The Ministry of Science and Technology as well as other governmental bodies in China are considering the implementation of a tax break or exemption for companies that invest in new drug development. Up to this time, China has not been a major player in international drug development. Excluding Chinese traditional medicines, of the 3,000 pharmaceuticals manufactured in China since the 1950s, only 1% was developed within the country. 99% are copies of foreign products. However, the Chinese government is aiming to change this by introducing tax benefits as an incentive to attract capital to this industry. The tax breaks or exemptions will be applied to both domestic and foreign companies. Discussions regarding the tax breaks or exemptions are unlikely to occur until next year. Li Sujing, head of the policy division at the Law and Regulation Department of the Ministry of Science and Technology said, “I hope we’ll start surveys next year and work out plans then.” By first analyzing the current situation of new drug development in China, the Ministry hopes to tailor its regulations to induce more R&D investment.
Pharmaceutical development by local companies has been steadily increasing in China about 18% over the past five years. However, drugs manufactured in China are mainly produced through the use of foreign technology. The government hopes that within the next 3-5 years, and with the establishment of the proposed tax breaks or exemptions, China will be able to produce drugs using research and technology developed within the country.