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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- Two small Chinese medical device companies, Changzhou Dzhang and Kangyu, went bankrupt after winning bids in a state-led volume-based procurement (VBP) program due to severe financial pressures.
- VBP caused steep price cuts in orthopedics (up to 84%), causing revenue and profit drops for many producers; some companies began recovering only in 2024.
- Authorities now require lowest bidders to justify bids amid concerns of below-cost pricing, bankruptcies, and the ability to guarantee long-term product support.
Two Chinese medical device firms, Changzhou Dzhang Medical Device Co. and Changzhou Kangyu Medical Device Co., have declared bankruptcy after winning bids in a government-led bulk-buying program. This marks the first time companies have gone bankrupt as a result of this initiative, highlighting the severe financial strain the state’s cost-cutting measures are imposing on the medical device sector. The Tianjin Medical Procurement Center announced that both companies, once selected in an inter-provincial alliance for orthopedic trauma product supply, are no longer able to fulfill their contracts due to bankruptcy. [para. 1][para. 2]
Both companies were small-scale enterprises: Dzhang, founded in 2015 with registered capital of 13.74 million yuan ($1.9 million), made orthopedic surgical instruments and injection devices, while Kangyu, established in 2003 with 10 million yuan ($1.38 million) capital, was licensed to handle a wide range of devices. The Wujin District People's Court in Changzhou accepted bankruptcy proceedings for Kangyu in October 2023 and for Dzhang in June 2024. Kangyu had 25 creditors with claims totaling 6.656 million yuan ($918,000), while its assets were only 311,000 yuan ($43,000); Dzhang’s assets were also insufficient to cover debts. Both companies faced multiple labor and contract disputes. [para. 3][para. 4]
While the specific causes for their bankruptcies remain unclear, industry observers widely view them as collateral damage from the government's volume-based procurement (VBP) program that began disrupting the orthopedics sector in September 2021. This program's rounds for artificial joints, spinal products, and sports medicine supplies have resulted in average price cuts of 82%, 84%, and 74% respectively, putting immense pressure on suppliers. [para. 5][para. 6]
Leading domestic producers such as Wego Orthopaedic Device Co., Ltd. saw their revenue and net profit fall 37.63% and 81.3% in 2023, respectively. Double Medical Technology Inc. reported 2022 revenue and net profit declines of 28.09% and 84.2%, while Shanghai Sanyou Medical Co., Ltd.'s revenue dropped 1.68% and profit plummeted 88.18%. The companies attributed these losses to heightened shipment volume but drastically lower prices after key products became subject to VBP. Some companies like Chunlizhengda Medical Instruments Co. and Sanyou Medical have started seeing profit growth only in early 2024. [para. 7][para. 8]
Dzhang and Kangyu won contracts in a September 2023 VBP tender for orthopedic trauma supplies across 28 Chinese provinces and regions, offering prices of 1,340-1,695 yuan ($185-$234) per product set. Many small companies, unlike large brands with established hospital clientele, were forced to bid very low to secure contracts and avoid sunk costs. For small enterprises with few products, not winning a bid could mean bankruptcy. In the locking compression plate and intramedullary nail categories, Dzhang and Kangyu’s rankings were mid-to-low among numerous bidders. [para. 9][para. 10][para. 11][para. 12]
The “volume for price” logic in the program means companies often bid below cost just to survive, increasing business pressure and stirring patient concerns over product quality. A company executive reported MRI machines’ winning bids in recent tenders were sometimes below actual production and warranty costs, highlighting ongoing industry risk. [para. 13][para. 14][para. 15]
With the 11th national VBP round imminent, authorities have signaled efforts to stop “vicious competition,” requiring lowest bidders to justify their prices are not below cost. The two bankruptcies have sparked concerns about long-term product supply; VBP contracts often stipulate extended warranty periods, which many small firms cannot guarantee. According to procurement rules, if a supplier defaults, institutions can pick replacements from other winning bidders, and defaulting companies risk being blacklisted for two years. [para. 16][para. 17][para. 18]
- Changzhou Dzhang Medical Device Co.
- Changzhou Dzhang Medical Device Co., founded in 2015, had a registered capital of 13.74 million yuan ($1.9 million). It manufactured orthopedic surgical instruments and injection devices. The company declared bankruptcy, with its assets insufficient to cover debts, and its first creditors' meeting was scheduled for September 15. It won contracts in a government procurement program for a locking compression plate system and an intramedullary nail system.
- Changzhou Kangyu Medical Device Co.
- Changzhou Kangyu Medical Device Co. went bankrupt after winning a bid in a government bulk-buying program. Established in 2003 with 10 million yuan ($1.38 million) registered capital, it handled various medical devices. The People’s Court of Wujin District accepted its bankruptcy liquidation in October 2023, revealing total claims of 6.656 million yuan against assets of only 311,000 yuan.
- Wego Orthopaedic Device Co., Ltd.
- Wego Orthopaedic Device Co., Ltd. is a leading domestic Chinese producer in the orthopedics sector. The company experienced a decline in revenue in both 2022 and 2023, with its 2023 revenue falling by 37.63% and net profit by 81.3%. This downturn is attributed to the impact of the government's volume-based procurement (VBP) program, which introduced significant price reductions.
- Double Medical Technology Inc.
- Double Medical Technology Inc. (大博医疗科技股份有限公司) experienced a significant financial downturn due to China's volume-based procurement (VBP) policy. In 2022, the company's revenue and net profit saw sharp decreases of 28.09% and 84.2%, respectively, highlighting the severe impact of government-led cost-cutting measures on medical device manufacturers.
- Shanghai Sanyou Medical Co., Ltd
- Shanghai Sanyou Medical Co., Ltd. is a Chinese medical device firm whose revenue and net profit for the most recent fiscal year fell by 1.68% and 88.18%, respectively. This was due to the government's volume-based procurement (VBP) program, which significantly reduced prices for its main spinal products despite increased shipment volumes. However, Sanyou Medical reported its first profit growth since VBP implementation in the first quarter of this year.
- Chunlizhengda Medical Instruments Co., Ltd.
- Chunlizhengda Medical Instruments Co., Ltd. is a Chinese medical device company. They reported their first profit growth in the first quarter of the year, following a downturn after the implementation of volume-based procurement (VBP). This indicates a positive shift for the company in the competitive medical device market.
- Beijing Wandong Medical Technology Co., Ltd.
- Beijing Wandong Medical Technology Co., Ltd. won a bid for a 1.5-tesla MRI machine at 2 million yuan, a price significantly below market average. Their financial reports show per-unit production costs ranging from 1.677 million to 2.287 million yuan. Including a two-year warranty (approx. 500,000 yuan), the total cost would fall between 2.177 million and 2.787 million yuan, suggesting their bid was potentially below cost.
- 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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Sep. 12, 2025, Issue 35
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