China introduces new policy to boost generics

Home/Policies & Legislation | Posted 11/05/2018 post-comment0 Post your comment

The State Council, China’s cabinet, unveiled a new policy whereby some generics manufacturers could qualify for a ‘high-tech enterprise’ designation that comes with a 15% corporate tax rate, compared to the 25% rate for other companies.


The new policy (Circular No. 20 2018), announced on 3 April 2018, outlines several ways in which China aims to encourage generics.

First, the government’s new drug regulator – the State Drug Administration (SDA) [1] – will compile and actively update a drug list that encourages companies to produce generics. That list will include medications for rare diseases, major infectious diseases and paediatric treatments, as well as important drugs that are suffering shortages. The health commission will also produce regular lists of drugs in short supply in order to encourage drugmakers to increase production. 

The policy sets higher standards for materials and techniques used to manufacture generics. In addition, for the first time, public insurers will be required to cover generics under the same standards as brand-name drugs.

The new policy will also forbid doctors to write brand names on prescriptions, except in extenuating circumstances, and pharmacists would still have the option to switch to a generic drug.

To balance the interests of both brand-name and generic drugs, China also aims to strengthen enforcement of intellectual property rights in the country and establish an ‘early warning patent system’ to prevent generics makers from infringing patents. At the same time the policy encourages patentees to voluntarily grant compulsory licences to Chinese generics makers where there ‘is a serious threat to the public health’.

Around 95% of the drugs approved by China’s drug regulator are generics. However, in the past, domestic generics have been proven ineffective or have given rise to severe side effects. This has led to many patients in China with cancers or rare diseases being forced to use expensive imports. For this reason, the policy also aims to tighten approval standards and accelerate the approval process for generics. Generics will be approved only if their quality and efficacy are proven to be equivalent to the originator products.

China has been trying to improve access to medicines, speed up its drug approval process and cut healthcare costs, as part of a wide-ranging 2016−2030 ‘healthy China’ plan aimed at raising life expectancy.

Editor’s comment
A compulsory licence permits pharmaceutical manufacturers to produce a drug that is patent protected without the consent of the patent holder.

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1.  GaBI Online - Generics and Biosimilars Initiative. CFDA to come under national market supervision administration []. Mol, Belgium: Pro Pharma Communications International; [cited 2018 May 11]. Available from:

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Source: Chinese Government, Reuters

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