On June 19, 2025, the European Commission (“EU Commission”) adopted Regulation 2025/1197 imposing restrictive measures on Chinese medical devices in its first use of the European Union’s International Procurement Instrument (“IPI”). For a period of five years starting on June 30, 2025, the EU Commission excluded Chinese medical device manufacturers from EU public tenders with a value of more than EUR 5 million and prohibited successful tenderers from sourcing more than 50% of medical devices from China.
The EU Commission’s decision marks the first application of the IPI, a tool designed to address discriminatory measures and practices by non-EU countries in their public procurement markets.
What is the International Procurement Instrument?
Adopted in 2022, Regulation 2022/1031 (“IPI Regulation”) empowers the EU Commission to impose restrictions on non-EU companies’ access to EU public procurement markets if the non-EU country from which these companies originate does not offer reciprocal access to their procurement market for EU companies, goods, and services.
Under the IPI Regulation, the EU Commission may initiate IPI investigations on its own initiative or upon a complaint from any interested party in the European Union or an EU Member State. Investigations assess whether a non-EU country’s measures or practices seriously and recurrently impair access of EU companies, goods, or services to that country’s procurement market. Following an investigation, which includes consultations with the country under investigation, the EU Commission publishes its findings and may propose IPI measures.
If the EU Commission finds that access to the non-EU country’s procurement market is impaired, it may adopt IPI measures in the form of (i) score adjustments, which reduce the evaluation score of bids of companies from the country under investigation; and (ii) exclusion from tenders for companies, goods, or services from that country.
IPI measures are valid for a period of five years, renewable for another five years.
First IPI case: Medical device suppliers and medical devices originating in China
On April 24, 2024, the EU Commission initiated, on its own initiative, an investigation into China’s procurement practices for medical devices. The investigation examined policies at both central and local level, such as the ‘Buy China’ policy, the ‘Made in China 2025’ strategy for hospitals, and the ‘Administrative Measures for the Procurement of Imported Goods’ restricting the procurement of imported medical devices. The notice of initiation of the investigation includes an annex with the list of products categories that fall within the scope of the investigation.
On January 14, 2025, the EU Commission published the findings of its investigation. The EU Commission found that 87% of Chinese public tenders for medical devices discriminated explicitly or implicitly against foreign suppliers. On that basis, the EU Commission concluded that Chinese procurement measures and practices significantly disadvantage EU medical device suppliers. Despite consultations between the EU Commission and the Chinese authorities, no mutually acceptable solution was reached.
Therefore, on June 19, 2025, the EU Commission adopted IPI measures that:
- exclude economic operators originating in China from EU public procurement contracts for medical devices where the contract has a value of at least EUR 5 million. The medical devices concerned are those falling under Common Procurement Vocabulary (CPV) codes 3310000-1 to 33199000-1 as defined in Regulation 2195/2002, e., most medical devices;
- prohibit successful tenderers from subcontracting more than 50% of the total contract value to economic operators originating in China; and
- prohibit successful tenderers (and any subcontractor) from supplying more than 50% of Chinese origin medical devices (by value) under the contract.
The key criterion for the application of the measures is thus whether economic operators or medical devices are deemed to originate in China for the purpose of the IPI Regulation.
Under the IPI Regulation, a medical device manufacturer or supplier originates in China if:
- the legal entity1 is incorporated or organized under Chinese law and is engaged in substantive business operations in China; or
- the persons who may exercise a dominant influence on the legal entity by virtue of their ownership of or financial participation in the legal entity, or of the rules which govern that legal entity, are Chinese.
Under the applicable customs rules of origin, a medical device has Chinese origin where it has undergone its last substantial, economically justified processing or working in China.
The IPI measures will enter into force on June 30, 2025 for a period of five years. The measures apply to all EU contracting authorities and entities. Local authorities in administrative units of less than 50,000 inhabitants may benefit from an exemption (subject to conditions). That said, contracting authorities may exceptionally decide not to impose the IPI measures if (i) only tenders from economic operators originating in China meet the tender requirements; or (ii) the decision not to apply the IPI measure is justified for overriding reasons relating to the public interest such as public health or protection of the environment.
The IPI measures signal the EU Commission’s commitment to defending the economic interests of EU medical device suppliers and ensuring a worldwide level playing field for EU companies in public procurement in the health sector.
Questions remain about the scope and application of the IPI measures
As noted, all medical devices that have Chinese origin will count toward the maximum 50% of Chinese origin medical devices that may be supplied under a contract. Most medical device suppliers will be aware of whether a medical device originates in China, as the origin of a medical device is used when exporting medical devices. That said, the IPI measures – like the recent ‘tariff wars’ – may prompt companies in the medical device sector to stress-test their origin determinations, in particular where key components for the medical devices are manufactured in China.
It is more complicated to assess whether an economic operator originates in China, in particular for multinational companies. This assessment is crucial because a company deemed to originate in China for the purpose of the IPI Regulation would be excluded from tenders. While the EU Commission published guidance that addresses, among others, the origin of an economic operator, there are still many open questions on the origin determination of an economic operator under the IPI Regulation. For instance, under the IPI Regulation, where a company is part of a group of natural or legal persons, public entities, or a combination thereof, the IPI measures would in principle also apply to the company if one of the group companies originates from China. This expansion of the scope of the IPI measures does not apply if the participation of the Chinese-origin company in the group amounts to less than 15% of the value of a tender submitted by that group (unless the Chinese-origin company in the group is necessary in order to fulfil the majority of at least one of the selection criteria in the public procurement procedure).
For companies with a significant presence in China that seek to participate in EU public procurement tenders for medical devices, it would be prudent to establish their ‘origin’ for the purpose of the IPI Regulation. This would help frontload work for when contracting authorities, during a procurement process, ask tenderers to provide (more) evidence of their origin as part of the authorities’ obligations under the IPI Regulation.
Further, the meaning of the IPI measures is not clear. The measures refer to subcontracting to companies originating in China. Subcontracting is defined as arranging the execution of a part of a contract by a third party. Does this cover the subcontracting of the medical device itself or is the subcontracting of a component or a manufacturing phase sufficient?
Finally, medical devices are not standard goods; they support protection of public health. One could question how the IPI measures will affect situations such as a renewal of EU public contracts (certain medical devices are not, or not easily, replaceable in hospital settings – especially those medical devices the use of which requires complex training) or possibly to EU public contracts for combination products (i.e., product that includes a medicinal product and a medical device).
In addition, the IPI measures will increase the tensions in the EU medical devices market. That market is already facing significant challenges, struggling with supply disruptions linked to the implementation of the EU Medical Devices Regulation, ongoing transition issues, withdrawal of legacy devices, lengthy re-certification timelines, and limited availability and capacity of Notified Bodies responsible for conducting conformity assessments when required.
