China to slash tax for generic makers to 15%
China’s government has announced plans to implement preferential tax rates to generic drug makers in a bid to encourage the manufacturing of generics.
As part of the strategy (link in Chinese), announced by China’s State Council on Tuesday, April 3, corporate income tax for generic makers that have been identified as a “high-tech enterprise” will be set at 15%. The current rate of corporation tax is 25%.
The State Council explained that its new strategy was aimed at promoting research and development of generics and enhancing their quality and efficiency.
The State Council also said it would draw up new incentives aimed at encouraging the development and production of generic drugs, a move it said would help safeguard public health, reduce medical bills and spur innovation.
The Chinese government’s health department and drug regulator will compile and update a list of scarce drugs, to encourage drug makers to increase production.
A new State Market Supervision Administration, which will incorporate the functions of drug regulator State Food and Drug Administration, is set to be established.
The supervision authority will also manage China’s State Intellectual Property Office, which will also be restructured.
“We must research and perfect the system for the protection of IP rights of drugs that is compatible with China’s economic and social development level and industrial development stage, and fully balance the interests of drug patentees and the public,” said the announcement.
China will also aim to establish “early-warning” mechanisms to reduce the risk of generic companies infringing patents.
China has been criticised for lacking protection for IP rights. In March, the US announced tariffs of up to $60 billion on China in response to China’s alleged IP violations.
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