Two Chinese Medical-Device Makers Declare Bankruptcy After Winning Bulk-Buying Bids
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Two Chinese medical device firms have declared bankruptcy after successfully winning bids in a government-led bulk-buying program, a first-of-its-kind event that spotlights the intense financial pain inflicted by the state’s cost-cutting measures.
The Tianjin Medical Procurement Center announced recently that two companies selected in an inter-provincial alliance for orthopedic trauma products, Changzhou Dzhang Medical Device Co. and Changzhou Kangyu Medical Device Co., have gone bankrupt and can no longer supply their contracted products.
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What Happened When
- September 2021：
- The national volume-based procurement (VBP) tender for artificial joints began, resulting in an average price cut of 82%.
- 2022：
- Subsequent VBP round for spinal products, with average price reductions of 84%.
- 2022：
- Wego Orthopaedic Device Co., Ltd. and Double Medical Technology Inc. both experienced significant revenue and net profit declines due to VBP pressures.
- 2022–2024：
- Beijing Wandong Medical Technology Co., Ltd. reported per-unit MRI machine production costs in this period.
- 2023：
- Further VBP round for sports medicine supplies, with average price reductions of 74%.
- 2023：
- Wego Orthopaedic Device Co., Ltd. revenue and net profit fell by 37.63% and 81.3% respectively; Shanghai Sanyou Medical Co., Ltd. reported revenue and net profit to have fallen 1.68% and 88.18% respectively for the most recent fiscal year.
- September 2023：
- Dzhang and Kangyu participated in a VBP tender for orthopedic trauma supplies covering 28 provinces/regions.
- October 2023：
- People’s Court of Wujin District in Changzhou accepted bankruptcy liquidation case for Kangyu.
- By 2025：
- If a supplier defaults, hospitals can select alternate winning bidders; Tianjin Medical Procurement Center required Dzhang and Kangyu to respond within 15 days or face contract loss and blacklisting.
- 2025：
- With the 11th round of national VBP approaching, China’s National Healthcare Security Administration announced new bidding rules to prevent vicious competition.
- First quarter of 2025：
- Chunlizhengda Medical Instruments Co., Ltd. and Sanyou Medical reported their first profit growth since VBP implementation.
- June 2025：
- People’s Court of Wujin District in Changzhou accepted bankruptcy liquidation case for Dzhang.
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