China is impossible to ignore.
With more than 1.4 billion people and the world's second-largest medical device market, China offers a scale that few healthcare systems can match. The market is estimated at over US$60 billion in 2024, depending on methodology, and continues to grow driven by demographic aging, rising healthcare demand, expanding insurance coverage and sustained investment in healthcare infrastructure.
The reach of the system is equally striking. As of 2024, China's basic medical insurance covered 1.327 billion people, around 95% of the population funded through employer and employee payroll contributions for urban workers (UEBMI) and government subsidies combined with individual contributions for other residents (URRBMI).
Success in China’s medtech market requires a long-term commitment, deep understanding of regulatory pathways, and strong relationship capital (guanxi). Business relationships often carry more weight than formal contracts, and trust is built through personal meetings, shared dinners, and reciprocal support. Respect for hierarchy, protecting “face” (mianzi), and cultivating mutual obligations (renqing) are essential for building lasting partnerships and gaining market access.
But the reason medtech companies pay attention to China has less to do with size than with how the system shapes adoption. Increasingly, Chinese healthcare is defined by reimbursement, payment reform and procurement policy not solely by regulatory approval. A product may receive approval from the National Medical Products Administration (NMPA) and still struggle to achieve meaningful adoption without a clear pathway through the reimbursement and hospital payment system.
China Isn't Fragmented. It Just Looks That Way
China's healthcare system combines universal social health insurance coverage with strong government oversight of healthcare spending.
The majority of the population is covered through public medical insurance schemes administered under the supervision of the National Healthcare Security Administration (NHSA). While healthcare delivery occurs through thousands of hospitals across provinces and municipalities, reimbursement policy is increasingly guided by national frameworks designed to control costs and improve efficiency.
For medtech companies, this creates a different dynamic from many Western markets. China may appear fragmented because decisions are often implemented at provincial or local levels. Yet many of the most important reimbursement and payment reforms originate centrally and cascade through the system. Understanding national policy direction often matters more than mapping individual hospital purchasing decisions.
Several institutions shape market access:
- National Healthcare Security Administration (NHSA): responsible for healthcare reimbursement, payment reform and volume-based procurement
- National Health Commission (NHC): oversees healthcare delivery and hospital policy
- National Medical Products Administration (NMPA): regulates medical device approval and registration
- Provincial healthcare security bureaus and procurement authorities: implement reimbursement, tendering and purchasing decisions at local level
Where a technology fits within this framework can determine not only reimbursement but also pricing, procurement access and long-term commercial viability.
Why "Innovative" No Longer Wins in China
Chinese hospitals historically operated under fee-for-service reimbursement, but that model is being replaced.
Over the past several years, China has implemented one of the world's largest healthcare payment reforms through Diagnosis Related Groups (DRG) and Diagnosis-Intervention Packet (DIP) payment systems. The objective is to move away from activity-based reimbursement toward fixed payments linked to diagnoses and clinical pathways.
Under these systems, hospitals receive predetermined payments for episodes of care rather than reimbursement for every individual service or product used. For medtech companies, this fundamentally changes the commercial equation. The central question becomes:
Can the technology improve outcomes or efficiency within a fixed payment envelope?
A device that reduces complications, shortens hospital stays or improves resource utilisation may fit naturally within DRG or DIP payment structures. A technology that increases procedure costs without demonstrating measurable value may face significant resistance regardless of its technical sophistication.
The reform is no longer a pilot. As of 2024, DRG/DIP payment covers all overall planning regions, and the share of medical insurance fund expenditure paid through these mechanisms exceeds 80% of inpatient medical insurance fund expenditure. In August 2025, the NHSA issued the Interim Measures for Disease-based Payment Management under Healthcare Security, formally consolidating DRG/DIP as the nationwide standard. The system has moved beyond scale-up into permanent regulatory architecture.
How China Cut Stent Prices by 93% and What It Means for You
Few healthcare policies have reshaped China's medtech market more dramatically than Volume-Based Procurement (VBP).
Originally introduced in pharmaceuticals, VBP has expanded steadily into medical devices and high-value consumables. Under this model, procurement authorities aggregate demand across hospitals and negotiate large-volume purchasing contracts in exchange for substantial price reductions.
For market entry, companies must adapt to the VBP-system, which has significantly increased price pressure on medical devices. Regulatory approval through the National Medical Products Administration (NMPA) can be lengthy and often requires local clinical data, making experienced local regulatory support highly valuable. Establishing a local presence through a subsidiary or joint venture can facilitate access to procurement networks and healthcare institutions, while early registration of trademarks and patents is critical, as China operates under a first-to-file intellectual property system. For medtech companies, success in China depends less on entering a large market and more on understanding a highly coordinated system where reimbursement, procurement and healthcare financing are becoming tightly interconnected.
The VBP impact has been profound. National procurement rounds have covered coronary stents, orthopaedic implants, intraocular lenses and other high-value categories with price reductions of approximately 93% on coronary stents and 82% on joint implants at national tender. Spinal implants have seen reductions of 55–84% across categories. The 2024–2025 cycle is extending VBP further into neurointerventional, peripheral interventional, electrophysiological devices and orthokeratology lenses.
For medtech companies, VBP creates both opportunity and risk. Winning a procurement round can provide access to large patient volumes and broad hospital adoption. Losing can significantly reduce access to participating hospitals for the duration of the procurement cycle.
This shifts competition away from traditional premium pricing strategies and toward questions of manufacturing efficiency, cost structure and demonstrable clinical value.
The Western Brands That Used to Dominate? They Don't Anymore
One consequence of VBP that often surprises foreign entrants is how quickly it has shifted market share toward Chinese manufacturers.
The drug-eluting stent market, once dominated by Western device manufacturers with roughly 75% share, is now led by domestic Chinese stent-makers holding more than 75% of the market. Similar shifts are visible across orthopaedics, cardiovascular and high-value consumables more broadly. VBP rewards manufacturers who can supply at scale and at low unit cost a structural advantage for domestic players with lower cost bases and closer relationships to provincial procurement authorities.
This has changed what entering China actually means. Foreign medtech companies arriving today face a fundamentally different competitive structure than they would have five years ago. The strongest commercial positions tend to be either in categories not yet subject to national VBP, in innovative segments where domestic capability is still developing, or in partnerships and localisation strategies that align with national policy direction on domestic manufacturing.
Treating China as a premium export market, one where Western brand and clinical reputation carry the day increasingly underestimates how much the competitive ground has shifted.
NMPA Approval Is the Easy Part. Here's What Comes Next
One of the most common mistakes foreign medtech companies make in China is treating regulatory approval as the primary market access hurdle. In reality, NMPA approval is often only the beginning.
A successful commercial pathway typically requires alignment across four distinct systems:
- Regulatory approval through NMPA
- Reimbursement and payment structures under NHSA (including DRG/DIP positioning)
- Hospital listing and procurement processes at institutional level
- Centralised purchasing programmes and tenders, including VBP
Unlike many European markets where reimbursement decisions are relatively centralized, coverage and payment decisions for medical devices in China frequently involve provincial and municipal implementation. Hospitals themselves remain critical decision-makers. Many maintain approved product catalogues and internal evaluation processes, requiring both clinical support and economic justification before adoption.
Market access in China is rarely a single decision. It is a sequence of interconnected decisions across multiple stakeholders each governed by different logic and timing.
Clinical Data Used to Be Enough. Not Anymore
China has traditionally been viewed as a market where regulatory approval and physician support drive adoption. That view is becoming outdated.
As reimbursement reform accelerates, health economic evidence is becoming increasingly important. Hospitals operating under DRG and DIP payment systems face stronger incentives to evaluate technologies not only on clinical performance but also on their impact on overall treatment costs.
The technologies that align most naturally with current policy priorities tend to:
- Reduce total treatment costs
- Shorten length of stay
- Improve efficiency of clinical workflows
- Reduce complications and readmissions
- Support treatment in lower-cost care settings
Clinical differentiation remains important, but increasingly it must be accompanied by a credible economic narrative that resonates with hospital administrators, payers and procurement authorities.
The new rule: align or be left behind
China remains deeply committed to healthcare innovation. The NMPA has established accelerated review pathways for innovative devices, and several pilot zones and innovation programmes have been designed to support earlier access to novel technologies. In 2024 alone, the NMPA approved 65 innovative medical devices, most of them domestically developed.
Yet innovation does not exist independently of policy. The government's broader healthcare objectives cost control, domestic manufacturing capability, healthcare accessibility and system sustainability play a significant role in determining which technologies gain momentum.
For foreign medtech companies, this means innovation alone is rarely sufficient. The strongest opportunities tend to emerge where innovation aligns with national healthcare priorities, improves system efficiency and supports broader reimbursement objectives.
The Value Test is Reshaping Medtech Adoption
The direction of Chinese healthcare policy is increasingly clear. The combination of DRG/DIP payment reform, expanded Volume-Based Procurement and tighter reimbursement oversight reflects a long-term effort to improve healthcare sustainability while managing rising demand from an ageing population.
This creates structural advantages for technologies that can demonstrate measurable value. Solutions that reduce resource utilisation, improve operational efficiency, enable earlier intervention or support care pathway optimisation are becoming increasingly aligned with how the system is evolving.
At the same time, premium technologies that rely solely on technical superiority without demonstrating economic benefit may find adoption becoming more challenging as payment reform matures.
China Isn't a Market. It's a Stress Test
China is not a market a medtech company enters simply because it is large. It is a market companies enter because of its strategic importance and because success there increasingly requires mastery of one of the world's most sophisticated healthcare financing and procurement environments.
It is a system where reimbursement reform is reshaping provider behaviour, where hospital economics matter as much as clinical performance, where procurement can determine market share at the stroke of a tender, and where policy direction influences technology adoption at scale.
For medtech companies, the strategic questions become:
Can the technology create value within DRG and DIP payment models? Can it survive the pricing pressures of Volume-Based Procurement? Can it demonstrate both clinical and economic benefit? And does it align with the direction China's healthcare system is already moving?
The opportunity in China is not simply access to the world's largest patient population. It is the chance to prove that a technology can succeed in a healthcare system increasingly built around value, efficiency and reimbursement-driven adoption and few markets will test that proposition more rigorously.
This article is part of our internationalisation series exploring how healthcare systems, reimbursement structures and market dynamics shape medtech commercialisation across different global markets. You can also explore our foundational article on international medtech expansion.
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