China Further Revises Rules for Foreign Investment in Pharmaceutical Industry
Global Life Sciences: China Update
On December 24, 2011, China’s National Development & Reform Commission (NDRC) published the amended Industry Catalogue for Foreign Investments (the Catalogue). Initially promulgated in the early 1990’s, the Catalogue classifies foreign investments in various industries into four categories (Encouraged, Restricted, Permitted and Prohibited) and has been the key regulation defining the regulatory landscape of foreign investments in China.
While the amended Catalogue does not significantly alter the life sciences industries’ rules, a number of changes are worth noting:
Pharmaceutical Distribution. The amended Catalogue has removed foreign investments in pharmaceutical distribution business (retail and wholesale) from the Restricted Category. This means that foreign investments in this field will be subject to less regulatory scrutiny and may be approved by the government authorities below the provincial level.
Vaccines. The manufacturing of vaccines in China’s National Vaccine Program are still restricted for foreign investment, but more novel vaccines, including vaccines for cervical cancer, HPV, Malaria and HFMD have been added to the Encouraged Category. Foreign investors are encouraged to localize the manufacturing of those vaccines in China.
The implementation of the Catalogue always requires more specific rules and guidelines; international companies that are interested in the above areas should keep a close eye on at any further developments.
Sidley has a powerful, fully integrated life sciences practice serving multi-national pharmaceutical, biotechnology, medical device and food companies in every aspect of their business operations in China. Sidley’s Foreign Direct Investment, general Commercial, Corporate, M&A/Joint Venture, Antitrust, FCPA, Licensing, IP, provincial government work, as well our Regulatory practice permits us to serve virtually every legal need of our life sciences clients in China.
Sidley is the first international law firm to establish a stand-alone, comprehensive food and drug regulatory practice in China. As an integral part of our Global Life Sciences practice, we bring our knowledge of industry practices in the U.S. and EU to each project in China and help develop global Standard Operation Procedures (SOPs) and benchmark best practices.
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