China Boosts Regulatory Framework for Local Pharmaceutical Manufacturing – Publications

Breaking News: China's Pharmaceutical Industry Sees Major Regulatory Overhaul

Beijing, China — China has introduced significant changes to its Drug Administration Law and corresponding legislation, aiming to boost foreign investment, streamline drug approvals and registration, and improve market access. These reforms are expected to have a profound impact on the pharmaceutical industry, both locally and internationally.

Boosting Foreign Investment

The new regulatory framework is designed to encourage foreign investment in China's pharmaceutical sector. This is achieved through the implementation of a nationwide Market Authorization Holder (MAH) system. The MAH system allows pharmaceutical companies to partner with local manufacturers or contract manufacturing organizations (CMOs) to manufacture their products, thereby gaining quicker access to the market. This move is expected to attract more foreign investment into the Chinese pharmaceutical industry.

Streamlining Drug Approvals

The Drug Administration Law has been amended to facilitate faster and more efficient drug approvals. The priority review system for pediatric drugs, drugs in short supply, and drugs for rare diseases is now in place, ensuring that these crucial medications are available to patients more quickly. Additionally, the new regulations provide for a priority review and approval procedure for certain applications, such as those for local production of originator chemical drugs and biologics.

Enhancing Market Access

Under the new regulations, pharmaceutical companies can choose to manufacture their products in China, which can reduce production costs and enhance supply chain resilience. Furthermore, the regulations do not impose any restrictions on the location of product manufacturing, allowing companies to manufacture domestically or through cross-border agreements. This flexibility is expected to attract more companies to set up operations in China.

Cross-Border Manufacturing

The existing Chinese law does not restrict the choice of location for product manufacturing, making cross-border manufacturing legally feasible. However, in practice, pharmaceutical manufacturing is limited to two separate routes depending on whether the MAH is incorporated in China or abroad. For domestic MAHs, manufacturing must take place in China, while foreign MAHs can manufacture products outside China and import them for sale in the country. An exception was made in June 2022, allowing Hong Kong and Macao drug MAHs to entrust qualified CMOs located in the Greater Bay Area cities. This arrangement has been welcomed by pharmaceutical companies in Hong Kong and Macao.

Impact on Global Pharmaceutical Companies

The new regulatory framework is likely to have a significant impact on multinational pharmaceutical companies. They will need to find local partners to manufacture their products within China, which may require significant investments in local infrastructure and compliance. However, the potential benefits include reduced production costs and enhanced supply chain resilience.

Enhancing Regulatory Compliance

The new regulations emphasize the importance of regulatory compliance, including the need for pharmaceutical companies to adhere to Chinese regulatory requirements for all R&D activities and production activities related to drugs marketed in China. This includes the compliance with Chinese Good Manufacturing Practice (GMP) and Good Clinical Practice (GCP) standards, which may create additional compliance burdens for international companies.

Future Outlook

The reforms are expected to have a lasting impact on China's pharmaceutical industry, attracting more foreign investment and improving market access. The regulatory framework provides a solid foundation for the development and manufacturing of essential medications, including those for rare diseases. As the industry adapts to the new regulations, it is expected to become more efficient and competitive.

References

1. China Law & Practice
2. ChemLinked
3. Morgan Lewis
4. National Center for Biotechnology Information
5. Ropes & Gray

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This article provides a comprehensive overview of the recent changes to China's regulatory framework for local pharmaceutical manufacturing. The reforms aim to boost foreign investment, streamline drug approvals and registration, and improve market access. The new regulations are expected to have a significant impact on the pharmaceutical industry, both locally and internationally, and will require multinational companies to adapt to local manufacturing requirements.