Foreign Enterprise Penalized Nearly CNY 700,000 for Operating Unlicensed Medical Devices!
Shanghai-based foreign enterprise, Company A, is a medical enterprise trading company headquartered in Germany, importing medical devices from its German headquarters for sale in China. Company A has obtained a Class III "Medical Device Business License," allowing it to legally operate medical device A. However, during a field inspection by law enforcement officers, it was discovered that Company A was selling six small accessories along with its main product A, and one of these accessories, B, is classified as a Class II medical device.
According to the definition of medical devices, classification rules, and related regulations, accessory B is categorized as Class II and should be registered as such, but Company A sold accessory B without the required legal registration.
Although Company A immediately initiated a recall procedure after the incident, a small number of accessory B had already been sold.
Ultimately, Company A was confiscated of all illegal B accessories, totaling over 400 units. Although the confiscated illegal earnings were only about CNY 10,000, the fine imposed was nearly CNY 700,000. Due to this administrative penalty, Company A was removed from the procurement lists of many hospitals. The company suffered significant losses due to this oversight in compliance management.
Dongjin Reminder:
Medical devices have clear definitions and classification rules, with a strict classification management system. Relevant companies should strengthen compliance management, especially not to overlook the review of accessories. This can help avoid unnecessary penalties and losses. For companies that have already obtained medical device business licenses, if there are changes in the product's functionality or accessories, it is crucial to strictly review whether a new medical device business license is required.
If any company has any questions, Dongjin is always ready to provide consultation.
Mike Chang
Partner
mikechang@shanghaiinvest.com