March 28, 2007
News Release 07-033
Inv. No. 332-474
Contact: Peg O'Laughlin, 202-205-1819
U.S. MEDICAL DEVICE FIRMS MAY BE ADVERSELY AFFECTED
BY JAPANESE REGULATORY PROCESSES, SAYS ITC
Average regulatory approval times for new medical devices in Japan were longer than those in
other principal global markets, and that may adversely affect U.S. medical device and equipment
firms, reports the U.S. International Trade Commission (ITC) in its publication Medical Devices
and Equipment: Competitive Conditions Affecting U.S. Trade in Japan and Other Principal
The ITC, an independent, nonpartisan, factfinding federal agency, examined the competitive
conditions, including regulatory conditions, affecting the medical device industries of the United
States, the European Union (EU), and Japan at the request of the U.S. House of Representatives
Committee on Ways and Means.
As requested, the ITC report provides an overview of the global market for medical devices and
equipment, including production, consumption, and trade; profiles the medical device and
equipment industries in the United States and principal foreign producer countries, namely the
EU and Japan; analyzes U.S. trade in medical devices and equipment with major competitor
countries, including a description of trade practices, regulatory measures such as product
approvals, and government and private expenditures on medical research; and examines bilateral
and multilateral trade agreements that have addressed regulatory issues in major foreign markets,
including Japan's, and the implications for the U.S. medical device and equipment industry.
Highlights of the report follow.
- U.S. medical device firms are the world's leading developers and exporters of
high-technology medical devices and may be disproportionately affected compared to other
major producers by Japan's regulatory approval system. Although the Japanese approval
system does not discriminate in its treatment of domestic and foreign-made medical
devices, medical device firms that specialize in innovative products are more adversely
affected by the regulatory delays and other unique costs of the Japanese approval system
because of the shorter product life cycles (as short as 18 months) and more rigorous
regulatory scrutiny of such products compared to less advanced medical technologies. The
Japanese regulatory environment is also particularly difficult for small and medium size
firms. As a result of regulatory delays in the Japanese market, recent data indicate that U.S.
firms are submitting significantly fewer products for approval in Japan.
- The Japanese government enacted major amendments to its Pharmaceutical Affairs Law
(PAL) in 2002 to reform its medical device regulatory approval system. These new
changes to Japan's regulatory system came in response to pressures both from within and
outside of Japan, including the U.S. government. The most significant goals of the reform
were to improve efficiency and shorten product approval times. Despite some limited
success in reducing product approval times in 2005 after these reforms took effect,
significant challenges remain.
- Medical device firms generally prefer the EU medical device approval system over the
U.S. and Japanese approval systems, due to its shorter approval times. Although medical
device regulation in the United States remains tightly controlled, it has become more
predictable in recent years, and review times have steadily declined.
- The U.S. medical device trade surplus declined steadily, from $5.9 billion in 2001 to
$957 million in 2004, before rebounding modestly in 2005 to $1.8 billion. Despite steady
growth in U.S. exports (which reached $25.5 billion in 2005), uninterrupted growth in
U.S. demand and increased foreign outsourcing by U.S. firms contributed to the decline.
Japan continued its historical trend of running a trade deficit in medical devices, while the
EU maintained a trade surplus. Several multilateral and bilateral trade agreements have
facilitated U.S. trade in medical devices, as they focus on issues of concern to the medical
device industry, including the harmonization of medical device regulatory systems.
- The United States, the EU, and Japan together account for about 90 percent of global
production and consumption of medical devices. The U.S. medical device industry is the
most competitive in the world, recognized for its ability to continually design, develop,
and place innovative medical devices in U.S. and foreign markets. This can be attributed
in part to a higher level of research and development investment and greater availability
of venture capital, compared with the EU and Japanese industries. While both U.S. and
EU firms produce a broad variety of medical devices, ranging from general hospital
supplies to more advanced technology products, including advanced cardiovascular
devices, Japanese firms are more narrowly focused on medical imaging devices and
commodity hospital supplies.
Medical Devices and Equipment: Competitive Conditions Affecting U.S. Trade in Japan and Other
Principal Foreign Markets (Investigation No. 332-474, USITC Publication 3909, March 2007) will
be available on the ITC's Internet site at /publications/docs/pubs/332/pub3909.pdf. A
CD-ROM of the report may be requested by calling 202-205-2000 or by writing the Office of the
Secretary, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436.
Requests may also be faxed to 202-205-2104.
ITC general factfinding investigations, such as this one, cover matters related to tariffs or trade
and are generally conducted at the request of the U.S. Trade Representative, the Senate
Committee on Finance, or the House Committee on Ways and Means. The resulting reports
convey the Commission's objective findings and independent analyses on the subjects
investigated. The Commission makes no recommendations on policy or other matters in its
general factfinding reports. Upon completion of each investigation, the ITC submits its findings
and analyses to the requester. General factfinding investigation reports are subsequently released
to the public unless they are classified by the requester for national security reasons.
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