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Road to COP29: Our insights
The 28th Conference of the Parties on Climate Change (COP28) took place on November 30 - December 12 in Dubai.
Asia | Publication | September 2024
On 8 September 2024, the Ministry of Commerce (MOFCOM), the National Health Commission (NHC) and the National Medical Products Administration jointly released the Notice on Carrying Out Pilot Programs to Expand the Opening-up in the Healthcare Sector (关于在医疗领域开展扩大开放试点工作的通知) (the Notice)1.
The Notice, as part of China’s efforts to provide a more open environment for foreign investors, aims to relax the restrictions for foreign investors’ investments in China’s life sciences and healthcare sectors, namely, (i) the development and application of human stem cells, gene diagnostic and therapy technologies for product registration and manufacturing (CGT), and (ii) the establishment and operation of wholly foreign-owned hospitals (Medical Institutions). The Notice came into effect on 7 September 2024.
This article summarizes the main content of the Notice and sets out relevant historical legal developments in these two healthcare areas.
According to the Notice:
Foreign investment in CGT businesses have been prohibited for a long time since the promulgation of the Catalogue of Industries for Guiding Foreign Investment (2007 edition) (a predecessor of what is currently known as the Negative List) issued in October 2007, as well as under the 2024 Negative List. However, the Notice establishes a policy framework for foreign-invested enterprises in the CGT Pilot Regions to engage in CGT business on an exceptional basis notwithstanding the prohibitions.
From 2019, local governments of Shanghai, Beijing, Shenzhen and Tianjin have released notices and plans aiming to relax the restrictions on foreign-invested enterprises to engage in CGT business. On 19 March 2024, the State Counsel released the Action Plan for Promoting High-Level Opening-Up and Further Attracting and Utilizing Foreign Investment (扎实推进高水平对外开放更大力度吸引和利用外资行动方案), which provides that certain designated pilot free trade zones including those in Beijing, Shanghai and Guangdong are permitted to select qualified foreign-invested enterprises to engage in the development and application of gene diagnostic and therapy technology on a pilot basis.
The Notice echoes these policy-level developments in recent years, but the actual implementation measures remain to be seen. Notably, the Notice mentions that the pilot enterprises must comply with relevant laws and regulations on human genetic resources. We therefore would expect the NHC and relevant other authorities in China are likely to enhance the regulations in such area and in respect of medical data protection in the near future.
The establishment and operation of medical institutions in China will generally remain subject to the requirement of forming an equity joint venture structure under the 2024 Negative List (except for certain specific relaxations, as explained below).
According to the Notice, foreign investors will be permitted to establish wholly-owned hospitals in Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen and Hainan (MI Pilot Regions). However, such relaxation does not cover the establishment of Chinese medicine hospitals or permit the acquisition of public hospitals in China. The specific conditions, requirements and procedures for the establishment of wholly foreign-owned hospitals are yet to be released.
The regulatory landscape on foreign investment into China’s medical institutions sector has been evolving gradually since 1997, demonstrating an overall trend of relaxation of foreign shareholding restrictions, as briefly summarized below:
In summary, the current regulatory landscape on foreign investment into medical institutions in China can be summarized as follows:
China has one of the biggest healthcare markets in the world, driven by significant patient needs and a rapidly expanding middle class generating increasing healthcare expenditure. The pilot measures outlined in the Notice send positive signals to the market and promise greater opportunities for foreign investors interested in investing in China’s healthcare sector.
Publication
The 28th Conference of the Parties on Climate Change (COP28) took place on November 30 - December 12 in Dubai.
Publication
Miranda Cole, Julien Haverals and Emma Clarke of our Brussels/ London offices are the authors of a chapter on procedural issues in merger control that has been published in the third edition of the Global Competition Review’s The Guide to Life Sciences. This covers a number of significant procedural developments that have affected merger review of life sciences transactions.
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