錢伯斯全球生命科學(xué)實(shí)務(wù)指南中國篇

CHAMBERSGLOBALPRACTICEGUIDES

LifeSciences

2023

Definitivegloballawguidesoffering

comparativeanalysisfromtop-ranked

lawyers

China:Trends&Developments

MinZhu,Yaling(Michelle)Gon,

Yang(Aaron)Gu,ChaiLu,YingLiandShiyeYuan

HanKunLawOffices

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CHINATrendsanddevelopmenTs

TrendsandDevelopments

Contributedby:

MinZhu,Yaling(Michelle)Gon,Yang(Aaron)Gu,Chai

Lu,YingLiandShiyeYuan

HanKunLawOffices

HanKunLawOfficesisaleadingfull-servicelawfirminChinawithmorethan700profes-sionalslocatedinofficesinBeijing,Shanghai,Shenzhen,HaikouandHongKong.HanKunhasadedicatedlifesciencesandhealthcareteamconsistingofseniorpartnersandlawyers,andiswidelyrecognisedandwell-knownforitspracticeinlifesciencesandhealthcare.The

firmiscommittedtoprovidingclientswithcom-prehensivelegalservices,whichincludeprivateequityandventurecapital,MA&,capitalmar-kets,pharmaceuticallicencein/outandassetsale/purchasetransactions,intellectualproper-ty,dataprotection,complianceandregulatory,anddisputeresolution.

Authors

MinZhuconcentrateshispracticeonlifesciencesandhealthcare,privateequityinvestment,foreigndirectinvestment,M&A,cybersecurity

anddatacompliance,amongotherareas.Hehasprovidedlegalservicestodozensofmultinationals,foreigncompaniesandChinesecompanieswithrespecttotheirestablishment,domesticandoverseasinvestments,andregulatoryandcomplianceaffairs.Minhasbeenrecognisedasahighlyrecommendedpractitionerintheareasoflifesciences,healthcareandcorporatecompliance.

Yaling(Michelle)Gonfocusesonrepresentingclientsincomplicatedandchallengingcomplianceandregulatorymatters,includinganti-corruption,unfaircompetition,

anti-monopoly,anti-fraud,exportcontrolandtradesanctionareas.Sheiswellrespectedforbeingpersonallydevotedtoherclientsandofferingpracticaladviceonresolvingcomplexlegalissues.MostofMichelle’sclientsareleadingmultinationalsdoingbusinessinChinaorlarge,China-basedmultinationalsdoingbusinessgloballyacrossawiderangeofindustries,includingpharmaceuticals,medicaldevices,lifesciencesandhealthcare.

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Yang(Aaron)Gufocusesoncorporate,regulatorycomplianceandtransactionalservicesforthelifesciences,biopharmaceutical,medicaland

healthcareindustries,includingbiosecurityandhumangeneticresourceissues,clinicaltrialmatters,productmarketingauthorisations,GxPcompliance,druglicensingandcollaboration,aswellasregulatoryissuesinvolvedinventurecapitalandprivateequityinvestments,M&Aandforeignandoutboundinvestmentsinthelifesciencesindustries.HealsoprovidesadvocacyadviceondraftlawsandregulationsreleasedbytheNMPAandotherChinesegovernmentalauthorities.

ChaiLufocusesonM&Atransactions,privateequitytransactions,andsecuritiesofferingsandlistings.Shehasrepresentedprivateequityfunds

andtheprincipalinvestmentdepartmentsoffinancialinstitutionsindirectinvestmentinChina,representedUSandEuropeanmultinationalcompaniesintheacquisitionorsaleofChinesebusinesses,andrepresentedlargeChinesestate-ownedenterprisesandprivatecompaniesinoverseasacquisitionsandassetdisposals.Herclientsareactiveinabroadrangeofindustries,includingfinancialservices,insurance,telecommunications,TMT,consumergoods,mining,powerandenergy,manufacturingandhealthcare.

YingLigraduatedfromPekingUnionmedicaluniversityin2005withaPHDinpharmaceuticalsandbiotechnology,andstartedworkingasapatentattorneyin

thesameyear.Forthepast18years,hermainworkhascoveredpatentprosecution,patentportfoliomanagement,IPduediligence,andpatentinvalidationandlitigationforbothdomesticandinternationalclients.YinghasextensiveexperienceinFTOsearchesrelatedtosmallmoleculedrugsandbiologicalmacro-molecules.ShehassuccessfullyrepresentedmanyclientsbeforeCNIPAandthecourtsinvariouspatentinvalidationandadministrativelitigationcases.

ShiyeYuanconcentrateshispracticeontaxplanning.Intheareaofprivateequityandventurecapital,heimplementstaxoptimisationsthroughoutthe

entireinvestmentlifecycle,especiallyofferingstabletaxsolutionsinever-evolvingtaxregimes.IntheareaofM&Aandcapitalmarkets,Shiyeprovidesfeasibletaxarrangements,properlybalancingbetweentaxsavingsandcompliance,todesigntransactionstructuresthatcanwithstandpotentialchallengesfrominvestorsandlistingauthorities.Intheareaofwealthmanagementandstockoptionincentives,hehasexpertiseindesigningfocusedtaxarrangementsfordifferentparticipants,appropriatelyconsideringbothtaxsavingsconsiderationsandassetsecurityneeds.

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CHINATrendsanddevelopmenTs

HanKunLawOffices

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LifeSciencesinChinaafterCOVID-19

TheCOVID-19pandemichasleftanindeliblemarkacrossentireeconomies,andhasprovid-edanarrayofchallengesandopportunitiesforeverysector.ThehealthcareandlifesciencessectorinChinahasseenenormousinterest.TherewereprofoundchangesintheChineselegal,regulatoryandmarketlandscapesduring2022,includingmarketparticipantsinvestinginlife-savingtreatments,theChinesegovernmentprovidingamplesupportforfacilitatingtransac-tions,innovationsinhigh-qualitytechnologies,protectionsforintellectualpropertyandpersonalinformation,andafairerandmoreopenbusi-nessenvironment.ThisarticlewillexaminetheseandothertrendsanddevelopmentsinChina’shealthcareandlifesciencessector.

PharmaceuticalIndustryTransactionsDuringthePandemicPeriod

IPOs

ThenumberofnewlylistedChinesepharmaceu-ticalcompaniesin2022decreasedsignificantlycomparedto2021.Amajorityofthese2022issuancesfellbelowtheirinitialofferingprices,markingareturntomorerationalvaluationsinthepharmaceuticalindustry.Inthefuture,inves-

torsareincreasinglylikelytofavourpharmaceu-ticalcompanieswithsolidtrackrecordsofinno-vationandcutting-edgetechnologiesthatstandoutinthemarket.

Venturecapital/privateequityfinancing

Thepharmaceuticalindustry’sdownbeatperfor-manceinthecapitalmarketsmayhavedamp-enedinvestors’enthusiasmandconfidenceincapitalmarketsmorebroadly.ThenumberandamountofChinesepharmaceuticalcompanies’primarymarketfinancingsin2022droppedsharply,mostnotablyinearly-stagefinancings(seriesangelandseriesA).Giventheshortageoffinancingandcashflow,biotechstart-upshadtoconsidercuttingpipelines(especiallythoselack-inginnovationorfacingfiercecompetition,suchasfrom“me-too”drugs).Atthisstage,thephar-maceuticalindustryhadtwoprincipalconcerns:

?howtoreducecostsandincreaseefficiencytoovercomethecoldwinteroffinancing;and

?howtoenhanceinnovationcapacitytobecomemorecompetitive.

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Contributedby:MinZhu,Yaling(Michelle)Gon,Yang(Aaron)Gu,ChaiLu,YingLiandShiyeYuan,

HanKunLawOffices

License-in/out

GovernmentpoliciesandmarketincentiveshavedrivenChinesepharmaceuticalcompaniestoplacemoreeffortsontheresearchanddevel-opment(R&D)ofinnovativeproducts,and2022witnessedremarkableachievementsinpharma-ceuticallicense-outtransactions.Sourcesshowthatthetotaltransactionvalueoflicense-outdealsinvolvinginnovativedrugs/newtechnolo-giesinChinareachedarecordhighofUSD27.55billionin2022,doublingtheamountin2021.Theaggregatenumberoflicense-outtransactionsforChina’sinnovativedrugs/newtechnologiesexceeded220bytheendof2022.

Bycontrast,thenumberofpharmaceuticallicense-intransactionsin2022decreasedsignif-icantlycomparedtothelargeincreasein2021,andnolarge-scalelicense-intransactionswereconcludedinvolvinganamountofmorethanUSD1billion.Thereasonsforthisdecreaseinpharmaceuticallicense-intransactionsmayinclude:

?cashflowshortagesofpotentiallicenseesinChina,particularlybiotechcompanies;

?thelackofinnovativetargetproducts;

?inflatedtransactionpricesandtoughcompe-titionfordesirabletargetproducts;and

?the“fastfollow”ofChinesepharmaceuticalcompaniesindevelopingtheirowninnovativeproducts.

Ofnote,ophthalmologyhasbecomeanemerg-ingareaforlicense-intransactions,inadditiontoestablishedfieldssuchasoncology,infection,neuroscienceandautoimmunity.

Mergersandacquisitions

Chinesepharmaceuticalcompanieshavebeenactivelydeployinghigh-qualitytechnologiesandpipelines.High-qualityinnovativebiotechcom-

paniessuchasAIdrugR&Dandsmall-moleculetargeteddrugR&DcompaniescontinuetobepopularM&Atargets.Sourcesindicatethat21majorM&AtransactionsinChina’spharmaceu-ticalindustrywereconcludedin2022,withanaggregatedealvalueofmorethanRMB16bil-lion.

RegulatoryTrends

In2022,Chinacontinuedtoupdateregulatorypoliciesfrequently,withactivecontributionsfromtheNationalMedicalProductsAdministra-tion(NMPA),theNationalHealthCommission(NHC)andtheMinistryofScienceandTechnol-ogy(MOST).Majorregulatoryissuesamongthevariousnewpoliciesincludetheregulationofhumangeneticresources(HGR),clinicaltrialsandtheexpandingroleofinternet-basedmedi-calandpharmaceuticalservices.

In2022,theregulatoryauthoritiespersistedintheireffortstosafeguardbiosecurity,particularlywithrespecttoHGRregulation.Astheauthor-ityresponsibleforformulatingandimplementingguidelinesandpoliciesforthedevelopmentofnationalscienceandtechnology,MOSTissuedsuccessiveregulatorydocumentsonHGRregu-lation,includingtwoQ&AreleasesthatclarifycertaincontroversialquestionsinHGRadmin-istrationandcompliancepractice,providingamorelimitedscopeofHGRinformationsubjecttoadministrativefilingandapproval.

Inaddition,significantindustryattentionhasbeenfocusedontwodraftrules:

?theRulesforImplementationoftheRegula-tionsonAdministrationofHumanGeneticResources(DraftforComment);and

?theMeasuresfortheImplementationofAdministrativePenaltyoftheMinistryofSci-enceandTechnology(DraftforComment).

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Contributedby:MinZhu,Yaling(Michelle)Gon,Yang(Aaron)Gu,ChaiLu,YingLiandShiyeYuan,

HanKunLawOffices

Thesetwodraftrulesreflecttheregulatoryauthority’slatestviews,whichcouldresultintighteningregulationofcertainmatterswhilerelaxingothers,withatrendtowardincreasedenforcementactioninthefuture.

RegulationsonclinicaltrialshavebeenupdatedandspecifiedtopromotetheorderlyconductofdrugR&D.TheNMPAhasannouncedtheAnnexofInvestigationalDrugstotheGoodManufac-turingPracticesforDrugs,whichrespondstotheimplementationandenforcementofGoodManufacturingPractice(GMP)forinvestigationaldrugs,furtherstrengtheningtheguidanceonandregulationofthepreparationofinvestigationaldrugs.ThereleaseoftheTechnicalGuidelinesfortheModificationofProtocolsduringClinicalTrialsforDrugs(forTrialImplementation)fillsapreviouspolicygap,providingsponsorswithguidelinestoamendtheprotocolsforongoingclinicaltrialsfrombothsubstantiveandnon-substantiveperspectives.

Duetothepandemic,Chinaacceleratedtheoptimisationofitsremotemedicalandpharma-ceuticalservicespoliciesin2022.Internethos-pitalsandtheonlinesaleofprescriptiondrugsaresupportedbynewregulations,whichinevi-tablybringchallengestotraditionalregulatorymethods.TheannouncementoftheRulesfortheRegulationofInternetDiagnosisandTreatment(forTrialImplementation)setforthmoretranspar-entandeffectiverequirementsforthedevelop-mentofinternet-baseddiagnosisandtreatment.TheProvisionsforSupervisionandAdministra-tionofOnlineDrugSaleswerereleased,andthepolicyontheonlinesaleofprescriptiondrugswasgraduallyloosened.Notably,theonlinesaleofprescriptiondrugswasexplicitlyallowed.

In2022,Chinastartedtopilotcross-bordercon-tractmanufacturingarrangementsbylaunching

andimplementinganewpolicyoncross-bordercontractmanufacturingofdrugsandmedicaldevicesintheGuangdong–HongKong–MacaoGreaterBayArea.Thispolicyisasignificantsteptowardexploringnewregulatorymodes.Cross-bordercontractmanufacturingwillprovidedrugmarketingauthorisationholders(MAHs)andmedicaldeviceMAHswithmoreflexibilityintheirarrangementsforlicenceholdingandmanufac-turing.

Inrespectofdatasecurityinhealthcareindus-tries,theMeasuresforSecurityAssessmentofCross-borderDataTransfers,issuedin2022,specifytheapplicationofsecurityassessments,therequirementofself-assessmentbeforeapplications,andkeyrequirementsforsecu-rityassessmentofcross-borderdatatransfers,whichposeachallengetointernationalcollabo-rativeR&Danddistributioninhealthcareindus-tries.

Inadditiontotheaforementionedgeneralintro-ductionstopolicyupdatesthatareapplicabletobothdrugsandmedicaldevices,thefollowingregulatoryhighlightsapplytodrugsormedicaldevicesrespectively.

Drughighlights

During2022,theNMPAreleasedaseriesofregulationsfocusedonclarifyingtheresponsi-bilitiesandrolesofMAHs.Sincetheimplemen-tationoftheMAHsystemin2019,theNMPAandotherregulatoryauthoritieshaveaccumulatedandupdatedalargenumberofsupplementaryrules,whicharescatteredacrossvariousregu-lationsandguidingprinciples.On9May2022,theNMPAreleasedtheRegulationsforImple-mentationoftheDrugAdministrationLaw(DraftforComment),whichwouldintegratetheafore-mentionedsupplementaryruleswhilerefiningandaddinganumberofprovisionsthatwerenot

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Contributedby:MinZhu,Yaling(Michelle)Gon,Yang(Aaron)Gu,ChaiLu,YingLiandShiyeYuan,

HanKunLawOffices

clarifiedintheDrugAdministrationLaw.Inaddi-tion,thelatestamendmenttotheMeasuresforAdministrationofDrugRecallshasadjustedtheregulatoryrequirementsfordrugrecallsbasedontheMAHsystem.

TheCenterforDrugEvaluation(CDE)alsoreleasedtheWorkingProceduresonSpeedingUptheReviewofInnovativeDrugApplications(forTrialImplementation),clarifyingtherequire-mentsatvariousstagesofthereviewprocessformarketingapplicationsforinnovativedrugsthatareincludedinbreakthroughtherapies.Inthisway,theCDEismakingeffortstoencouragetheR&Dofinnovativedrugsandthusmeetcertainclinicalneeds.

Medicaldevicehighlights

In2022,theStateAdministrationforMarketRegulation(SAMR)releasedtheMeasuresfortheSupervisionandAdministrationofMedi-calDeviceDistributionsandtheMeasuresfortheSupervisionandAdministrationofMedicalDeviceManufacturing,whichserveassupport-ingdocumentsfortheRegulationsonSuper-visionandAdministrationofMedicalDevices(Revisedin2021).Thesedocumentseffectivelyconstructthedistributionandmanufacturingsegmentoftheentiremedicaldevicelifecycleregulatorysystembasedontheneedsofsystemreformandregulatorypractice.

TheGoodClinicalPracticeforMedicalDeviceTrials(RevisedGCP)hasbeenupdatedinresponsetotherequirementsspecifiedunderheatedlyrevisedregulatoryprovisionsformedi-caldevices.TheRevisedGCPemphasisesethicalresponsibility,explicitlyincludesinvitrodiagnostic(IVD)reagentswithintheadministra-tivescope,furtherclarifiestheresponsibilitiesofeachpartyinvolvedinclinicaltrials,andresolvescertainissuesandpainpointsintheindustry.

Inordertostrengthentheon-siteverificationofqualitymanagementsystemsintheregistrationofmedicaldevices,theNMPAamendedtheGuidelinesforMedicalDeviceRegistrationQual-ityManagementSystemVerificationin2022.Thelatestguidelinesclearlystatethatanapplicantwillfailtopasstheverificationifauthenticityproblemsarefoundduringon-siteverifications.

CompliancePractices

Commercialbriberyinthemedicalandhealthcareindustries

Rigorousmonitoringandenforcementagainstcommercialbriberyfocusingonthemedicalandhealthcareindustriesareexpectedtocontinue,includingdawnraids,cross-referralsofcasestoothercompetentagencies,andcollaborationamongdifferentgovernmentagencies.Aslawenforcementeffortsagainstcommercialbriberyintensify,anincreasingamountofcomplexhid-denbriberyschemesarebeingidentifiedandpenalisedbylawenforcementagencies.Suchschemesincludetailor-madebiddingsuchasbidrigging,exclusiveprofitsharing,entertain-mentdisguisedastrainingorconferences,andusingadhocrebatesanddiscountstodistribu-torsasindirectpaymentstohealthcareprofes-sionals.

Strengtheningregulationofnationalmedicalinsurancefundusage

Toincreasescrutinyofmedicalinsurancefundusage,newregulationmethodswillbetrialled,includingincreasingunannouncedinspections,andimplementingfraudpreventionmechanismsbasedondatacollectionfrommobileapplica-tionsandnewpaymentmethodsforoff-sitesupervision.

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CHINATrendsanddevelopmenTs

Contributedby:MinZhu,Yaling(Michelle)Gon,Yang(Aaron)Gu,ChaiLu,YingLiandShiyeYuan,

HanKunLawOffices

Continuousadvancementofnationalcentralisedprocurementofmedicaldevicesandpharmaceuticals

Nationalcentralisedprocurementbecameinsti-tutionalisedin2021,andremarkableachieve-mentsandvaluableexperiencehavesincebeenobtainedinpharmaceuticalchemicalsandhigh-valueconsumablessuchascoronarystentsandartificialjoints.Deepercoverageofnationalcen-tralisedprocurementoverregularpharmaceuti-calchemicalsisexpected.Companiesshouldenhanceself-monitoringofcomplianceeffortstopreventprocurementissuesrelatedtocommer-cialbriberyortaxationissues.Lawenforcementagencieshopethatthereducedprofitmarginsduetocentralisedprocurementwillleadtolesscommercialbriberybylifesciencescompaniesinvolvinghealthcareprofessionals.

Tradesecretprotection

In2022,relevantpoliciesregardingtradesecretprotectionwereinitiatedatbothnationalandlocallevels.Enterprisesareencouragedtoenhanceinternalcontrolmechanisms,self-pro-tectioncapabilitiesandmanagementorganisa-tion,forthepurposeofestablishingsystematiccompliance.Meanwhile,localgovernmentsintendtostrengthentheprotectionofkeyandspecialisedindustries,especiallynewindustries,newbusinessmodelsandtrends.Prioritywillbegiventotheprotectionofknowledge-ortech-nology-intensive,innovativeandtime-honouredbusinesses.

ChangesinChineseIntellectualPropertyLawsandRegulations

Revisionofpatent-relatedlawsand

regulations

TheChinaNationalIntellectualPropertyAdmin-

istration(CNIPR)publishedtheRevisedDraftPatentExaminationGuidelines(DraftforCom-ment)inAugust2021.On31October2022,it

publishedtheDraftAmendmentstothePatentExaminationGuidelines(SecondDraftforCom-ment).Asachaptercloselyrelatedtothefieldsoflifesciencesandchemistry,theDraftAmend-menttothePatentExaminationGuidelines(DraftforComment)addsseveralprovisionsontheexaminationofpatentapplicationsforinventionsinthefieldoftraditionalChinesemedicinetoprovideguidanceforpatentexaminationoftra-ditionalChinesemedicines.Oncetheguidelinesarefinallyrevised,theywillalsoprovidedetailedguidancefortheoperationofthepatenttermadjustment(PTA)process,patenttermextension(PTE)andtheEarlyResolutionMechanismforPharmaceuticalPatentDisputes(alsocalledthedrug-patentlinkagesystem).

Developmentsinlitigationandadjudicationcasesinlifesciencesandchemistry

Thefirstdrug-patentlinkagerulingcaseinChina

On25April2022,theCNIPRannouncedthatithadconcludedthefirstbatchofadministrativerulingcasesoftheEarlyResolutionMechanismforPharmaceuticalPatentDisputes.Thesewerethefirstadministrativecasesofthistypecon-cludednationwidesincetheimplementationofthenewPatentLawon1June2021.Thethreecasesconcludedthistimeinvolvedthepatentfor“oxycodonehydrochloridesustained-releasetablets”belongingtoPurduePharmaceutical,whichrequestedconfirmationthatthegenericdrug-relatedtechnicalsolutionsofYichangRen-fuPharmaceuticalCo.,Ltd.fellwithinthescopeofprotectionoftheabove-mentionedpatentrights.Aftertrial,theCNIPRheldthatthetech-nicalsolutionsrelatedtogenericdrugsdidnotfallwithinthescopeofprotectionoftheabovepatentrights.

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CHINATrendsanddevelopmenTs

Contributedby:MinZhu,Yaling(Michelle)Gon,Yang(Aaron)Gu,ChaiLu,YingLiandShiyeYuan,

HanKunLawOffices

Thefirstdrug-patentlinkagelitigationcasein

China

On15April2022,theBeijingIntellectualProp-ertyCourtmadeafirst-instancejudgmentinthefirstChinesepatentlinkagelitigationcase(betweenChugaiPharmaceuticalCo.,Ltd.and

WenzhouHaihePharmaceutical).On5August

2022,theSupremePeople’sCourtmadeasec-ond-instancefinaljudgmentinthecase,whichlastedeightmonthsfromthedateoffilingon8November2021;comparedwiththetrialtimeofdrug-relatedpatentlitigationbeforetheimple-mentationofthepatentlinkagesystem,thecur-renttrialtimeisgreatlyshortened.PredictabilityisenhancedforboththeMAHandthegenericpharmaceuticalcompany,andthepossibleloss-escausedbylaterrightsprotectionorinfringe-mentarereduced.

Withtheimprovementofrelevantlawsandregu-lations,itisexpectedthattherewillbemoreandmoredrug-patentlinkagecases.

TaxConcerns

AsoneofthemostencouragedsectorscurrentlyinChina,healthcareandlifesciencescompa-niesmayenjoyawiderangeoftaxincentives,mainlyincludingthefollowingtaxpreferentialtreatments.

Highandnewtechnologyenterprise(HNTE)