On 8 September 2024, the China’s Ministry of Commerce (MOFCOM), the National Health Commission (NHC) and the National Medical Products Administration (NMPA) issued a joint Circular on the pilot programmes to further open the republic’s healthcare sector to foreign investors. The Circular outlines two major initiatives: the establishment of wholly foreign-owned hospitals in select regions, including Beijing and Shanghai, and the engagement of foreign-invested enterprises (FIEs) in biotechnology within designated free trade zones (FTZs).
Key points of the Circular
1. Biotechnology development and application
Previously, the development and application of human stem cells and genetic diagnosis and therapy were explicitly prohibited and included in Negative List since 2007. With the issuance of the Circular, FIEs are now allowed to engage in these activities within the FTZs of Beijing, Shanghai, Guangdong, and the Hainan Free Trade Port for the purposes of registration, market authorisation and manufacturing. Once approved, these products may be used nationwide.
Piloted FIEs must meet the requirements of human genetic resources management, clinical trials (including international multi-centre clinical trials), and other related management requirements, while complying with China’s comprehensive legislative framework. For more details on the latest policy shifts in human genetic resources management, refer to our previous analysis on ethical guidelines for human genome editing research in China here.
2. Establishment of wholly foreign-owned hospitals
The Circular allows for the establishment of wholly foreign-owned hospitals in nine regions: Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen, and Hainan. This policy, however, excludes hospitals specialising in traditional Chinese medicine and those established through mergers and acquisitions of public hospitals.
Historically, foreign investors in China had generally been limited to forming joint ventures when establishing or acquiring medical institutions. The first breakthrough occurred in 2013 when China permitted wholly foreign-owned medical institutions in the Shanghai FTZ. This new policy expands foreign ownership to additional regions, offering for investors greater access to China’s healthcare sector.
The specific conditions, requirements, and procedures for establishing these hospitals will be detailed in regulations, which will be issued later. Based on previous regulations in the Shanghai FTZ, future guidelines will likely include stipulations on total investment and the level of medical technology required.
The Circular represents a significant relaxation of China’s restrictive policies on foreign investment in the healthcare sector, particularly in the areas of wholly foreign-owned medical institutions and biotechnology development and application. While these policy changes are currently limited to pilot regions, they signal a trend towards increased openness to foreign investment in China’s healthcare market. Law-Now will monitor and report on related policies as they are announced.
The original publication can be found here (Chinese only).
For more information on the investment policies in healthcare sectors in China, contact your CMS client partner or these CMS experts.
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