China on the Move: China’s Healthcare and Life Sciences Regulatory Evolution in 2025

In the first half of 2025, China's healthcare and life sciences regulatory framework underwent a wave of important reforms. These developments reflect the country's continued efforts toward global alignment, innovation, and regulatory transparency. For multinational pharmaceutical, medical device, and healthcare companies operating in or entering the China market, these reforms present both opportunities and new compliance requirements.

This GT Advisory summarizes four significant developments:

1. New NMPA policy optimizing localized production of imported medical devices
2. Draft Measures to strengthen clinical trial data exclusivity protection
3. Finalized anti-corruption compliance guidelines for the healthcare industry
4. Anti-monopoly guidelines specifically targeting the pharmaceutical sector
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   NMPA Announcement No. 30: Optimizing Local Production of Imported Medical Devices

   Before 2020, multinational medical device firms faced considerable compliance burdens when attempting to localize production of imported Class II and III devices in China. When an overseas company intended to manufacture its approved devices in China, it was required to find a local partner. The local partner was responsible for applying for and completing the registration or record-filing for the localized product as a domestic device. This process required re-conducting and preparing materials such as non-clinical research, testing, and clinical evaluation, which could be extremely time-consuming.

   To address such inefficiencies, Announcement No. 104 (2020) created a pathway for expedited local production by allowing foreign-invested enterprises (FIEs) established by the registrant to leverage existing product approvals. For instance, Philips utilized this pathway to launch its localized ultrasound probe product through its wholly owned Shanghai subsidiary in 2021, significantly reducing time to market.

   However, challenges remained. The announcement imposed strict eligibility criteria, limiting participation to FIEs directly established by the imported medical device registrant. This excluded many original registrants without direct subsidiaries in China. Additionally, it required identical raw materials, production processes, and quality management systems (QMS) to those of the imported product, offering little flexibility for adaptation.

   On March 17, 2025, the National Medical Products Administration (NMPA) issued Announcement No. 30, effective March 18, 2025. This policy refines the framework established by 2020 Announcement No. 104, with the aim of encouraging localized manufacturing, reducing duplicative documentation, and attracting foreign investment-while upholding stringent safety and efficacy standards.

   Key Changes in 2025 Announcement No. 30

   • Expanded Eligibility: The 2025 policy allows not only subsidiaries directly established by the imported device registrant but also domestic entities under the same "actual controller" to apply for local production. This provides flexibility of companies lacking a direct presence in China by leveraging existing group entities.
   • Refined QMS Requirements: Whereas the 2020 rules demanded near-identical manufacturing conditions, the 2025 policy emphasizes substantial equivalence in the design and development phase of the QMS. Variances are permitted, subject to justification, risk analysis, and control measures. Previously, a foreign company encountered issues when trying to replicate a device tool in Shanghai because local regulators required that the cleanroom layout and monitoring system match its U.S. facility identically. With the 2025 updates, such company could proceed if it demonstrates substantial QMS equivalence in design and development, explains the deviation, and implements risk controls. This update is a game-changer for complex, modular product lines.
   • Incentives for Innovative Devices: Innovative imported devices that transition to domestic production may benefit from expedited review procedures, reinforcing China's push for advanced technologies.
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     Implications for Industry

     • Expanded fast-track eligibility increases market access flexibility for global medical device firms.
     • Relaxed QMS equivalence standards address longstanding pain points for complex devices.
     • Firms developing or holding innovative products may wish to evaluate localization strategies to take advantage of regulatory priority.
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       Draft Measures on Regulatory Data Exclusivity for Clinical Trials

       While China introduced the concept of data exclusivity in 2002 following its accession to the World Trade Organization, detailed rules and implementation for a data exclusivity mechanism have long been absent in its regulatory framework. This gap has created a highly competitive environment for originator medicines in China, as domestic companies can leverage clinical trial data to develop generic drugs or biosimilars without robust protections in place. For example, Novo Nordisk's Semaglutide (Ozempic), approved in China in 2021 for diabetes treatment, has faced intense competition despite its core compound patent remaining valid until March 2026. By January 2025, at least 23 Chinese companies were developing Semaglutide biosimilars, with three having filed new drug applications (NDAs) and 12 advancing to Phase III studies.

       By contrast, under the U.S. Hatch-Waxman Act, similar products receive five to 12 years of market exclusivity, depending on type, making timing more strategically predictable.

       On March 19, 2025, the NMPA released the Draft Implementing Measures and Working Procedures for Drug Clinical Trial Data Protection (Draft Measures) for public comment, marking a significant step toward formalizing regulatory data protection in line with international practices.

       Key Features

       • Scope of Protection: The Draft Measures cover unpublished, independently generated clinical trial data submitted in support of innovative, improved, or first-to-market drugs, as shown below:
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         Drug Type	Scope of Protection	Exclusion
         Innovative drugs (including small molecules and biologics)	All unpublished clinical trial data in the marketing authorization (MA) dossier supporting the drug's safety, efficacy, and quality control	N/A
         Improved new drugs (including small molecules and biologics)	All unpublished new clinical trial data demonstrating a clear clinical advantage over drugs with known active ingredients or approved biologics	Excluding bioavailability data, bioequivalence data, and immunogenicity data of vaccines
         First-to-market generic drugs or biologics marketed overseas but not marketed in China	All unpublished clinical trial data necessary and supportive for the MA approval	Excluding bioavailability data, bioequivalence data, and immunogenicity data of vaccines

         
         
       • Exclusivity Periods:

       - Six years for innovative drugs (adjusted downward for overseas approvals obtained before the China MA application).

       - Three years for improved new drugs and first-to-market generics not yet approved in China.

       • Application Procedures: Requests for data exclusivity must be submitted with the MA application. Public disclosure of exclusivity grants will follow the MA approval and will be published on the official website of the Center for Drug Evaluation (CDE).
       • Key Ambiguities: The draft lacks a clear definition of "first overseas approval," leaving uncertainty for:

       - Drugs launched across multiple jurisdictions: For drugs launched in phases across multiple countries, it is unclear whether first overseas approval refers to the earliest global MA, based on the first country to grant approval.

       - Products approved for different indications: For products approved in different countries for varying indications, the criteria for determining the first MA date are ambiguous.

       - Withdrawn or suspended approvals: For drugs that were marketed in certain countries but later withdrawn, the method for calculating the relevant date remains unspecified.

       Practical Considerations

       • Strategic Planning: Global companies must coordinate approval timelines to maximize exclusivity in China.
       • Data Management: Clear delineation between "undisclosed" and public data is critical.
       • Early Preparation: Companies should anticipate generic applications up to one year before exclusivity expiration and consider complementary IP strategies (e.g., SPCs or secondary patents).
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         Final Compliance Guidelines on Commercial Bribery in Healthcare

         On Jan. 10, 2025, China's State Administration for Market Regulation (SAMR) formally enacted its Compliance Guidelines for Healthcare Companies to Prevent Commercial Bribery Risks (Guidelines), following public comment on a draft issued in October 2024. See our November 2024 GT Advisory for analysis on the October 2024 draft.

         Notable Changes from Draft to Final

         • Article 13: Strengthened separation of educational and sales functions-medical education staff may no longer engage in sales activities, including collecting payments or issuing invoices.
         • Article 15: The draft prohibition on hospitality to gain commercial advantage was removed.
         • Article 24: The duty to implement clear rebate and discount policies now applies to both giving and receiving

         Although not legally binding, the Guidelines are expected to influence SAMR enforcement and serve as an interpretive reference for anti-bribery cases.

         Previously, it was common for pharmaceutical representatives to offer indirect incentives in the name of "educational support." A 2024 case involved Hansoh Pharma, which faced an approximate USD 3.5 million fine in China after authorities found widespread bribery masked as educational conferences and promotional fees. The finalized 2025 Guidelines reflect a direct response to such incidents. For example:

         • Article 13's prohibition on sales targets for educational personnel addresses the historical practice of using medical science liaisons as disguised sales agents.
         • Article 24's broader scope requiring rebate transparency now covers both payer and payee, aiming to eliminate undisclosed "kickbacks" common in procurement cycles.

         Practical Considerations

         • Review internal compliance programs in light of the Guidelines.
         • Clearly segregate educational and commercial functions.
         • Establish robust audit trails for rebates, discounts, and business hospitality.
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           Anti-Monopoly Guidelines for the Pharmaceutical Sector

           On Jan. 24, 2025, the State Council issued Anti-Monopoly Guidelines for the Pharmaceutical Sector, offering sector-specific antitrust enforcement principles.

           Key Provisions

           • Reverse Payment Settlements: For the first time, agreements where brand companies compensate generics to delay entry ("pay-for-delay") may be deemed anticompetitive.
           • Resale Price Maintenance (RPM): Broadens the definition of RPM to include indirect mechanisms (e.g., financial incentives, algorithmic price monitoring).
           • Joint R&D Safe Harbor: Acknowledges the procompetitive value of R&D cooperation; outlines conditions for exemption from enforcement.
           • Unfair Pricing: Clarifies criteria for identifying excessively high prices, including benchmarking methods and abusive markups.
           • Product Hopping: Introduces scrutiny of practices aimed at patent life extension without clinical benefit.
           • Merger Reviews: Includes IP licensing and R&D platforms as part of SAMR's remedies arsenal.
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             Takeaways

             • Firms should proactively evaluate patent settlement agreements and pricing practices for antitrust exposure.
             • M&A transactions involving IP or pipeline assets may be subject to heightened review.
             • Cross-functional compliance and legal teams are encouraged to monitor SAMR enforcement closely.
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               Conclusion

               China's 2025 regulatory updates represent a significant tightening of compliance expectations and increased alignment with global norms. Multinational companies in the life sciences sector may consider:

               • Reassessing China entry and expansion strategies in light of medical device localization reforms;
               • Proactively planning data exclusivity pathways and synchronizing global MA filings;
               • Aligning anti-bribery compliance frameworks with SAMR expectations;
               • Monitoring evolving antitrust enforcement, particularly regarding IP and pricing.