have been arranged to fit into the 8 sectors of interest to the Swiss Business Hub Korea.

A summary of the Korean medical device market by sector and product category is outlined in the table below.

2 3

2nd Tier Medical Institutions: Small-and-Medium sized hospitals that are approved by local government 3rd Tier Medical Institutions: Large hospitals (general hospitals) that are designated by the Ministry of Health and Welfare

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Hospital Installations Market Size (2010) Item Group

Unit : 1000 USD Production

Export

Import

Market Size

Treatment table

92,743

9,707

11,410

108,914

Anesthesia apparatus

24,199

5,646

20,745

43,073

Artificial internal organ apparatus

3,061

1,047

126,982

129,474

185,159

108,398

286,266

391,912

672

126

952

1,603

31,622

23,361

32,733

45,927

Urology devices

4,690

876

3,474

8,020

Patient transport

15,323

712

16,811

33,812

122

141

985

985

Radiologic device Radiation & laser protective devices Cardiovascular devices

Stethoscope Clinic thermometric system

4,734

1,725

11,474

15,222

421,718

410,133

128,682

206,055

Electrosurgical device

23,970

8,540

36,569

55,738

Laser apparatus for medical use

71,234

42,493

46,638

86,492

2,929

2,192

551

1,745

0

0

21,323

21,323

882,177

615,097

745,595

1,150,295

29.8%

42.3%

32.4%

Testing apparatus for Bio-phenomena

Magnetic induction apparatus for medical use Radiographic supplies Total % of Total Market Dental Market Size(2010) Dental devices

30.2% Unit : 1000US$

4,966

2,395

9,389

12,735

Dental Materials

443,685

87,615

155,768

581,053

Total

448,651

90,010

165,157

593,788

15.1%

6.2%

7.2%

15.6%

Orthopedic devices

21,229

4,341

53,503

73,703

Orthopedic materials

95,973

5,619

294,182

399,508

Splints

31,099

14,094

2,517

24,374

Surgical supplies

27,150

1,313

61,070

91,142

175,452

25,367

411,272

588,727

6.8%

1.7%

17.9%

% of Total Market Orthopedics and Trauma Market Size(2010)

Total % of Total Market

Unit : 1000US$

Disposable Goods Market (2010)

15.4% Unit : 1000US$

Needle for syringe and puncture

30,635

20,127

35,599

50,886

Syringes

57,073

25,953

10,839

50,862

Infusion instruments

146,952

45,148

168,658

293,386

Acupuncture and moxibusion apparatus

10,518

3,678

3,952

12,433

Suture and ligature

13,279

2,411

29,339

42,279

Contraceptive device Total % of Total Market

20

| Medtech Industry in Korea

7,281

16,528

4,773

-3,338

265,738

113,845

253,160

446,508

10.4%

7.8%

11.0%

11.7%

Reusable Instruments Market Size (2010) ) General medical supplies and apparatus Speculums for medical use

Unit : 1000US$ 10,785

6,006

18,161

24,623

84,744

9,787

62,529

150,706

Surgical operation apparatus

155,348

121,606

222,418

280,394

Total

250,877

137,399

303,108

455,723

9.8%

9.4%

13.2%

% of Total Market Rehabilitation Machines Market Size (2010) Item Group

12.0% Unit : 1000US$

Production

Physical devices for medical use Hearing aid

% of Total Market

Import

Market Size

159,428

17,706

81,305

34,683

10

3,875

38,548

Human tissue and organ substitute Total

Export

223,027 4,948

2,193

85,891

88,646

262,657

161,631

107,472

208,498

10.2%

11.1%

4.7%

Laboratory Machines & In-Vitro Diagnostic Market Size (2010)

5.5% Unit : 1000US$

Non-ionization diagnostic device

5,958

2,749

87,438

90,647

Medical in vitro testing apparatus

74,431

89,066

104,897

90,262

Medicinal substance-producing equipment

23,636

7,827

186

15,995

104,025

99,642

192,521

196,904

4.1%

6.9%

8.4%

Total % of Total Market Ophthalmologic Devices Market Size (2010) Sight corrective ophthalmic lens Test chart for visual acuity and color blindness Total % of Total Market

5.2% Unit : 1000US$

216,985

142,630

112,057

220,262

3,383

3,419

446

938

220,369

146,049

112,503

221,200

8.6%

10.0%

4.9%

5.8%

Source: Korea Medical Devices Industry Association, KMDIA

2.3 Distinguished Characteristics of Korea Medical Device Industry 2.3.1 Vulnerable Industry Structure & Trade Deficit As shown above statistics, Koreaâ&#x20AC;&#x2122;s medical device production and export has increased gradually over the past years. However, its level of technology development, capital strength, and recognition still stays vulnerable point that majority of medical device manufacturers are classified as small-business. Over 78% of medical device manufacturers are in less than KRW 1billion production scale, and 70.7% of medical device manufacturers carry less than 100 employees. 65% of medical device is imported from overseas that its trade deficit has continued chronically.

2.3.2 Immature Technology Level rd

The 3 Medical Institutions (large general hospitals) who usually utilize high-priced up-to-date medical device, purchase very limited portion of domestic products. Domestic medical products are generally targeting low-priced market. Korea holds relatively low technology level for high-priced devices such as MRI, CT compare to Big3 countries. Also, the infrastructure of analogue field is also very weak that it is required to develop core part related technologies such as sensors and actuators.

Medtech Industry in Korea |

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2.3.3 IT Convergence Medical Information System, Oriental Medicine Device Development The Ministry of Knowledge and Economy reported that Korea’s export of hospital related information processing systems such as PACS (Picture Archiving Communicating System) is consistently increasing towards advanced countries. This indicates Korea is leading the world’s IT converged medical information systems technology.

Furthermore, as the new market for oriental medicine is formed, the development of the related medical device is accelerating.

2.3.4 Conglomerates Entering into Medical Device Market Korea conglomerates who were specialized in IT field such as Samsung, SK, and LG is increasingly advancing into medical device market. For example, Samsung Medison already has taken up 6.9% of total production and 11.6% of total export of Korea’s total medical device in 2011. These conglomerates’ involvement in medical device market has established firm foundation for Korea’s medical device industry to jump up to higher level.

2.4 Policy and Strategy In November 2010 under the leadership of Ministry of Strategy and Finance and Ministry of Health & Welfare, Korea government has presented medical device industry stimulus projects to respond to changing business environment such as FTA and to reinforce the industry’s competitiveness. The stimulus project is consists of two grogram: “Medical Device Industry Advancement Program”, and “Small-and-Medium Medical Device Enterprises Foster Program”.

In short term period, the Medical Industry Advancement Program focuses on reform medical device regulation and approval procedure in near future, and for more medium-long term period it establishes enhanced R&D infrastructure to strengthen medical device industry competitiveness.

The Small-and-Medium Medical Device Enterprise Foster Program identifies and supports promising SMEs. The program also supports domestic product revitalization through consumer based R&D. As one of these projects propulsion strategy, KFDA (Korea Food & Drug Association) has amended approval regulation to be more rational in October 2011. The Ministry of Health & Welfare and Ministry of Knowledge and Economy is forming a R&D investment plan to secure domestic devices’ competitiveness in global market.

2.4.1 Medical Device Registration Regulation Improvement KFDA recently announced amendment of medical device law to cope with external/internal industry environment change. The amended regulation presents more efficient and reasonable system, changing its paradigm to establish better environment for expedite advanced medical device development. The lower risky products such as Class I products registration has turned into list management regulation from notification regulation. Class II products’ technical document evaluation will be consigned to third party private testing organization. Riskier products such as Class III and Class IV will go through more strict regulation evaluated by KFDA itself.

Furthermore, GMP regulation has been strengthened to enhance domestic products’ competitiveness in global market, and to retain balance of pre/post management. It also resolves barriers for overseas manufacturing GMP 22

| Medtech Industry in Korea

facility resolving discrimination between local manufacturers. The detail of amended regulation is elaborated in Chapter III.

2.4.2 R&D Project Plan 2.4.2.1

Consumer Affiliated Core Strategy Product Development Expansion

To promote consumer affiliated core strategy products and to enhance its comparative advantage, KEIT (Korea Evaluation Institute of Industrial Technology) is pushing forward KRW 30billion projects from 2012 to 2016, i.e.

Industry Convergence Original Technology Development Project and Major Medical Device Commercialization Technology Development Project.

Consumer Affiliated Core Strategy Product Development

2.4.2.2

Business Support Infrastructure Establishment

KEIT has established Advanced Medical Device Development Support Center in Daegu and Osong, Electronic Medical Device Parts & Material Center in Gumi, Medical Device Production Base in Wonju Dongwah Complex and Guro Digital Industrial Compelx. These institutions are to foster regional clusters with specialties and to support registration evaluation technology development to prepare global approval standards.

2.4.2.3

Medical Device Win-Win Forum

As the collaboration between consumer (hospital) and developer (manufacturer) becomes essential, Medical Device Win-Win Forum is formed to provide networking opportunity to discuss medical device industry development. The Medtech Industry in Korea |

23

forum is a private sector centered activity that consists of Korea’s major universities and medical device manufacturing companies. The forum pursues cooperation among device developers, consumers and test evaluation organizations for product commercialization and a success of accreditation technology development project. Through this forum, the government targets to analyze high-end medical device items and its strategy. A periodic seminar also will be organized to encourage hospitals’ and developers’ collaboration. The government will support selected product’s development, commercialization and its marketing.

2.4.2.4

Advanced Clinical Trial Capability Establishment

Ministry of Health and Welfare is planning to expand its support to 25 clinical trial centers in university hospital for their test result to be accredited by overseas organizations such as FDA and PMDA. The ministry also provides its support for clinical trial consulting through CROs (Contract Research Organization) for domestic medical device companies to proceed their clinical trials smoothly.

Overseas global companies will also be able to confirm their product’s efficacy while establishing aggressive marketing strategy for market entry through the multi-national clinical trials.

2.4.3 Propulsion of IEC60601-1 3rd Edition rd

With Europe and other advanced countries’ recent application of IEC 60601-1 3 Edition which is a strengthened safety standards for electronic medical device, Korean medical device companies are facing with technical barriers in entering these markets. rd

By adopting the latest IEC 60601-1 3 Edition, a globally valid regulation, KFDA is in the process of notification for ‘Common Standards and Specification for Electric Mechanical Safety’ to enhance local manufacturing companies’ competitiveness, and to secure domestically distributed medical devices’ safety and quality.

Such notifications’ enforcement date is as follows; the schedule ultimately targets for all electronic medical devices rd distributed in Korea to conform with IEC60601-1 3 Edition by 2016. Only certain products specified separated enforcement date in the notification will follow its special date.

-

June 1, 2014: Class III and IV devices in accordance with 「Medical Device Products and Products’ Classification Code」

-

June 1, 2015: Class II devices in accordance with 「Medical Device Products and Products’ Classification Code」

-

June 1, 2016: Class I devices in accordance with 「Medical Device Products and Products’ Classification Code」

24

| Medtech Industry in Korea

2.4.4 Rebate Dual Punishment On November 28, 2010, the Ministry of Health and Welfare executed 「Rebate Dual Punishment Regulation」 to eradicate illegal rebates, and to retain transparent distribution market & order. The Rebate Dual Punishment Regulation is to punish both rebate provider and receiver. Before the regulation when pharmaceuticals provide illegal rebate to medical institutions and pharmacies, only the provider was subject to penalty, and had limitations of not being able to punish for accepting bribes. It also limited its bribe penalty for medical institutions and pharmacy’s actual establisher, and non-public officials.

The illegal rebate was also prevalent in the medical device sector. However, there was no legal basis for punishment. As an improvement, the Rebate Dual Punishment Regulation was imposed on May 27, 2010 through the amendment of the Medical Law, the Pharmaceutical Affairs Law, and the Medical Device Act. Starting from November 28, 2010, the regulation prohibits doctors and pharmacists to receive any unlawful economical benefits from pharmaceutical companies with the purpose of sales promotion. In other words, except the cases determined by the order of Ministry of Health and Welfare, doctors, pharmacists, oriental medicine practitioners, and other health care provider, founders and employees of medical institutions cannot obtain unlawful financial benefit, i.e. money and valuables, benefits, labor, regalement, and other economical benefits with the purpose of sales promotion from the pharmaceutical and/or medical device manufacturers.

Table 11. Reinforced Penalty Measure for Rebate Receiver and Provider Penalty

Before Amendment (Before Nov. 28, 2010)

After Amendment (After Nov. 28, 2010)

Administrative Measure (License Suspension)

2 months

Within a year

Criminal Penalties

None

Imprisonment for less than 2 years Or Less than KRW 30million penalty (forfeit/collection of obtained economical benefits)

Administrative Measure (License Suspension)

Manufacturer (Importer): 1 month~ registration suspension Medical Suppliers Wholesaler: 15 days～ 6months

Maintain existing law

Criminal Penalties

Imprisonment for less than a year Or Less than KRW 3million penalty

Imprisonment for less than 2 years Or Less than KRW 30million penalty

Receiver

Provider

Certain cases determined by the order of the Ministry of Health and Welfare such as sample distribution determined by Medical Law, support for conference/seminar, support for clinical trials are recognized as an exception. From various reference from foreign cases, the recognition of the exceptions are limited to the best minimum so that such exception does not to damage the imposing purpose of the Rebate Dual Punishment Regulation, and it scope was referenced by other foreign cases.

(Appendix3. Medical Device Law Administrative Measure for Scope of Permitted Economical Benefit based on Rebate Dual Punishment Regulation)

Medtech Industry in Korea |

25

Korean government is well aware that the imposition of such Rebate Dual Punishment Regulation will create challenges at the beginning of enforcement, however, it expects that in mediumâ&#x20AC;&#x201C;long term period, the regulation will make medicine & medical supplies market more transparent. Therefore, pharmaceutical companies and medical device manufacturers will become better shape for R&D investment, and overall the credibility of the countryâ&#x20AC;&#x2122;s health and welfare system will gain higher reputation.

26

| Medtech Industry in Korea

3. The Role of Government.

3.1 Government Organizations for Medical Device Industry Minister of Health & Welfare (MOHW) agency regulating the importation of medical devices through KFDA Regulatory

Reimbursement

Commissioner of KFDA

Health Insurance Review &

(www.kfda.go.kr)

Assessment Service (HIRA) ( www.hira.or.kr )

Food Safety Bureau Drug Safety Bureau Bio/Herbal Medicine Bureau Risk Prevention Policy Bureau Medical Device Safety Bureau National Instritute of Food and Drug Safety Evaluation

Medtech Industry in Korea |

27

3.1.1 Medical Device Organization within KFDA

3.1.2 Umbrella Organization of KFDA

Collaborating Third-party Organization Medical device Testing Laboratories : Test labs for devices approvals (13 labs) Medical device Quality Evaluation Institutions : Audit GMP/ GIP jointly with KFDA (4 Institutes)

TechnicalDocumentReview Agency Review of Technical Document on Class 2 device (6 Institute)

Medical device Clinical Trial Centers : Hospitals accredited by KFDA for Medical device trials (total 105)

28

| Medtech Industry in Korea

3.2 History of Medical Device Management System

1963 ~ 2002 Pharmaceutical affair laws

2003 ~ 2012 Medical device act

Medical Device Management System Provision

Operation of independent Medical Device Management system

Introduction of Classification Separation of approval/Notification Introduction of Clinical Trials Introduction of GMP

Establishment of Medical device Act (break from Pharmaceutical Affairs Laws) Instruction of Class 4 device, Repairer, Renter, Postmanagement (Tracking system etc)

3.3 Medical Device Regulations

Medical Device Act framework -

The Medical Device Act: Definition of Medical Device, etc.

The Enforcement Decree: Medical Device Committee, Delegation of Authorities The Enforcement Regulations: Document and format of technical regulations KFDA Notice: Classification, Approval process, standard for GMP, etc

3.3.1 Key Regulations on Medical Devices Medical Device Act This Act is the superordinating law among medical device related regulations. It regulates medical deviceâ&#x20AC;&#x2122;s production import and sales. The act provides definitions of each device classification, requirements for manufacturing, importing, repair service, and trading of medical devices.

Enforcement Decree of the Medical Device The Decree delegates the regulations defined by Medical Device Act. It regulates the Medical Device Committee as well as the standards penalty estimation standard, and penalty surcharge standard.

Enforcement Regulation of the Medical Device This is an actualization of the regulation delegated by the Medical Device Act. The regulation defines items subject to approval or notification. It also defines application procedure for â&#x20AC;&#x2DC;manufacturing business approval, manufactured Medtech Industry in Korea |

29

product approval, importing business approval, and imported product approval’ as well as the matters to be observed by manufacturers and importers. Technical document examination standard, clinical trial plan approval, and clinical trial practice standard is also elaborated by this regulation.

Medical Device Approval Notification Evaluation Code This Code elaborates details for the manufactured/imported medical device’s approval/notification, the technical document evaluation, and approval application procedure for devices in purpose of exhibitions based on Article 5, Article 7, Article 13-2, Article 14, Article 15, Article 18, Article 20, Article 25-2, Article 29-2 at 「Enforcement Regulation of the Medical Device」 Medical Device Production & Quality Management Standard This Standard illustrates the quality management system that both local and overseas manufacturers must be equipped with, in order to supervise their organization, responsibilities, procedures and processes efficiently in manufacturing and maintaining quality of medical devices.

Medical Device Clinical Trial Management Standard This standard is a provision under the Medical Device Enforcement Regulation Article 13 Chapter 1. It defines detailed standards for medical device’s clinical trial plan, execution, monitoring, inspection, record documentation and analysis, and trial result reporting.

Medical Device Product & Product Classification Regulation In accordance with Medical Device Act Article 3, and Enforcement Regulation of the Medical Device, this regulation defines requirements for medical device products and their classification.

3.3.2 Definition of Medical Device and Its Classification

3.3.2.1 The definition of Medical Device Medical Device means an instrument, machine, contrivance, material, or other similar products that are utilized on humans or animals, individually or in combination with others; and fall under any of the following items (provided, however, that drugs and quasi-drugs regulated under the pharmaceutical Affairs Act and artificial limbs and orthotic products falling under the scope of rehabilitation-assisting products under Article 55 of the Act on Welfare of People with Disabilities be excluded): ① Product(s) utilized to diagnose, cure, alleviate, treat, or prevent illness ② Product(s) utilized to diagnose, cure, alleviate, or complement to injuries or disabilities; ③ Product(s) utilized to test, replace, or alter structures or functions of bodies; ④ Product(s) utilized for the purpose of birth control

3.3.2.2 Classification of Medical Device - Classification by 4 classes of a medical device depending on purpose of use and difference in potential risk posed to the human body by use of medical device, etc.

Class1: Medical Devices which do not directly touch the human body, or cause only an insignificant danger 30

| Medtech Industry in Korea

when they do touch the human body Class2: Medical Devices which could endanger the human body without critical damage to life Class3: Medical Devices which could endanger the human body or which are inserted into the human body Class4: Medical Devices which directly contact the heart, central nervous system/blood vessels, or are used to maintain life.

3.3.2.3 Classification by Name of the Product The Classification depends on the Name of the Product and the details of classification is elaborated at Regulations for Product Classification of Medical Device and Class by Product KFDA Notification.

The classification is as flows: -

The total number of name of medical device(small group) : 2,139

-

4 Categories: Instrument /Machine, Medical supplies, Dental materials, Analyzing product for IVD

-

133 middle group: Operating and treatment table, etc.

Table 12. Number of items by Class

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31

3.4 Import Procedure of Medical Device Overview 1. Product Registration a. Pre-Market Notification b. Pre-Market Approval i. General File Technical Review ii. Clinical Trial Report Review -

Clinical Trial Application

2. Korean Good Manufacturing Practice (GMP) Certification 3. Device Business License 4. Medical Device Handler

• The medical device import procedure is largely divided into two – product registration and GMP. The product registration is again divided into document evaluation and clinical trial report evaluation by products.

• All application must be prepared in Korean.

• Foreign manufacturers without Korean office cannot submit a device registration.

• Local manufacturers or importers (distributors) or Third Party License Holders can apply for approval.

• With the medical device regulation amendment in April 2012, the approval/management regulation for each classification has been improved more efficiently. Before the amendment, importers were required to obtain GIP (Good Import Practice), however, the amended regulation requests for GMP of manufacturing facility of the imported products.

3.4.1 Product Registration • Medical devices sold in Korea must obtain a product license for each and every product code.

• Currently there are 2,139 medical devices which are classified into four categories depending on technical attributes and product code.

• Product license do not expire.

• To obtain a product license, KFDA requires either a. Pre-market Notification or b. Pre-market Approval

3.4.1.1

Products Subject to Approval vs. Notification

All medical devices are classified either as product subject to approval or product subject to notification. a. Subject to Product Approval : Products of Class 2, Class 3, Class 4, 32

| Medtech Industry in Korea

Products that means essentially different from those of the Medical Device which have already been approved or notified among the Products of Class 1 b. Subject to Product Notification : Products that means essentially equivalent from those of the Medical Device which have already been approved or notified among the products of Class 1

3.4.1.2

Product Approval Review Period & Fee Document

Period(days)

Fee($)

Manufacturing(importing) Business License Approval

25

160

Technical document Review

55

170

Technical document

amendment Review

32

130

Technical document

+ Clinical trial document Review

70

400

10

47

-

39

Clinical trial plan

30

free

Preliminary Review of Advertisement

10

100

Product

manufacturing (Import) Approval

Product

manufacturing (Import) Notification

3.4.1.3

Pre-market Notification

In case for product notification, the subjected item’s notification shall be reported via electronic administration system at http://emedkfda.go.kr to obtain its validity. No KFDA review is required.

• Required information for Product Notification application - Product name - Product classification - Appearance and structure - Purpose of Use - Instruction for use - Precautions for use - Manufacturer - Remarks

3.4.1.4

Pre-market Approval

A person that intends to obtain a product approval may have a prior review with respect to the suitability of technical file and clinical report to be submitted The evaluation shall proceed in two separate processes: General Technical File Review and Clinical Report Review. i. General Technical File Review: • Devices substantially equivalent as previously approved products Medtech Industry in Korea |

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ii. Clinical Report Review • New developments, new performance, new structure, new purpose for use • Significant difference affecting safety and effectiveness In case of Class II product’s Product Approval Evaluation, the product will be sub-classified either into equivalent product, improved product or new product based upon its similarities of existing approved products.

The technical documents to be submitted are differentiated by its sub-classification. The range of documents to be submitted for each sub-class are marked as ○,△, X based on product’s characteristics (out of 104 categories). This marking clarifies whether to submit clinical trial results. (Appendix 4 : The range of documents to be submitted) “New (novel) product” is a medical device that is not equivalent in the purpose of use, working mechanism or raw materials (limited to medical supplies) etc. with the already approved medical device.

- “Improved product” is a medical device that is equivalent in the purpose of use, working mechanism, raw materials (limited to medical supplies) with the already approved medical device, but not equivalent in performance, test specifications, instructions for use etc.

- “Equivalent product” is a medical device that is equivalent in the purpose of use, working mechanism, raw materials (limited to medical supplies), performance, test specifications and instructions for use with the already approved medical device.

And for Class II products that were approved over 3 times, the product’s technical document evaluation is exempt in case the product’s purpose of use, performance property, raw material, efficacy, test standard and manuals are announced at KFDA website as “Product Notified as Equivalent”, Figure 8. Import Approval Procedure Flowchart (Class 2)

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Figure 9. Import Approval Procedure Flowchart (Class 3 & 4)

3.4.1.5

Required Documentation for Product Approval Evaluation

• A person that intends to have a product approval shall submit the following data (including data in an electronic form), together with a review request form as per Attached Form No.7 to the KFDA Commissioner (or the head of the Technical Documentation Review Committee in case of Class 2).

• Form7 “Medical Device Technical Document Review Request” (Please see Appendix5 for a English language copy of this form) 1) Product name 2) Classification code (class) 3) Appearance and Structure 4) Raw material 5) Manufacturing Method 6) Purpose of Use 7) Instruction for use 8) Precautions for use 9) Packing Unit 10) Storage Method or Validity 11) Test Specification 12) Manufacturer 13) Conditions of Approval 14) Remarks

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â&#x20AC;˘ Attached Data 1) Substantially equivalent product comparison table 2) Data on purpose of use 3) Data on principle of operation 4) Data concerning test specifications to confirm performance and safety of the product, the grounds for setting such specifications, and the actually measured values.

- Data on electrical and mechanical safety - Data on biological safety - Safety data concerning radiation - Data concerning electro-magnetic interference - Data concerning product performance - Data on physical and chemical characteristics - Data concerning safety 5) Data concerning safety 6) Data concerning clinical trials 7) Data concerning usage status in foreign countries, Documentary evidence shall fall under one of the followings, and among these, for test data, model and a list of raw materials shall be same as those of the product applied for review of technical documents, however, that for test data, for which 3 years expired from the issue date as of the submission date, data demonstrating that there is no change in the product after the issue date shall be additionally submitted: 1) Test data issued by the testing laboratory registered in the KFDA; 2) Test data issued by the National Certification Body(NCB) under the IECEE CB-Scheme, which is run by the International Electrotechnical Commission(IEC); 3) Good Laboratory Practice(GLP) test data issued by an authorized GLP laboratory under GLP of the Organization for the Economic Cooperation and Development(OECD); 4) Data appearing in journals, which are registered in the Science Citation Index; 5) Data, which is issued by the director of the special agency and is deemed appropriate through examination of the content (including overview of testing facilities, major equipment, research personnel of the agency, investigatorâ&#x20AC;&#x2122;s experience, etc.) as tested at domestic and foreign special agencies including colleges or research institutes, etc.; provided that unless there is internally or externally authorized test specification, data regarding safety and performance test on design and development of the product, which was performed under the manufacturerâ&#x20AC;&#x2122;s quality management system; and 6) Data (such as clinical trial results, etc.) submitted and evaluated as of the time of the license (approval) being obtained in the country where the Medical Device was developed, which data shall demonstrate that such data was received or approved by the government of such country or the registration authorities to which license (approval) affairs are delegated by such government.

3.4.1.6

Requirements for Clinical Trial Application

To go through medical device clinical trial in Korea, one shall submit clinical trial plan and be approved by the Commissioner of KFDA. The rule is exempt for clinical trials in the order of the Ministry of Health and Welfare such as existing products that are under observation for its approval specification for its clinical efficacy. The clinical trials must be preceded safely and scientifically based on clinical trial plan report. The test can only be conducted by CROs appointed by KFDA.

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â&#x20AC;˘ Application Documents for Clinical Trial Plan Approval - Clinical trial plan or amended clinical trial plan; - Documents demonstrating that the medical device for clinical trial is manufactured in the facilities which comply with the facility standards for manufacturing sites - Technical documents, etc. â&#x20AC;˘ Matters that are required to be included in the clinical trial plan - Title of a clinical trial; - Name and location of the clinical trial institution; - Names and titles of the principal investigator, investigators, and co-researchers of a clinical trial; - Name and title of the person in charge of managing medical devices for clinical trial; - Name and address of the person requesting the clinical trial; - Purpose and background of a clinical trial; - Purpose of use of the medical device for clinical trial (including the intended diseases or indications); - Selection criteria and exclusion criteria for subjects, the number of subjects and the grounds thereof; - Period of a clinical trial; - Method of a clinical trial (including use quantity, instructions for use, period of use, and combined therapy), items that shall be observed, items that shall be tested in clinical laboratory, and method of observation; - Expected adverse side effects and cautions for use; - Criteria for discontinuation and elimination; - Performance evaluation criteria, evaluation method, and analytical method (by statistical method); - Criteria and method for safety evaluation including adverse side effects, and reporting method; - Consent form from the subjects; - Agreement for compensation for victims; - Matters concerning medical treatment of subjects after a clinical trial; - Measures for safety protection of subjects; and - Other necessary matters to safely and scientifically conduct a clinical trial

3.4.2 GMP Procedure 3.4.2.1

Overview

In accordance with Medical Device Law Article 13, and Enforcement Regulation of Medical Device Article 15 and 20, the importers and manufacturers of medical device in Korea must comply with Standards for Manufacturing and Quality Management of Medical Device. Importers and manufacturers can only distribute medical devices that suites the Standards, and must be certified by GMP (Korean Good Manufacturer Practice) before sales. Recently, the GMP regulation has been amended to reinforce existing GMP standards. Before April 2012, if a foreign manufacturer is certified with ISO13485, the manufacturer was not subject to separate inspection and only its importer was needed to be certified as KGIP (Korean Good Import Practice). However, the KGIP certification is removed and the foreign manufactures must go through 3~5 days of inspection at production site. Class I products are exempt to GMP inspection.

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3.4.2.2

History of Korean GMP

1997.5.21.

Voluntary medical devices GMP regulation based on pharmaceutical GMP was established under The Pharmaceutical Law (3 Classes) 2003.5.29. Medical Devices Law was established 2004.7.28. Mandatory medical devices GMP regulation based on ISO 13485 was established (4 Classes) 2007.5.30. Mandatory medical devices GMP was fully applied in Korea 2012.4.8.

GMP is applied to foreign manufacturer instead of KGIP

3.4.2.3

GMP Inspection Standards -

GMP compliance evaluation should be performed before selling the device

-

Scope : Apply to domestic manufacturers and importers

-

GMP inspection of domestic and foreign manufacturing sites

-

Exemption for Class I devices (except for some measuring and sterilization needed devices)

-

Criteria for Compliance – Harmonized with ISO 13485 – Observances of manufacturers and importers

-

Document review and site audit by KFDA and Medical Device Quality Management Review Agency (4 agencies registered)

-

GMP Certification is valid for 3 years

3.4.2.4

GMP Inspection Type -

Initial Inspection st • 1 medical device of the manufacturer

-

Additional Inspection • New product group addition • Manufacturing site change

-

Periodic Inspection • At least once every three years

-

3.4.2.5

Foreign manufacturer • Regard GIP-certification as GMP-certification (as of April 8, 2012) • Periodic Inspection to foreign manufacturer – On-site Inspection phased in according their risk • Class IV: 2012~ • Class III : 2013~ • Class II and I : 2014~ Other sites will be re-certified by documentation review

Dossier for GMP Inspection

Before GMP site inspection, the documents must be submitted are followings. In case document submission is not available due to information’s confidentiality, the document can be submitted at the time of site inspection. All documents drafted in non-Korean or non-English must be enclosed with translations either in Korea or English..

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-

A copy of manufacturing/importing business license

-

GMP related documents such as • Manufacturer’s name, address including the corporate structure • Total number of employees • Product range and class of medical devices • Certificate of quality system • Location and function of the site including layout and major equipments • A list of significant suppliers and their locations • If permitted, any existing audit results received by approved agencies • Quality manual • Device master record of representative product(Product Standard) • Explanation of products if device is needed installation or servicing(Product Manual)

3.4.3 Device Business License (DBL) • The Third Party License Holder (Distributor) must possess a DBL or if the manufacturer will act as its own license holder through its local sales office, the manufacturer shall obtain the DBL. • This license is similar to the US “Certificate of Device Establishment”.

• A DBL can be obtained by submitting the following to the KFDA; - “Product License” - Information on facilities - Business registration - Health certificate for company representative • It does not expire.

3.4.4 Medical Device Handler “Medical device handler” means a person who deals with medical devices for business purposes and falls under any of the following Items provided below, and has acquired a license or filed a notification under Medical Device Act, or who has established a medical institution under the Medical Service Act or a veterinary center under the Act for Veterinarian: -

Manufacturer of medical device Importer of medical device Refurbisher of medical device Seller of medical device Renter of medical device

3.4.4.1

Medical Device Manufacturer and Importer

The manufacturer and the importer is the party/individual who can produce and import medical devices. The party is complied with requirements described by Medical Device Act, and must apply for minimum of one product approval or product notification along with the relevant business approval. They also conform to GMP regulation.

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3.4.4.2

Medical Device Refurbisher

A person who intends to refurbish medical devices for business (hereinafter referred to as “Refurbisher”) shall submit a refurbishing business notification to the KFDA Commissioner as provided by the Ministerial Decree of the Ministry of Health and Welfare, except where a person who has obtained a product manufacture license, etc. A person intending to file a notification shall have facilities and a quality management system in place as determined by the person intending to file above mentioned notification, shall have facilities and a quality management system in place as determined by the Ministerial Decree of the Ministry of Health and Welfare.

3.4.4.3

Medical Device Distributor or Renter

A person who intends to sell medical devices for business (hereinafter referred to as "Seller") or a person who intends to rent medical devices for business (hereinafter referred to as "Renter") shall submit for each place of business a sale business notification or a rental business notification to the city mayor, Goon-governor or Gugovernor of the place where its business is located in accordance with the Ministerial Decree of the Ministry of Health and Welfare. A person who may sell or rent medical devices under this Act shall comply with the applicable provisions regarding the methods for quality assurance at its business place and other measures to maintain orderly sales as provided in the Ministerial Decree of the Health and Welfare.

3.5 Health Insurance 3.5.1 Health Insurance Medical Treatment Materials The material for treatment is defined as medical devices utilized for the treatment of insurance applicable patients, which is either approved or notified by the commissioner of KFDA or related law. It indicates consumable material approved and notified by the Minister of Health and Welfare based on related regulation and protocol. Such material includes consumable medical device described at 「Medical Device Act」 including artificial joint and stent, some of non-medicine products described at 「Pharmaceutical Affairs Law」 such as gauze and bandages(dressing), human tissue described at 「Human Tissue Safety & Management Act」 including bone and cartilage, and some of industrial products such as batteries and CD. • Treatment materials registered at Health Insurance Review & Assessment Service are 16,533 (reimbursable).

Among them 16,147 are independent assessment products, and the rest 386 are independently nonassessable products (including medical cost). 71% of them are imported and 29% are domestic products.

Korea’s yearly medical care is shown at below table. In 2011 the material cost was at USD 1,845 million, taking up 4.4% of total medical expenses.

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Table 12. Korea’s yearly medical care

(Unit : million USD) 2007 34,717 1,453 4.18

Category Total Medical Expenses Material Expenses Ratio of Material Expenses (%)

2008 31,776 1,427 4.34

2009 30,892 1,324 4.29

2010 37,757 1,705 4.52

2011 41,580 1,845 4.44

Source: Medical Care Expenses Overview, HIRA st

Table 13. The demand for reimbursement by 1 tier categories of treatment material in 2011 st

1 Tier Categories

Name of Categories

Value (1000 USD)

Total

1,529,002

A

NUCLEAR MEDICINE EXAMINATION

17

B

SUTURE

C

SYNOSTOSIS & FRACTURE FIXATION

74,308

D

SOFT TISSUE FIXATION RELATED TO ARTHROSCOPE OPERATION

29,400

E

ANTIFICIAL JOINT

229,516

F

SPINE MATERIAL

78,745

G

CARDIOTHORACIC SURGERY

52,756

H

NEUROSURGERY

20,525

I

OPHTHALMOLOGY& OTOLARYNGOLOGY

36,572

J

ARBITRATED SURGICAL PROCEDURE

397,652

K

GENERAL MATERIAL Ⅰ

141,339

L

GENERAL MATERIAL Ⅱ

62,969

M

GENERAL MATERIAL Ⅲ

92,581

N

FLAT RATE REIMBURSEMENT

T

HUMAN TISSUE

113,356

189,362 9,898

Source: HIRA nd

Table 14. The Top 10 Reimbursement among 2 Tier Categories in 2011 nd

Treatment Material Cost (1000 USD)

Ra nk

2 Tier Categories

1

J5083

DRUG ELUTING CORONARY STENT (PREMOUNTED, SELF EXPANDABLE TYPE)

123,589

2

N0031

LAPAROSCOPE, THORACOSCOPE, COST FOR ARTHROSCLEROSIS MATERIAL

905,073

3

E2001

THE KNEE JOINT REPLACE FEMORAL COMPONENT (GENERAL)

57,963

Name of Category

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4

E2011

THE KNEE JOINT REPLACE TIBIAL COMPONENT

51,640

5

J4081

PTCA BALLOON CATHETER

44,559

6

N0051

ABRASIVE DEVICE INCLUDING BURR, SAW

44,356

7

F0018

THORACOLUMBARSCREW SET (INCLUDING LATCHING DEVICE)

40,826

8

M2052

LAPAROSCOPE TROCAR

37,375

9

N0041

ENDOSCOPE SURGICAL APPARATUS

26,100

10

E2021

THE KNEE JOINT REPLACE BEARING INSERT

25,296

Source: HIRA

3.5.2 Treatment Material Registration Procedure All treatment materials are subject to be registered based on National Health Insurance Corporation Medical Care Regulation, and the Standard for Determination & Adjustment of Treatment Treatment Material (notified by the Ministry of Health and Welfare). The registration follows negative list system, and all materials are to be registered classified either as reimbursable or non-reimbursable. In other words, all companies must apply to HIRA for its registration within 30 days after product approval from KFDA. Within 150 days after the submission of application, HIRA shall determine and announce its registration and the materials’ reimbursable status and its upper limit of reimbursement. When companies have objection to HIRA’s decision regarding its upper limit of reimbursement, they can apply for adjustment.

3.5.3 Treatment Material Reevaluation Some of improved products used to be estimated at 90% or the lowest price by the registration timing. To improve such irrationalism in price estimation system of the treatment material, the Ministry of Health and Welfare has nd reorganized its price estimation basis units, which is a 2 tier categories, to secure its fairness. It also terminates 42

| Medtech Industry in Korea

reimbursement of products that has not been manufactured (imported) for certain period of time. Since 2009, the Ministry has been putting their effort to improve its effectiveness and conducted following reevaluation of treatment materials.

•

All products registered at 「Treatment Material Reimbursable Non-Reimbursable Upper Limit Table」(except products include treatment cost) are subject to reevaluation every three years classified nd

•

•

•

by 2 tier categories.

Considering its cost efficacy or function in reorganizing product categories, products possessing similar or equivalent cost efficacy are classified under same categories. Some products with unclear classification standards are consolidated and reclassified by its characteristics (function, shape, material, etc), then applies equivalent upper price limit.

For equivalent categories, the Ministry first refers to the previous reimbursement claim amount and applies incremental assessment to adjust its upper limit price. For products whose price has raised or reduced over 50%, the Ministry initially adjusts its level of 50%, and then applies the rest exceeding value after 6 months of grace period. In case certain treatment material is found to posses special advantages, +α is applied based on its value assessment. The applicable range is minimum 10% up to maximum 50% addition based on its valuation.

After evaluating similar product’s economic feasibility and its fairness of reimbursement, the subjects for medical care (health benefits) are to be adjusted. The adjustment is to reevaluate products classified as non-reimbursable because of its economical ambiguity such as cost and efficacy. It also expunges registrations’ treatment materials whose approval was cancelled in order to terminate its reimbursement status because it had zero reimbursement claim. For materials with no claim within 3 years, its reimbursement is also to be terminated after 6 months of grace period. When the resume of sales for such material is requested, the termination can be cancelled.

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4. Korean Medtech Sector.

4.1 Hospital Installations

4.1.1 Hospital Installations Market Size Hospital Installations Market Size (2010) Item Group

Unit : USD 1,000 Production

Export

Import

Market Size

Treatment table

92,743

9,707

11,410

108,914

Anesthesia apparatus

24,199

5,646

20,745

43,073

3,061

1,047

126,982

129,474

185,159

108,398

286,266

391,912

672

126

952

1,603

31,622

23,361

32,733

45,927

Urology devices

4,690

876

3,474

8,020

Patient transport

15,323

712

16,811

33,812

122

141

985

985

4,734

1,725

11,474

15,222

421,718

410,133

128,682

206,055

Eletrosugical device

23,970

8,540

36,569

55,738

Laser apparatus for medical use

71,234

42,493

46,638

86,492

2,929

2,192

551

1,745

0

0

21,323

21,323

882,177

615,097

745,595

1,150,295

2,964,444

1,454,353

2,302,144

3,812,235

29.8%

42.3%

32.4%

30.2%

Artificial internal organ apparatus Radiologic device Radiation & laser protective devices Cardiovascular devices

Stethoscope Clinic thermometric system Testing apparatus for Bio-phenomena

Magnetic induction apparatus for medical use Radiographic supplies Total Total Medical Device % of Total Market Source: KMDIA

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| Medtech Industry in Korea

4.1.2 Number of Companies in Hospital Installations Market Mark

Manufacturer

Importer

Exporter

Number

447

372

363

Source: KMDIA

4.1.3 Key Player Company (Country of Origin) Medison

Product/ Import (1000USD) 204,671

No of Product (import) 17

DaesungMaref

No of employee 414

10,813

16

58

Comed Medical

204,222

6

108

Simens Korea Philips Korea GE healthcare Korea

111,003 97,572 86,676

16 117 221

312 130 319

Main Products

Supply Chain

Ultrasonography Radiographic unit DVT

14 branch office 110 Distributer 50 Distributor

Compression system pump Radiographic unit ESWL Ultrasonography MRI, CT MRI, CT Patient Monitor

49 branch office

Level of Technology in Hospital Installations -

Small domestic hospitals are satisfied with domestic equipment.

-

Critical equipment (that probes) is 80% imported.(MRI, CT, Angiographic system)

-

Local equipment include manometers, blood pressure equipment, patient monitor

4.2 Dental Industry

4.2.1 Dental Market Size Dental Market Size(2010) Item Group Dental Devices

Unit : USD 1,000 Production

Export

Import

Market Size

4,966

2,395

9,389

12,735

Dental Materials

443,685

87,615

155,768

581,053

Total

448,651

90,010

165,157

593,788

2,964,444

1,454,353

2,302,144

3,812,235

15.1%

6.2%

7.2%

15.6%

Total Medical Device % of Total Market Source: KMDIA

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4.2.2 Number of Companies in Dental Market Mark

Manufacturer

Importer

Exporter

Number

446

898

221

Source: KMDIA

4.2.3 Key Players Company

Product/ Import (1000USD) 48,780,098

Osstem (Korea) Shinhung (Korea) Metabiomed

Alphadent

No of Product

No of employee

Main Products

45

234

Dental Implant

52,706,812

49

121

Dental Unit

9,928,395

22

153

22,183,133

30

19

gutta-percha point, endodontic, paper Alloy, Dental

Source: KMDIA

4.2.4 Major Foreign Suppliers of Dental Devices Country US

Europe

Japan

Company -

Ultradent

-

Densply

-

3M Unitek

-

Dentronix

-

Biomet

-

Nobel Biocare

-

Sirona Dental

-

Komet Brassier Dental Instrument

-

Yoshida-Seiko

-

GC Korea

Source: Korea Dental Equipment and Material, US Commercial Service

Level of Technology: Korean manufacturers supply primarily low and medium technology products and devices such as dental chairs, Intra-oral camera equipment, Articulators, Compressors, Autoclaves. However, some good quality products are also manufactured in Korea such as Dental implants, Metal alloys, Amalgamators, Vibrators, Drill engines.

Best prospects for Swiss exporters are high-tech dental products including, Dental implants, Whitening products, Bone graft materials, Dental precious metal alloys, Orthodontic materials, Impression materials.

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| Medtech Industry in Korea

4.3 Orthopedics and Trauma 4.3.1 Orthopedics and Trauma market size Orthopedics and Trauma Market Size(2010)

Unit : USD 1,000

Item Group

Production

Export

Import

Market Size

Orthopedic devices

21,229

4,341

53,503

73,703

Orthopedic materials

95,973

5,619

294,182

399,508

Splints

31,099

14,094

2,517

24,374

Surgical supplies

27,150

1,313

61,070

91,142

175,452

25,367

411,272

588,727

2,564,398

1,454,353

2,302,144

3,812,235

6.8%

1.7%

17.9%

15.4%

Total Total Medical Device % of Total Market Source: KMDIA

4.3.2 The Number of Companies in Orthopedics and Trauma market Mark

Manufacturer

Importer

Exporter

Number

86

71

70

Source: KMDIA

4.3.3 Key Players Company (Country of Origin) GS Medical (Korea) Ceragem (Korea) U&I (Korea) Corentec

Product/ Import (1000USD) 24,599,178

No of Product (import) 13

No of employee

Main Products

110

Spinal internal fixation system

46,691,715

5

210

Vibrator, Medical use

3,984,277

24

94

6,593,736

7

23

Spinal internal fixation system Hip joint Knee Joint

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4.3.4 Major Foreign Suppliers of Orthopedics and Trauma market Country US

Company

Europe

-

Johnson & Johnson Korea

-

Smith & Nephew

-

Striker Korea

-

Medtronics Korea

-

Zimmer Korea

-

Biomet Korea (UK)

-

Synthes Korea(Switzerland)

Level of Technology of Implants in Orthopedics: -

Koreaâ&#x20AC;&#x2122;s market share of implants has increased dramatically in the past decade. In 1998, Korean products had 1% market share. In 2009, their market share was 25%.

-

However, high tech products such as hip and knee implants are still imported as domestic producers are still weak in the high tech sector.

-

Even though some Korean company, Corentec, OtisBiotec launched hip and kneeprosthesis. Among the domestic companies, GS Medical is the leading company in implants in the orthopedics sector.

4.4 Disposable Goods

4.4.1 Disposable Goods Market Size Disposable Goods Market (2010)

Item Group

Unit : USD1,000

Production

Export

Import

Market Size

Needle for syringe and puncture

30,635

20,127

35,599

50,886

Syringes

57,073

25,953

10,839

50,862

146,952

45,148

168,658

293,386

Acupuncture and moxibusion apparatus

10,518

3,678

3,952

12,433

Suture and ligature

13,279

2,411

29,339

42,279

7,281

16,528

4,773

-3,338

265,738

113,845

253,160

446,508

2,564,398

1,454,353

2,302,144

3,812,235

10.4%

7.8%

11.0%

11.7%

Infusion instruments

Contraceptive device Total Total Medical Device % of Total Market Source: KMDIA

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| Medtech Industry in Korea

4.4.2 Number of Companies in Disposable Goods Mark

Manufacturer

Importer

Exporter

Number

286

977

136

Source: KMDIA

4.4.3 Key Players Company (Country) Sewoon (Korea) Ace medical (Korea) Green Cross MS (Korea) Unidus (Korea) Ailee (Korea)

Product (1000USD) 11,996,356

No of Product 13

No of employee

Main Products

110

Catheter

24,137,520

28

225

PCA

10,210,232

4

141

2,200,267

56

157

Condom

11,262,803

87

260

Suture needle

Blood bag

Source: KMDIA

4.4.4 Major Foreign Suppliers of Disposable goods market Country US

Europe

Company -

Johnson & Johnson Korea

-

Smith & Nephew

-

Striker Korea

-

Linvatec Korea

-

BD Korea

-

Synthes Korea(Switzerland)

-

B Braun (Germany)

-

Storz(Germany)

Level of Technology in Disposable Goods -

After Asian Financial Crisis in mid 1990’s, the dollar vs. won exchange rate has gone up, therefore the demand for domestic disposable goods had increased. This resulted in enhancing domestic products’ technology competitiveness.

-

Local hospitals’ infections became a hot issue, which also resulted in increase of domestic disposable goods production.

-

As KFDA’s GMP regulations is settled, the quality of domestic disposable goods have improved with production process validation, sterilization validation, and risk management technology. The number of OEM production requests of advanced products from overseas are increasing.

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4.5 Reusable Instruments 4.5.1 Reusable Instruments Market Size Reusable Instruments Market Size (2010)

Unit : USD 1,000

Item Group

Production

General medical supplies and apparatus Speculums for medical use Surgical operation apparatus Total Total Medical Device % of Total Market

Export

10,785 84,744 155,348 250,877 2,564,398

Import

Market Size

6,006 18,161 9,787 62,529 121,606 222,418 137,399 303,108 1,454,353 2,302,144

9.8%

9.4%

24,623 150,706 280,394 455,723 3,812,235

13.2%

12.0%

Source : KMDIA

4.5.2 Number of Companies in Reusable Instrument Mark

Manufacturer

Importer

Exporter

Number

224

186

136

Source: KMDIA

4.5.3 Key Players Company (Country) Choongwae

Product (1000USD) 5,630,161

# of Product

# of emproyee

Main Products

9

39

Incubator Operating Light

Sometec

2,529,017

34

25

Endoscope

Solco

8,926,514

61

165

Knife Forcep Scissor

4.5.4 Major Foreign Suppliers of Reusable Instruments market Country US

50

| Medtech Industry in Korea

Company -

Steris

-

Smith & Nephew

-

Striker Korea

-

Linvatec Korea

-

BD Korea

EU

Japan

-

Marqutte(France)

-

Synthes Korea(Swiss)

-

B Braun (Germany)

-

Storz(Germany)

-

Olympus

-

Fuzinon

Level of Technology in Reusable Goods Korean companies have produced surgical operation devices since the late 1970s. In 2009, imported products accounted for 80% of the Korean surgical operation device market. High quality products are imported from the US and Germany mainly and low-priced ones are imported from Pakistan. Korean products are considered to be of midquality. However, the technology level of Korean companies in the sector is increasing. Korean made reusable instruments have a relatively strong position in South America and China which are mid-quality product markets.

4.6

Rehabilitation Machines

4.6.1 Rehabilitation Machines Market Size Rehabilitation Machines Market Size (2010) Item Group

Unit : USD 1,000 Production

Physical devices for medical use

Import

Market Size

223,027

159,428

17,706

81,305

34,683

10

3,875

38,548

4,948

2,193

85,891

88,646

262,657

161,631

107,472

208,498

2,564,398

1,454,353

2,302,144

3,812,235

10.2%

11.1%

4.7%

5.5%

Hearing aid Human tissue and organ substitute Total Total Medical Device

Export

% of Total Market Source: KMDIA

4.6.2 Number of Companies in Rehabilitation Machines Mark

Manufacturer

Importer

Exporter

Number

52

43

36

Source : KMDIA

Medtech Industry in Korea |

51

4.6.3 Key Players Company (Country) Nuke Medical Starkey Korea G & Lee sound

Product (1000USD) 47,779,988 9,441,620 6,479,864

No of Product

No of employee

24 77 59

97 64 43

Deayang Medical

3,535,225

26

20

Stratek

3,652,612

29

30

Hansbiomed

1,761,406

6

53

Main Products Heater, Medical Hearing Aid Hearing Aid TENS Laser App Implant Mama

4.6.4 Major Foreign Suppliers of Reusable Instruments Market Country US

Europe

Japan

Company -

Smith & Nephew

-

Medtronics Korea

-

St Jude Medical

-

Striker Korea

-

Linvatec Korea

-

Bard Korea

-

Ydex Korea(Demark)

-

Phonak Korea (Switzerland)

-

Marquett (France)

-

BBraun (Germany)

-

Tyco healthcare(UK)

-

Terumo

4.6.5 Level of Technology in Rehabilitation Devices Generally, domestic physical device makers focus on the home market which requires a lower level of technology than the hospital market that demands a much higher level of technology. However, Koreaâ&#x20AC;&#x2122;s domestic bio technology industry (including tissue engineering) meets a global level of technology.

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| Medtech Industry in Korea

4.7 Laboratory Machines & In-Vitro Diagnostics 4.7.1 Laboratory Machines & In-Vitro Diagnostic Market Size Laboratory Machines & In-Vitro Diagnostic Market Size (2010) Item Group

Production

Unit : USD 1,000 Export

Import

Market Size

Non-ionization diagnostic device

5,958

2,749

87,438

90,647

Medical in vitro testing apparatus

74,431

89,066

104,897

90,262

Medicinal substance-producing equipment

23,636

7,827

186

15,995

104,025

99,642

192,521

196,904

2,564,398

1,454,353

2,302,144

3,812,235

4.1%

6.9%

8.4%

5.2%

Total Total Medical Device % of Total Market

4.7.2 Number of Companies in Laboratory Machines & In-Vitro Diagnostics Mark

Manufacturer

Importer

Exporter

Number

103

86

52

Source: KMDIA

4.7.3 Key Players Company (Country) Samsung Electronics Inpofia Isense Vision Scientific

Product (1000USD) 1,133,149

No of Product 1

No of employee

Main Products

155

Chemical Analyzer

18,696,028 19,074,204 2,060,245

21 33 23

183 254 26

Glucose meter Glucose meter Centrifuge

Source: KMDIA

4.7.4 Major Foreign Suppliers of Laboratory Machines & In-Vitro Diagnostic Country US

Europe

Company -

Abbott

-

Beckman coulter

-

Bio Rad Lab.

-

Ortho

-

Roche(Switzerland)

-

Siemens(Germany)

-

Biomerieux(France)

-

Biosite(Germany)

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53

Japan

-

Hitachi

-

Toshiba

-

Daichi

Level of Technology in Laboratory Machines & In-Vitro Diagnostic.

-

Koreaâ&#x20AC;&#x2122;s production in this field is relatively low. Some basic general lab equipments such as centrifuges are manufactured domestically, but devices such as in-vitro diagnostic related equipments are not produced at all. Only in 2010, Samsung Electronics developed and marketed a device for dry chemistry.

-

Among in-vitro diagnostic reagents, some of blood glucose test strip is manufactured in Korea but reagents are not produced at all as the nationâ&#x20AC;&#x2122;s technology is at premature level.

4.8 Ophthalmologic Devices 4.8.1 Ophthalmologic Devices Market Size Ophthalmologic Devices Market Size (2010) Item Group

Unit : USD 1,000 Production

Sight corrective ophthalmic lens Test chart for visual acuity and color blindness Total Total Medical Device % of Total Market

Export

Import

216,985

142,630

112,057

220,262

3,383

3,419

446

938

220,369

146,049

112,503

221,200

2,564,398 1,454,353 2,302,144

3,812,235

8.6%

10.0%

4.9%

4.8.2 Number of Companies in Ophthalmologic Devices Mark

Manufacturer

Importer

Exporter

Number

101

66

56

Source: KMDIA

4.8.3 Key Players Company (Country) Daemyoung Optical SomoOpical New Bio Huvitz

54

Product (1000USD) 37,901,487

# of Product 11

# of employee

Main Products

230

Lens

13,301,894 7,938,166 10,470,537

46 4 11

234 151 108

Lens Contact lens Refractometer Slit lamp

| Medtech Industry in Korea

Market Size

5.8%

4.8.4 Major Foreign Suppliers of Ophthalmologic Devices Country US

EU

Japan

Company -

Johnson & Johnson

-

Baushrom

-

Alcon

-

Karl Zeis(Germany)

-

Haag Streit

-

Iridex

-

Kowa

-

Topcon

-

Canon

Level of Technology in Laboratory Machines & In-Vitro Diagnostic.

-

Companies from the US, Europe and Japan dominate about 80% of Koreaâ&#x20AC;&#x2122;s ophthalmology device industry.

-

Huvitz is the leading company among Korean optometric medical device manufacturers. Huvitz has achieved a global level of technology in the ophthalmologic diagnostic sector. However, the general technology level of the Korean optometric medical device industry is considered to be less than 70% that of the global level.

-

Korea retains strong techniques and production capabilities of optical lens. Therefore it is actively exported to overseas. Especially the color contact lens are evaluated to be very competitive, however recently faces challenges in global market as Chinese products are massively distributed with price competitiveness.

Medtech Industry in Korea |

55

5. Opportunities for Swiss SMEs. 5.1 Overview th

Switzerland is the 5 exporter to Korean medical device market, however, its market share within imported products is relatively small with 4.7%. The major exporting products from Switzerland to Korea are dental materials and orthopedic goods. Top 3 exporting products accounts 53.8% of total Swiss export, and top 30% exporting companies are taking up 90% of total export. This indicates that Switzerland’s export to Korea is limited to certain companies.

This chapter reviews Swiss companies who have presence in Korean medical device market, and presents future strategy to these companies. The chapter also elaborates on considerable facts for more Swiss companies to enter into Korea, and most prospective products for Swiss companies to export to Korea.

5.2 Swiss companies in Korean Medical Device Market4 5.2.1 Korean Medical Device Market Size & Swiss Medical Device Export to Korea Category Korean Medical Device Market Size Domestic Sales Imports Other countries Switzerland

Value(USD) 3,375,296,214 1,109,460,699 2,265,835,515 2,158,517,351 107,318,164

Ratio 100% 32.9% 95.3% 4.7%

67.1%

Source: KFDA Statistics, 2010

The imported devices dominate 67.1% of total Korean medical device market (as of 2010), among them Swiss th products’ (ranking of the 5 ) market share is 4.6%, which is relatively small compared with countries such as the US st (ranking 1 ) with 41.65%.

5.2.2 Korea’s Medical Device Import Value and Amount by Product Classification Import Value Ratio (%)

Import Amount

Class 1

17,045,815

15.9

1,171,410

9.1

Class 2

35,107,836

32.7

10,789,881

83.8

Class 3

28,814,846

26.8

754,644

5.9

Class 4

26,349,667

24.6

149,533

1.2

total

107,318,164

100

12,865,468

100

class

Source: KFDA Statistics, 2010

4

Source: KFDA Statistics, 2010

56

Import Amount

Import Value (USD)

| Medtech Industry in Korea

Ratio (%)

Looking at Swiss companiesâ&#x20AC;&#x2122; exporting products based on its value by classification, Class II products comes first with 32.7% followed by Class III, Class IV, and Class I. However the value differences among classes are not very big. In exporting amount wise, which is estimated based on approval (or registration) in various units (EA/Box/Set), the amount of Class II products was dominant with 83.8% followed by Class I, Class III, and Class IV. Class IV products was only 1.2% of total, showing great gap between other class products. The difference between value and amount is because Class IV devices are usually high-priced products such as external lithotripter, implantable defibrillator, and intraocular lens, while Class II devices include lower-priced price products such as infusion device, and dental material.

5.2.3 Import Value & Amount by Product Classification Rank

Product Group

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Orthopedic Materials Dental Materials Human Tissue & Its Function Replacement Clinical Thermometric System Instruments Syringe Artificial Internal Organ Apparatus In-Vitro Diagnosis Instruments Infusion Instruments Orthopedic Instruments Speculums for Medical Use Cardiovascular Devices Anesthesia Apparatus Laser Apparatus for Medical Use Physiological Phenomena Measure Device Urological Equipment Electrosurgical System Surgical Supplies Suture & Ligature Physical Devices for Medical Use Dental Equipment Hearing Aid Sight Corrective Lens Needle & Puncture Patient Transport General Instruments Splints Sheet Metals TOTAL

Import Amount (USD)

Quantity

24,958,097 23,135,760 9,812,692 8,573,904 5,786,877 5,213,071 4,767,071 4,146,236 2,918,147 2,483,590 2,324,665 2,183,538 2,090,415 1,689,629 1,140,866 1,117,857 1,098,264 1,009,000 745,422 742,540 637,250 426,527 211,931 62,524 17,723 16,989 6,142 1,437

734,720 726,338 62,896 267,878 417,278 9,514,088 1,555 143 619,723 18,412 70 228 218 9 4,702 11 19,454 6,503 4,014 980 1,204 2,593 459,430 1,868 8 4 1,140 1

107,318,164

12,865,468

Source: KFDA Statistics, 2010

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57

The import value by product classification shows the orthopedic materials including artificial joint, orthopedic bone screw, and spinal internal fixation system takes up the largest share among other products (USD 24,958,097, 23.2%). nd Dental materials including dental implant, dental surgical instruments came in 2 place (USD 23,135,760, 21.5%), followed by human tissue & its function replacement (USD 9,812,692, 9.1%), and Clinical Thermometric System (8,573,904 USD, 8.0%).

The fact that top 3 product group shares 53.8% of total, indicates Swiss export to Korea is concentrated on certain products.

5.2.4 Top 30 Swiss Companies present in Korea5 Rank

5

Manufacturer

Major Products

1

Synthes GmbH

operation instruments, orthopedic materials

2

Cendres+MĂŠtaux

dental materials

3

Key Tronic Coporation

Thermometer

4

Medtronic Europe Sarl

implantable cardiac pacemaker, implantable defibrillator

5

STAAR Surgical AG

intraocular lens

6

Institut Straumann AG

dental implant, dental import instruments

7

Geistlich Pharma AG

Animal source bone graft material

8

Maillefer Instruments Holding SARL

dental materials, operation instruments

9

Biosensors Europe SA

Stent

10

Zimmer GMBH

artificial joint, orthopedic materials

11

Forma Vitrum AG

Syringe

12

Stryker Spine SA

spinal fixation cage

13

Roche Diagnostics GmbH

In-vitro diagnosis apparatus

14

Medos SARL,CODMAN SARL

infusion instruments

15

Medos International SARL

spinal fixation cage

16

Leica Microsystems (Schweiz) AG

medical microscope

17

ETHICON SARL

Ligature

18

Hamilton Medical AG

Ventilator

19

ANTEIS SA

Biomaterial graft/prosthesis

20

ZIEMER OPHTHALMIC SYSTEMS AG

Laser apparatus for medical use

21

Stryker Trauma AG

orthopedic bone screw, orthopedic fixation plate

22

Teoxane S.A.

Biomaterial graft/prosthesis

23

EMS(Electro Medical Systems) S.A.

operation instruments, dental materials

If manufacturer and OEM are different parties, the legal responsible party â&#x20AC;&#x201C; OEM is counted for the research.

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| Medtech Industry in Korea

24

Roche Molecular Systems Inc.

In-vitro diagnosis apparatus

25

Codman & Shurtleff, Inc.

infusion instruments

26

Storz Medical AG

external lithotripter

27

Medela AG

Aspirators for medical use, breast pump

28

Ares Trading S.A.

syringe, infusion instruments

29

Schott Schwiz AG

Syringe

30

DePuy Mitek A Johnson & Johnson Company

bone screw

Source: KFDA Statistics, 2010

90% of total Swiss medical device exports to Korea are from companies in the above table. In case of thermometer, the Key Tronic Corporation’s export value is almost equal to Korea’s total import of thermometer.

5.3 Suggestions and Recommendations for Swiss Companies Planning to Penetrate Korean Market 5.3.1 Understanding of Regulatory Requirements rd

KFDA supervises medical devices by its classes. For Class I and II devices, regional KFDA and 3 party institutions have taken over approval evaluation tasks to increase manufacturing companies’ autonomy and to give approval more prompt manner. For Class III and IV devices the system has switched to “selection” and “concentration” of indepth approval evaluation structure to enhance its professionalism. Therefore, the test reports can be substituted by reports already submitted to authorities in manufacturing countries or company’s own test reports which followed global standard test methods. This shortens approval period substantially. (※ For detailed information of Test Report Recognition Range, refer to ‘3. The Role of government / 3.4. Import Procedure of Medical Device / 3.4.1.4 Pre-market Approval / 3.4.1.5 Required Documentation for Product Approval Evaluation).

5.3.2 Preparation to GMP Inspections for Manufacturing Site From 2012 foreign manufacturer become a subject to GMP audit. Therefore any foreign companies who are planning to enter into Korean the medical device market needs to prepare for the GMP regulation. In case of an existing company who already entered into the Korean market needs regular renewal inspection, starting from 2012, Class IV device manufacturer must be inspected at manufacturing site. In 2013 the inspection range expands to Class III and IV, and in 2014 it again expands to Class II, III and IV device manufactures as subject to site inspection for GMP. This basically means all Swiss manufacturers except Class I products needs to prepare for GMP inspection. In case of a new company who enters into the market for the first time, all companies Class I products will need to go through GMP inspection except from 2012. ※ Details of GMP requirements are elaborated in 3. Role of Government / 3.4 Medical Device Import Procedure / 3.4.2 GMP Procedure.

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59

5.3.3 Preparation to IEC 60601-1 3rd Edition Drive by KOR-EU FTA and KOR-US FTA, KFDA is trying to improve its regulation up to global standards. From rd 2014 KFDA is projecting to adopt IEC 60601-1 3 Edition gradually. Therefore, companies who plan to enter into the Korean market or already has entered into the market with electronic medical devices must prepare for such regulation change to go through approval procedure swiftly. rd ※ For detailed dates of IEC 60601-1 3 adoption, refer to ‘2. Medical Device Industry Overview and Trend / 2.4. rd Policy & Strategy / 2.4.3 Propulsion of IEC60601-1 3 Edition’.

5.4 Opportunities The 90% Swiss’ export of medical device is concentrated on top 30 companies. In export value, top 3 product groups are orthopedic instruments, dental materials, and clinical thermometric systems all of which are under Class II or III classification. In export amount, Class IV products which requires advanced technology accounts only 1.2%.

Considering Korea has weakness in regards to technology and financial level, they purchase major high-tech devices from overseas such Swiss competitive advantageous products. The bio+medical instrument type of advanced convergence medical devices or cardiac pacemakers are highly potential in Korean market. Also, orthopedic instruments and dental materials all of which are major Swiss products will gain larger market share in Korea, because Korea is rapidly aging society.

The strategy below can support Swiss companies to expand their market share with minimum of investment risk.

5.4.1 Market Entry through Multi-National Clinical Trial KFDA has improved its clinical trial management standards to be a suitable measure with global standard. It also projects supporting system in order to enhance newly developed medical devices value. Therefore, foreign companies can utilize this measure as market entry strategy for multi-national clinical trial. In other words, if a company proceeds new devices’ medical trial in Korea based on globally adjusted KFDA’s KGCP (Korean Good Clinical Practice), it will be a good opportunity to provide Korean hospitals and doctors to utilize and evaluate the product. Also, because the trial has been conducted under KFDA standard, the product’s approval procedure will be much smoother in Korea.

5.4.2 Strategic Alliance through OEM with Korean Medical Device Manufacturer Korea’s leading medical device manufacturers have developed upon the OEM relation with foreign advanced medical device companies. Since 2003, KFDA started to obligate GMP regulations in gradual phases, that in 2007 the GMP management standard including risk management software validation was fully obligated by all manufacturers. Therefore, Korean medical device manufacturers are equipped with production capabilities to manufacture high quality products so that they can act as production base for Swiss companies. For example, GE (USA), and Siemens (Germany) have successfully established and operates ultrasonic diagnostic device production plants in Korea.

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| Medtech Industry in Korea

5.4.3 Technical Partnership with Korean Medical Device Manufacturers As mentioned above, Korean government is intensively nurturing medical device industry, and many Korean companies are seeking for license-in opportunities for medical device development. Therefore, the technical partnership with Korean companies will enable Swiss companies to develop and manufacture medical devices not only to enter into Korean market but also advancing into global market.

Especially, cooperation with Medical High-Tech Complex Industry Foundations in Daegu Sinseo or Chungbuk Osong will present good opportunities.

5.4.4 Prospective Products Korea’s medical device’s production combined with import market is estimated to be USD 3,886 million. Korean doctors are providing high quality healthcare service utilizing advanced medical technologies. Therefore, they are always in hurry to purchase the latest medical devices to provide better quality service. Especially, dissemination ratio of devices such as PET and CT are relatively high compared with other countries.

Emergency & Trauma Treatment Products The government is projecting to establish 5 trauma centers in 5 different regions in 2012. By 2015 it project to establish 17 trauma centers to strengthen capabilities of the nation’s handling trauma such as traffic accidents, natural and industrial disaster.

In 5 years the government will invest KRW 1,000billion worth of resources to actively implement ‘Emergency Medical Service Preliminary Plan’. This will present huge sales opportunity for products related to emergency medical service and trauma treatment. u-Healthcare Related Products Utilizing Korea’s strong IT infrastructure, a medical system will be established that will enable to care for chronic disease patients regardless of location and time. Also, medical facilities and services for rural and fishery areas as well as local small cities will be actively expanded. Thus, the demand for related products to these medical systems and services will increase.

Disposable Products Recently, major hospitals infection control has become new issue that many surgical equipment and supplies are substituted to disposable products. In human resource management aspect, the disposable medical equipment are favored.

Products Not Available in Korea Cancer treatment related products such as linear accelerator, and digital X-ray, clinical pathologist diagnostic devices, edoscope, and microscope are not manufactured in Korea, therefore hospitals have no option to use imported devices.

The Demand for Aging Device Replacement As major high-end devices such as CT, MRI is getting aged; replacement is inevitable, presenting good sales opportunities for high-price devices manufacturers.

Minimal Invasive Operation Products The operations with laparoscopy and endoscopy are booming these days, as such operation method minimizes the Medtech Industry in Korea |

61

patientâ&#x20AC;&#x2122;s scar and also the days of hospitalization which enables patients to go back to their routine life quickly.

Therefore the demand for minimal invasive operation products will continuously increase. Not only endoscope but also scissor, forcep, troca for endoscopy has high market potential.

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| Medtech Industry in Korea

6. Conclusion.

Based upon the medical industry paradigm shift driven by higher quality of life and aged society, Korea’s medical device market size is estimated at USD 3,886million with the CAGR 9.4% growth rate from 2004 to 2011. Because of its low technology level and immature industrial structure, the market’s dependency on imported products is relatively high at 65%. Therefore, Korea is one of the attractive markets for foreign medical device manufacturers. However, considering the recent regulation amendment by KFDA regarding medical device management to level it up to those of advanced countries, as well as the complex import procedure, it is not the easiest market to enter into. st

Among top 10 exporting countries to Korea, the US ranks 1 sharing 44.39% of total Korea’s medical device import, followed by Germany (13.63%). It is noticeable that the US is sharing more than 3 times exporting th value than the those of Germany. Switzerland ranks 5 , however, its share is relatively small with 4.57%.

In order for Swiss companies to enter into Korea in short period of time and expand their market share, one rd must be well prepared for Korea’s new regulations such as adoption of IEC60601-1 3 , and the revision of GMP inspection for overseas manufacturer. Also strategic alliance with local medical device manufacturers will provide higher efficiency in entering into Korean market.

Furthermore, one must consider items that are most potential in Korean market. Such prospective items include: u-healthcare products, disposable surgical apparatus, CT, MRI, and minimal invasive operation related goods.

Medtech Industry in Korea |

63

7. Appendix.

Appendix1.

Top 30 Production Products by Value Top 30 Export Products by Value Top 30 Import Products by Value

Appendix2.

Product Categories

Appendix3.

Scope of Acceptable Economic Benefit based on Enforcement Regulation of the Medical Dice Rebate Dual Punishment

Appendix4.

The documents to be submitted

Appendix5.

Technical file review Application

Appendix6.

Source and Reference Site

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| Medtech Industry in Korea

Appendix1.

Top 30 Production Products by Value (Unit: USD, %) 2010 NO

Product

Production Value

2011

Ratio (%)

Ranking

Production

Ratio

Value

(%)

Growth Ranking

Rate (%)

1

Ultrasonic Imaging System

286,076,862

11.16

1

343,316,494

11.30

1

15.01

2

Dental Implant

162,594,359

6.34

3

225,353,703

7.42

2

32.83

3

Dental Noble Metal Alloy

198,538,291

7.74

2

209,296,789

6.89

3

1.03

4

Sight Corrective Spectacles

139,111,225

5.43

4

159,811,863

5.26

4

10.10

5

Soft Contact Lens

68,087,084

2.66

9

89,371,822

2.94

5

25.79

6

Heating Pad System, Home Use

70,158,774

2.74

8

85,633,947

2.82

6

16.97

7

Combinational Stimulator for Medical Use

71,198,335

2.78

7

84,112,274

2.77

7

13.22

8

Spinal Internal Fixation System

49,803,829

1.94

13

80,943,281

2.66

8

55.76

9

Medical Probe

81,809,115

3.19

6

74,306,467

2.45

9

-12.95

10

Laser Surgical Apparatus

55,027,056

2.15

12

65,418,364

2.15

10

13.93

11

Digital X-ray Tomography

88,783,452

3.46

5

62,947,823

2.07

11

-32.05

12

Syringes

56,372,904

2.20

11

54,792,060

1.80

12

-6.85

13

Blood Glucose Test Strip

30,812,630

1.20

19

53,842,720

1.77

13

67.47

14

Medical Image Processing System Software

60,481,302

2.36

10

42,460,116

1.40

14

-32.72

15

Dental Treatment Unit & Chair

40,997,121

1.60

14

40,075,578

1.32

15

-6.32

16

CT System

37,390,223

1.46

15

40,032,848

1.32

16

2.61

17

Hearing Aid

34,675,392

1.35

16

38,809,814

1.28

17

7.26

18

Intravascular Administration Set

29,975,16

1.17

20

35,669,509

1.17

18

14.04

19

Splints

30,978,589

1.21

18

34,712,070

1.14

19

7.39

20

Medical Hand-piece

29,150,108

1.14

21

33,819,628

1.11

20

11.19

21

Dental Implant Instruments

19,958,611

0.78

24

33,018,039

1.09

21

58.54

22

Infusion Pump

23,632,516

0.92

22

30,309,870

1.00

22

22.91

23

Glucose Analyzer

19,113,850

0.75

26

29,563,722

0.97

23

48.23

24

Medical Substance-Producing Equipment

23,630,683

0.92

23

26,145,296

0.86

24

6.03

25

Bed for Medical Use

32,369,463

1.26

17

24,494,736

0.81

25

-27.48

26

X-Ray System for Diagnosis

17,012,185

0.66

31

23,348,521

0.77

26

31.53

27

Needle for Syringe

18,973,925

0.74

27

23,180,494

0.76

27

17.08

28

Laser, Therapeutic

16,191,006

0.63

32

23,037,119

0.76

28

36.35

29

Compression System Pump, Sequential

12,865,237

0.50

40

22,947,401

0.76

29

70.94

30

Infusion Device

15,055,043

0.59

34

21,622,578

0.71

30

37.64

Sub total Total

1,820,825,23 4

2,112,394,961

2,563,821,84

3,038,021,39

3

8

※ Ratio: The share of product’s production value out of total production of the year. ※ Ranking: The product’s ranking by production value among total production of the year. ※ Growth rate (%) : The product’s production value growth rate from the previous year .

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65

Top 30 Export Products by Value (Unit: USD, %) 2010 NO

Product

Export (USD)

2011

Ratio (%)

Ranking

Ratio

(USD)

(%)

Growth Rate Ranking

(%)

1

Ultrasonic Imaging System

308,633,833

21.22

1

376,255,964

22.49

1

21.91

2

Soft Contact Lens

64,371,965

4.43

6

88,286,620

5.28

2

37.15

3

Sight Corrective Spectacles Lens

78,230,983

5.38

2

87,269,581

5.22

3

11.55

4

Blood Glucose Test Strip

67,704,098

4.66

4

82,794,894

4.95

4

22.29

5

Medical Probe

68,032,770

4.68

3

74,121,334

4.43

5

8.95

6

Dental Implant

52,104,038

3.58

7

73,580,973

4.40

6

41.22

7

Heating Pad System, Home Use

66,075,679

4.54

5

71,297,683

4.26

7

7.90

45,573,183

3.13

8

49,979,231

2.99

8

9.67

Laser Surgical Apparatus

35,653,560

2.45

10

43,307,016

2.59

9

21.47

10 Digital X-ray Tomography

45,118,022

3.10

9

38,609,975

2.31

10

-14.42

30,095,507

2.07

11

37,455,830

2.24

11

24.46

12 Spinal Internal Fixation System

23,996,035

1.65

14

35,417,271

2.12

12

47.60

13 Medical Hand-piece

25,338,570

1.74

13

29,381,682

1.76

13

15.96

14 Ophthalmic Refractometer

22,998,559

1.58

16

25,551,239

1.53

14

11.10

15 Syringes

25,886,368

1.78

12

25,109,704

1.50

15

-3.00

16 Stent

23,072,749

1.59

15

19,894,606

1.19

16

-13.77

17 Condom

16,528,102

1.14

18

19,737,424

1.18

17

19.42

18 Glucose Analyzer

14,868,358

1.02

19

17,574,982

1.05

18

18.20

19 Needle for Syringe

14,763,924

1.02

20

16,826,907

1.01

19

13.97

20 Infusion Pump

13,581,353

0.93

23

16,519,290

0.99

20

21.63

11,857,431

0.82

27

15,071,159

0.90

21

27.10

22 CT System

19,858,069

1.37

17

14,771,355

0.88

22

-25.62

23 Patient Monitor

14,208,665

0.98

21

14,537,587

0.87

23

2.31

24 Dental Implant Instruments

11,887,790

0.82

26

14,286,500

0.85

24

20.18

25 X-Ray System for Diagnosis

9,858,578

0.68

30

13,944,886

0.83

25

41.45

14,094,863

0.97

22

13,314,965

0.80

26

-5.53

8,073,592

0.56

34

13,058,195

0.78

27

61.74

28 Defibrillator

10,428,913

0.72

29

12,025,504

0.72

28

15.31

29 Image Intensifier X-ray System

10,795,472

0.74

28

11,428,432

0.68

29

5.86

30 Electrode

11,970,328

0.82

25

11,349,481

0.68

30

-5.19

8 9

11

21

Combinational Stimulator for Medical Use

Medical Image Processing System Software

Electric Stimulator for Medical Use by Personal

26 Splints 27 Body fat ratio analyzer

Sub total

1,165,661,357

1,362,760,270

Total

1,454,360,815

1,672,924,698

※ Ratio: The share of product’s export value out of total export of the year. ※ Ranking: The product’s ranking by export value among total export of the year. ※ Growth rate(%): The product’s export value growth rate from the previous year.

66

Export

| Medtech Industry in Korea

Top 30 Import Products by Value (Unit: USD , %) 2010 NO

Product Name

Import (USD)

1

Stent

2 3

2011

Ratio (%) Ranking

Import

Ratio

(USD)

(%)

Growth Rate Ranking

(%)

104,759,297

4.62

1

107,323,268

4.26

1

Soft Contact Lens

64,395,054

2.84

5

94,908,711

3.76

2

47.39

CT System

98,451,737

4.35

2

86,953,118

3.45

3

-11.68

4

MRI System

87,438,200

3.86

3

81,822,753

3.25

4

-6.42

5

Knee Prosthesia

71,719,682

3.17

4

73,877,478

2.93

5

3.01

6

Dialyzer

48,187,322

2.13

6

57,755,648

2.29

6

19.86

7

Intravascular Catheter

27,076,876

1.20

18

45,294,640

1.80

7

67.28

8

Medical Probe

35,958,908

1.59

13

43,624,049

1.73

8

21.32

9

Sight Corrective Spectacles Lens

43,200,073

1.91

8

40,912,661

1.62

9

-5.29

10

Ultrasonic Imaging System

39,957,742

1.76

10

40,240,450

1.60

10

0.71

11

Intraocular Lens

31,113,146

1.37

15

39,303,164

1.56

11

26.32

12

Medical Staple

36,101,713

1.59

12

37,531,128

1.49

12

3.96

13

Dressing

27,862,431

1.23

17

35,907,159

1.42

13

28.87

47,546,355

2.10

7

35,812,367

1.42

14

-24.68 13.69

14

Accelerator System Collimator Electron Applicator

2.45

15

PET System

28,380,786

1.25

16

32,265,251

1.28

15

16

Spinal Internal Fixation System

31,240,691

1.38

14

31,159,832

1.24

16

-0.26

17

Orthopedic Bon Screw

20,872,454

0.92

26

30,710,934

1.22

17

47.14

18

Laser Ophthalmic Surgical Unit

26,610,032

1.17

20

29,738,860

1.18

18

11.76

21,461,252

0.95

25

28,983,470

1.15

19

35.05

19

Medical Image Processing System Software

20

Graft/prosthesis, Biomaterial

25,710,250

1.13

21

27,926,596

1.11

20

8.62

21

Endoscope Apparatus

20,012,481

0.88

28

27,677,782

1.10

21

38.30

22

Surgical Apparatus

39,967,196

1.76

9

27,589,919

1.09

22

-30.97

23

Artificial Hipbone Joint

27,007,670

1.19

19

27,585,428

1.09

23

2.14

37,681,115

1.66

11

25,396,485

1.01

24

-32.60

22,453,435

0.99

23

24,284,338

0.96

25

8.15

18,623,421

0.82

31

23,072,554

0.92

26

23.89

24 25 26

Intravascular Angiography X-ray System Dental Implant Clinical Chemistry Automated Analyzer

27

Laser Surgical Apparatus

19,533,919

0.86

29

22,773,202

0.90

27

16.58

28

Blood Glucose Test Strip

22,501,811

0.99

22

22,385,147

0.89

28

-0.52

29

X-ray Film

20,642,181

0.91

27

0.88

29

7.09

30

Medical Glove

15,673,792

0.69

37

0.87

30

39.97

22,106,522 21,938,046

Sub total

1,162,141,022

1,246,860,960

Total

2,265,835,515

2,521,148,077

※ Ratio: The share of product’s import value out of total import of the year. ※ Ranking : The product’s ranking by import value among total import of the year. ※ Growth rate(%) : The product’s import value growth rate from the previous year.

Medtech Industry in Korea |

67

Appendix2. Product Categories on

Product Group

Classification code / Middle group A01000

Operating and treatment table

A02000 Bed for medical use

1

General Instrument for Treatment

A03000

Medical light and lamps

A04000 A05000 A68000

Medical sterilizing apparatus Medical water sterilizers Dental unit and chair

A88000 Treatment table for Ear, Nose and Throat A89000 Ophthalmic instrument table and chair A06000 Anesthesia apparatus A15500 Laser protective device A35000 Electrosugical device

2

Operating Device

3

Medical Chamber

4

Life Support Device

5

Artificial Internal Organ Apparatus

6

Diagnostic Device

A36000 Cryosurgery device A37000 Laser apparatus for medical use A39000 Aspirators for medical use A40000 Pneumothorax and Pnemoperitoneum apparatus A08000 Medical chamber A34000 Thermostats for medical use A07000 A10000

Respiratory apparatus Neonatal incubator

A09000 Artificial internal organ apparatus A11000 A12000 A13000 A15000

Diagnostic X-ray system Non-ionization diagnostic device Radiolgic device Radiation protective device

A14000 A87000 B01000

Film developer for medical use Film viewing devices for medical use Radiographic supplies

A16000 Physical devices for medical use A67000 Medical device for orthopedics and restoration

7

Stimulation Induction Device for Medical Use

8

Operating Instrument

9

Patient Transport

A82000 Vibrators A83000 Electric stimulator for medical use by personal A85000 A17000

Magnetic induction apparatus for medical use Cardiovascular devices

A18000

Urology devices

A33000 Tissue processing device A38000 Instruments for ligature and suture A19000 Patient transport A20000 Stethoscope A21000 Clinical thermometric system A23000 Sphygmomanometers and sphygmographs A26000 Visceral function testing instruments

10

Physiological Phenomena Measuring Device

A27000 Respiratory function testing apparatus A28000 Eye testing instruments A29000 Hearing testing instruments A30000 Perception and organs diagnostic devices A58000 Probe and Sound for medical use A64000 Measuring and introducing instrument B06000 Test chart for visual acuity and color blindness A22000 Hematological testing apparatus A22500 DNA analyzer

68

11

In Vitro Diagnostics

12 13

Speculums for Medical Use Instruments for Medical Treatment

| Medtech Industry in Korea

A24000

Urine or excrement analyzers

A25000 Body fluid testing apparatus A32000 Centrifuge for medical use B10000 In Vitro Diagnostic Strip A31000 Speculums for medical use A41000 Knives for medical use

A42000 Scissors for medical use A43000 Curettes for medical use A44000 Clamp for medical use A45000 Forceps for medical use A46000 Saw for medical use A47000 Chisel for medical use A48000 Raspatories for medical use A49000 Mallet for medical use A50000 A51000

File for medical use Lever for medical use

A52000 Snare for medical use A55000 Puncturing, abrasion, perforating instrument for medical use A56000 Wound retractors and speculums A59000 Dilator and expander for medical use A60000 Applicator for medical use A61000 Dispenser and Mixing instrument A62000 Filling instruments for medical use A63000 Depressors for medical use A65000 A69000

Douche instruments for medical use Dental engine

A81000 Inhalators for medical use C21000 Implant instrument for dental use C24000 Agent for dental use A53000 Needle for syringe and puncture

14

Syringes and Needles

15

Instrument for Dental Use

16

Sight Corrective Lens

17 18

Hearing Aid Medicinal substance-producing equipment

19

20

21

Implantation Materials

A54000 Syringes A57000 Tube and Catheter for medical use A66000 Blood donor or transfusion and biopsy set A79000 Infusion instruments A84000 Acupuncture and moxibustion apparatus A70000 Broaches for dental use A71000 Explorers for dental use A72000 Moisture-excluding instruments for dental use A73000 Impression taking and articulating instruments A74000 Vulcanizers and curing units for dental use A75000 Casting machine for dental use A76000 Sight corrective spectacles A77000 Ophthalmic lens A78000

Hearing aid

A86000

Medicinal substance-producing equipment

B02000 Suture and ligature B03000 Orthopedic materials C18000 Maxillofacial implant C19000 Maxillary bone fixation material

Human Tissue and Organ Substitute

C20000 Endosseous implant system B04000 Human tissue and organ substitute C22000 Bone graft material

External Supplies

C23000 Intra oral tissue regeneration barrier A80000 Hernia supporters B05000 Splints B07000 Surgical supplies

22

Contraceptive device

23

Alloy, foil

24

Materials for Dental Use

B08000 Condom B09000 Contraceptive device C01000 Alloy, foil C02000 Alloy, casting C03000 Alloy, metal-ceramic C04000 C05000 C06000 C07000 C08000

Alloy, soldering Alloy, artificial Filling material for dental use Crown & bridge material for dental use Artificial teeth material

Medtech Industry in Korea |

69

C09000 C10000 C11000

Denture material Endodontic material for root canal Cement for dental use

C12000 Adhesive for dental use C13000 Impression material for dental use C14000 Wax for dental use C15000 Modeling & investment material C16000 Protection material for dental use

70

25

Analyzing Products for In Vitro Diagnosis

26

U-healthcare medical device

| Medtech Industry in Korea

C17000 C25000

Orthodontic material Separating material for prosthesis

C26000 C27000

Material for prosthesis Retentive material for dental use

D10000

Blood analyzing products for in vitro diagnosis

D10500 D20000

Gene analyzing products for in vitro diagnosis Urine or excrement analyzing products for in vitro diagnosis

D25000

Body fluid analyzing products for in vitro diagnosis

A90000

U-healthcare medical device

Appendix 3 Scope of Acceptable Economic Benefit based on Enforcement Regulation of the Medical Device, Rebate Dual Punishment 1. Sample Dissemination - In order to recognize its shape, structure, raw material, operation method, and manual, devices marked as “sample” can be disseminated complimentarily.

2. Conference Support - Support for conference, symposium, seminar and other related events for research/education of medical device is allowed.

1) Support for Organizing Conference ① Subject to Support - Non-profit organization established under the purpose of medical device research - Universities, industry-university collaboration organization - Society, association and/or research organization approved by Korea Medical Device Industrial Cooperative Association or Korea Medical Devices Industry Association ②Support Scope - Expense to organize conference. One must apply for the election of the conference, which will be delegated by the organization appointed by the Minister of Health and Welfare.

- In case one wish to use a booth at the conference in purpose of product exhibition and promotion, one can pay less than KRW 3million per booth and less than two booths.

2) Conference Participation Support ① Subject to Support - Organization who are eligible for conference organization support or health medical professional who is participating to domestic/overseas conference organized by authorized foreign conference organization. ② Scope of Support - Actual expense of coach class airfare, transportation, meal, and accommodation. The expense will be predetermined for selected number of people and must be go through an organization appointed by the Minister of Welfare 3. Clinical Trial Support ① Subject to Support - Clinical trials that are approved by the commissioner of KFDA or Institutional Review Board. In case of preclinical test, clinical test which is approved by related committee within the medical institution are also recognized. ② Scope of Support - Minimum amount of medical device required for the clinical trial - Proper amount of expense required for the clinical trial 4. Product Presentation - Actual expense for health medical professionals to participate to local medical device presentation research seminar or other informative events, medical device operation technique training, and/or educational events.

Actual expenses include transportation, accommodation, meals and beverage within KRW 100,000, and souvenirs less than KRW 50,000. Professionals cannot attend same production presentations multiple times except following cases.

Medtech Industry in Korea |

71

1) Major changes of the products such as efficacy, usage, and dosage, which are approved by the Commissioner of KFDA 2) In case SCI registered magazines have published certain product’s new clinical trial result so that related information is needed to be delivered.

- In case the presentation is placed at medical institutions, one can provide a meal to a medical professional who is involved with prescription within KRW 50,000 value.

- For foreign companies’ local training for their products exported to Korea 5. Price Discount based on Terms of Payment.

- In regards payment for the medical device, in case 6% of interest is applied following discount is acceptable.

Within 1 month: less than 1.5% of discount Within 2 months: less than 1.0% of discount Within 3 months: less than 0.5% of discount.

6. Research Support after the Sales - Based on Medical Device Act Article 8, doctors, dentists, oriental medicine doctors, and pharmacists who are participating ‘after sales research’ can be compensated within KRW 50,000 per cases (exceptional cases can apply adjusted value of compensation).

72

| Medtech Industry in Korea

Appendix 4.

The documents to be submitted <Electric Field> Documents to be submitted

Substantially Equivalent product Comparison

Purpose of Use

Table New Product

Usage Details of Principle Origination· Status in Electric Electromagnetic Physical Clinical Biological Function of Radiation Safety (Power) interference Chemistry Trial Discovery & Overseas operation Development Countries

Different Purpose of Use

O

O

X

O

△)

O

X

O

X

X

O

O

O

Different Principal of Action

O

X

O

O

△

O

X

O

X

X

O

O

O

Different Raw Material

O

X

X

X

X

X

X

X

X

X

X

X

X

O

X

X

X

X

X

X

O

X

X

△

X

X

Different Test Specification

O

X

X

O

△

O

X

X

X

X

X

X

X

Different Manual

O

X

X

X

X

X

X

X

X

X

△

O

O

O

X

O

X

X

X

X

X

X

X

X

X

X

Improved Different Product Function

Equivalent Product

○ : Documents to be submitted × : documents exempt to submission △ : Submission differs by items <Medical supplies Field> Substantially Documents to be submitted

New Product

Usage Details of Equivalent Principle Origination· Status in Purpose Electric Electromagnetic Physical Clinical product Biological Function of Radiation Safety of Use (Power) interference Chemistry Trial Discovery & Overseas operation Comparison Development Countries Table

Different Purpose of Use

O

O

X

X

X

X

O

O

O

O

O

O

O

Different Principal of Action

O

X

O

X

X

X

O

O

O

O

X

O

O

Different Raw Material

O

X

X

X

X

X

O

O

O

O

△

O

O

O

X

X

X

X

X

X

O

X

X

X

X

X

Different Test Specification

O

X

X

X

X

X

○

X

X

X

X

X

X

Different Manual

O

X

X

X

X

X

X

X

X

X

△

O

O

O

X

X

X

X

X

X

X

X

X

X

X

X

Improved Different Product Function

Equivalent Product

○ : Documents to be submitted × : documents exempt to submission △ : Submission differs by items

Medtech Industry in Korea |

73

Appendix 5 ■ Enforcement Regulation of the Medical Device[Attached Form #7]

Technical File Review Application ※Mark √ at [ ] shaped parenthesis

Application Number

Applicant Manufacturer (Importer)

(front page)

Application Date

Name

Reviewed Date

1. Clinical Trail Report Review: 70 days 2. Technical File Review: 55days 3. Change Inspection A. Clinical Trial Report Review: 50days B. Technical File Review: 32days

Date of Birth

Address Company Name

Business Approval Number

Address

Manufacture (In case Company who manufacture the import or Address manufacturing has been outsourced)

Applied Review

Review Period

County of Manufacturing

[ ]Clinical Trial Report Review [ ]Technical File Review [ ]Change Inspection ([ ]Clinical Trial Report Submission [ ]Technical File Submission)

Applied Device Product Name(Name of Product, Item Model) Classification Appearance and Structure Raw Material Manufacturing Methods Purpose of Use Instruction for Use Precautions for Use Packaging Unit Storage Methods & Validity Period Test Specification (Standards) Approval Conditions Comments (Reason of Application) Based upon「Enforcement Regulation of Medical Device」 Article 7 Chapter 2, I hereby apply for Technical File Review Year Month Date Applicant Name (Signature) Person in Charge Name Person in Charge Phone To the Commissioner of KFDA ㆍ Head of Technical File Review Committee 210 ㎜ × 297 ㎜[general paper 60g/㎡(Recycled)]

Appendix 6

Source and Reference Site

Reference Site and Government Agencies Name

74

| Medtech Industry in Korea

Website

Bank of Korea

www.bok.or.kr

Espicom

www.espicom.com

Health Insurance Review & Assessment Service(HIRA)

www.hira.or.kr

KFDA Medical Device Safety Bureau

www.kfda.go.kr/medicaldevice

Korea Food and Drug Administrarion

www.kfda.go.kr

Korea Health Industry Development Institute (KHIDI)

www.khidi.or.kr

Korea Medical Device Industrial Cooperative Association(KMDICA)

www.medinet.or.kr

Korea Medical Device Industry Association (KMDIA)

www.kmdia.or.kr

Korea Statistics (KOSTAT)

www.kostat.go.kr

Ministry for Health & Welfare (MOHW)

http://english.mohw.go.kr

Ministry of Knowledge and Economy

www.mke.go.kr

OECD Health Data

www.oecd.org

Test Laboratory registered in the KFDA Authorized Laboratory Korea Testing Lab (KTL)

Areas of Expertise

website

all medical device

www.ktl.re.kr

Clinical Trial Institute Seoul National University Hospital

15 product groups, including implants and supplies 27 product groups, including electronic/electric devices 13 product groups, including medical supplies 11 product groups, including implanted medical devices and supplies

Yonsei University Hospital Medical Technology Evaluation Center

11 product groups, including implanted medical devices and supplies

http://sev.iseverance.com/dept_clinic/cen ter/mtec/

Yonsei University Dental College Dental Products Testing & Evaluation Center

Dental devices only

http://dentistry.yonsei.ac.kr/research/dent al_tool/

Kyung-hee University, Dental College, Open Laboratories for Dental Products

Dental devices only

Korea Testing & Research Institute (KTR) Korea Testing Certification (KTC) Korea Conformity Laboratory (KCL)

Institute for Biomaterials research and Development dental material Testing and Evaluation center, Kyoungpook National University

www.ktr.or.k www.ktc.re.kr www.kcl.re.kr/ http://cri.snuh.org/

www.cdm.or.kr

Dental devices only

www.kdmtec.or.kr/

Korea Institute of Medical Device Assessment(14 product groups)

13 product groups, electronic/electric devices

including

Korea Institute of Medical Technology (5 product groups)

5 product groups, electronic/electric devices

including

http://www.kimda.or.kr

http://www.kimt.re.kr/

Medtech Industry in Korea |

75