State Council Supports Chongqing Free Trade Zone to Establish Port for First-time Imported Pharmaceuticals and Biologics

On November 23, the State Council issued the Notice on Several Measures to Support Deepening Reform and Innovation in Pilot Free Trade Zones (hereinafter referred to as the “Notice”).

The following provisions of the “Notice” are relevant to the development of the healthcare industry:

(28) Pilot the implementation of filing management for imported non-special-use cosmetics in the pilot free trade zones. (Responsible department: National Medical Products Administration)

(34)Support the establishment of ports for the initial import of drugs and biological products.(Responsible departments: National Medical Products Administration, General Administration of Customs,Scope of Application: Chongqing Pilot Free Trade Zone）

(35) Delegate the authority for filing management of Class I medical devices produced in the Taiwan region and imported through the Pingtan port to the Fujian Provincial Drug Administration. (Responsible department: National Medical Products Administration; Scope of application: Fujian Pilot Free Trade Zone)

(51) Encourage pilot programs in areas such as the engagement of non-health technical personnel to provide TCM preventive treatment services in medical institutions, the promotion of professional titles for full-time TCM preventive treatment physicians in medical institutions, and the pricing of TCM preventive treatment service items. (Responsible department: Administration of Traditional Chinese Medicine)

In 2017, seven pilot free trade zones (FTZs), including those in Chongqing, Liaoning, and Hubei, were officially launched, bringing the total number of FTZs nationwide to 11 and forming a “1+3+7” pilot framework.

In recent years, concepts such as Free Trade Zones, National Independent Innovation Demonstration Zones, State-level New Areas, and Pilot Zones have been rolled out across China in a “patchwork” pattern, ensuring that all major provinces and regions have their own “test beds” benefiting from preferential policies and industrial support. How does such policy tilting promote industrial development? For the healthcare and medical industry, what preferential conditions, developmental conveniences, and potential investment opportunities are available?

Taking the Chongqing Free Trade Zone as an example, it offers the following preferential measures for the medical and health industry:

1. Application for Permission to Establish Wholly Foreign-Owned Hospitals.

2. The trial period for the practice of foreign physicians is tentatively extended to 3 years.

3. The required practice period for overseas nurses is tentatively relaxed to three years.

4. Expedite the import registration and approval process for medical devices and pharmaceuticals. When approving non-public healthcare institutions and their offered diagnostic and therapeutic services, health authorities may concurrently approve large-scale pharmaceutical equipment required within the institution’s scope of practice that meets established configuration standards. Import tariffs on certain medical devices and pharmaceuticals may be appropriately reduced.

5. Pilot the establishment of foreign-funded specialized health and medical insurance institutions.

Regarding the establishment of wholly foreign-owned hospitals, the Chongqing Municipal Commission of Commerce announced that Raffles Medical Group from Singapore has established a wholly foreign-owned hospital in the Chongqing Free Trade Zone. Adopting a “general hospital + specialized clinics” operational model, Singapore’s Raffles Medical Group will build and operate a 1,000-bed, wholly foreign-owned international general hospital with a total investment of approximately RMB 800 million. The facility is expected to be completed and commence operations by the end of 2018.

The core area of the China (Chongqing) Pilot Free Trade Zone is the Liangjiang New Area. The overall layout of the pharmaceutical industry in the Liangjiang New Area indicates that the Shuitu High-Tech Industrial Park focuses on building technological innovation service platforms for research on new drug formulation technologies, clinical trials of new drugs, and testing and inspection of medical devices; industrialization service platforms such as biopharmaceutical incubators and sci-tech financial service centers; and market trading platforms including a biopharmaceutical technology transfer center and pharmaceutical trading platforms. Priority will be given to developing three key sectors—traditional Chinese medicine, biopharmaceuticals, and medical devices—to enhance the overall level of the industry.

In terms of specific enterprises, Liangjiang New Area has formed three major clusters in the health industry: high-end medical devices and consumables, represented by Yongrenxin’s ventricular assist devices (VADs), Haifu Technology, and Jinshan Technology; high-end pharmaceutical formulations, represented by Peking University Healthcare (Southwest Synthetic Pharmaceutical and Daxin Pharmaceutical), Fosun Pharma Youyou, Huabang Pharmaceutical, and Huachang Pharmaceutical; and high-end medical services, represented by China Stem Cell Group and Porton Pharma. The area is also actively building public service platforms, exemplified by the Zhongguancun Medical Engineering Translation Center, Wistron Taiwan, and Hugui Technology.

At the same time, efforts are underway to build a public service platform for biomedicine, actively introducing national-level Good Laboratory Practice (GLP) facilities, platforms for pharmaceutical achievement transformation, and intellectual property trading. In the future, priority will be given to developing sectors such as medical devices and biopharmaceuticals, promoting high-end medical technologies including mid-to-high-end medical equipment, surgical robots, cell therapy, and genetic testing, while vigorously expanding contract research organization (CRO) services, with the aim of establishing the region as a major domestic biomedical industry hub.

In 2016, the Chongqing Municipal People’s Government officially released the “Action Plan for the Development of Biopharmaceutical Industry Clusters in Chongqing (2016–2020),” which set a target for the total output value of Chongqing’s pharmaceutical industry to exceed RMB 130 billion by 2020.

Following the implementation of policies supporting the establishment of ports for first-time imports of drugs and biological products, Chongqing is expected to leverage its Free Trade Zone as a strategic hub to actively introduce global innovative pharmaceutical products, taking the lead in China to build an industrial highland.

[References]

Notice of the State Council on Several Measures to Support the Deepening of Reform and Innovation in Pilot Free Trade Zones (Guo Fa [2018] No. 38)_Government Information Disclosure Column

http://www.gov.cn/zhengce/content/2018-11/23/content_5342665.htm

Liangjiang New Area Biopharmaceutical and Medical Device Industry

http://ljt.liangjiang.gov.cn/service/detail/2231