Burdens and Conflicts

Because registration for a drug requires in-country clinical trials, type testing and a lengthy review process, the registration process for some of these reagents often took one to two years to complete. For a product that has a life cycle of only two to three years, that problematic timing jeopardized a product’s potential in the market. In addition, many IVD manufacturers are device producers and do not have a drug license, which is a registration requirement for pharmaceutical products. Drug registration also requires disclosure of extensive product and production information, which threatens a manufacturer’s trade secrets and intellectual property. Furthermore, drug import regulation requires batch testing at each importation, putting time-sensitive reagent products at risk.

On another front, the SFDA requires a special license for drug distribution. The “drug” nature of the IVD registration permits only drug distributors to sell IVD products. As a result, device distributors that IVD manufacturers depend on to sell the instruments cannot distribute reagents.

In addition, because most IVD reagents are captive, hospitals often demand discounts or free equipment but sign multi-year reagent contracts. Cutting off the reagent trail prevented instrument distributors from creating the best sales package for the end users. Drug distributors usually are not interested in IVDs, because the sales volume of IVD products is low compared with that for drugs. And the customers of IVD technology are not the hospital pharmacies or drug stores that pharmaceutical dealers do business with on a daily basis.

The demand for IVD products (given that doctors are using these products heavily in their practices), combined with the poorly formulated regulations, drove many IVD sales “underground.” Many products were sold without SFDA registrations or were labeled as “research products” but actually sold to a clinical environment. For the past two years, few companies even submitted any registration, fearing the new regulation would send them on a different direction and further delay the registration process.