EU restricts Chinese access to public procurement of medical devices

Background

This measure marks the first case in which the EU makes use of the IPI based on Regulation (EU) 2022/1031 (IPI Regulation). The IPI Regulation’s objective is to create a level playing field in the global procurement market by empowering the EU to take countermeasures when non-EU countries restrict access to their own procurement markets or distort competition in EU-wide public procurement procedures by granting economic advantages.

The IPI measure, which is set out in Commission Implementing Regulation (EU) 2025/1197, follows an investigation concluded in January 2025. In this investigation, the EU Commission found that discriminatory requirements were identified in 87% of public procurement procedures for medical devices conducted in China.

Components of the IPI measure

The IPI measure impacts:

• “Economic operators” from China, which are excluded from participation in EU public procurement procedures for medical devices with an estimated value equal to or above EUR5 million net on VAT; more precisely, the IPI measure affects such medical devices falling under CPV codes 33100000-1 to 33199000-1 as defined in Regulation (EC) No 2195/2002, which might especially include diagnostic imaging equipment (e.g., CT, MRI), advanced monitoring and life-support systems, robotic systems or implantable devices; and
• All successful bidders, who must ensure that no more than 50% of the contract value is based on components, parts, or services originating from China or subcontracted to Chinese companies; accordingly, also non-Chinese companies with own or outsourced manufacturing capacities in China or otherwise procuring goods and services from China will be affected by the IPI measure; the non-observance of these obligations can lead to a fine of between 10% and 30% of the total contract value.

The origin of an “economic operator” is the country where a legal entity is constituted, so that primarily Chinese entities will be excluded from the aforementioned public procurement procedures. However, to prevent circumvention of IPI measures, also subsidiaries of Chinese companies established outside of China will be considered as originating from China if they are not “engaged in substantive business operations” in the country in which they are established. 

Based on the numbers for the years 2017 to 2022 cited by the EU Commission, by volume around 96% of all procurement procedures for medical devices in the EU fall below the EUR5 million threshold. However, by value the procurement procedures for medical devices above the threshold, and thus within the scope of the IPI measure, would account for around 59% of the aggregated contract value of all procurement procedures for medical devices – making the IPI measure economically significant. 

Exceptions to the IPI measure may be granted on a case-by-case basis as foreseen by the IPI Regulation. In cases where no non-Chinese alternative suppliers are available, the contracting authorities/ entities can decide not to apply the IPI measure.  

Market Impact and Strategic Outlook

The IPI measure enters into force on 30 June 2025, is set to apply for five years and is expected to have far-reaching implications across the EU medical device market. However, Maroš Šefčovič, EU Commissioner for Trade and Economic Security, has emphasized that the EU Commission remains “committed to dialogue with China” to resolve the issues, opening up the possibility of an early termination of the measure. 

In the meantime, companies active in EU tenders for medical devices – whether Chinese or non-Chinese – should assess the impact on their business strategies. This includes:

• Reviewing supply chains and, if necessary, shifting production capacities away from China to remain eligible for participation. 
• Adapting procurement strategies: Reassess sourcing models and supplier networks to reduce reliance on Chinese-origin components where necessary.
• Assessing the status of subsidiaries: Chinese companies with EU or other non-Chinese subsidiaries should evaluate whether these entities could still be considered “originating from China” due to a lack of substantive business operations in their respective country.
• Identifying niche opportunities for Chinese companies, where exceptions to the IPI measure may apply, particularly in markets with limited alternative suppliers.
• Exploring new market openings for EU-based manufacturers, especially those that have previously struggled to compete on price.
• Monitoring legal and geopolitical developments, including potential responses from the Chinese government and any adjustments to the scope or duration of the IPI measure.

More background on the EU IPI in general can be found here or here.