Strengthening Pharma IP: China’s Boost to Data and Market Exclusivity

* This article was co-authored with Olivia Zhao from Bird & Bird Lawjay Shanghai association team. 

On 3 January 2025, the General Office of the State Council issued the Opinions on Comprehensively Deepening the Reform of Regulation of Drugs and Medical Devices to Promote the High-Quality Development of the Pharmaceutical Industry (Circular 53) (the “2025 Opinions”). The far-reaching 2025 Opinions aim to foster pharmaceutical innovation and enhance the regulatory regime so as to position China as a global leader in the life sciences sector.

Since the implementation of the 2017 State Council Opinions on Deepening the Reform of Review and Approval System to Encourage the Innovation of Drugs and Medical Devices and the establishment of the National Medical Products Administration (the “NMPA”) in 2018 (see Bird & Bird newsletter - Ongoing Healthcare Reform in China), the NMPA has approved 185 innovative drugs and 292 medical devices, including 48 innovative drugs and 65 medical devices in 2024 alone. Looking ahead, China aims to strengthen its regulatory framework and improve review and approval processes by 2027, with a goal of achieving full regulatory modernization by 2035 to ensure the safety, efficacy and accessibility of drugs/medical devices, and to build a pharmaceutical industry which is at the forefront of innovation and global competitiveness. 

The 2025 Opinions contain 24 reform measures in 5 key areas. The key proposed changes are set out below:

1. Data Exclusivity

The 2025 Opinions propose additional drug categories that will be granted data exclusivity. This supplements the data exclusivity protection set out in the 2019 Implementing Regulations of the Drug Administration Law (the “Implementing Regulations of DAL”), which provides that drugs containing a new chemical entity (“NCE”), have 6 years of data exclusivity for undisclosed trial data and other data, commencing from the date of marketing authorisation (“MA”) approval in China. 

Key limitations of the current data exclusivity regulations include the following:

• Biologics and other drug types are excluded from protection.
• The term “NCE” is not defined in relevant drug legislations in China.
• The NMPA has not issued effective guidelines/notices for implementing data exclusivity. 

The lack of operational guidelines has hindered the enforcement of data exclusivity protection in China. 

The 2025 Opinions propose extending data exclusivity to include “a part of drugs”. While the term “a part of drugs” introduces ambiguity, the associated Policy Interpretation to the 2025 Opinions clarifies that data exclusivity will be expanded (to include additional drug types such as biologics, orphan/pediatric drugs) and that the undisclosed trial data and other data submitted by applicants will be granted categorized data protection term.

The NMPA is revising the Implementing Regulations of DAL to define the measures to implement data exclusivity protections, including the methods, scope, categories, and term. A revised draft can be anticipated soon, providing much-needed clarity and enforcement mechanisms for the data exclusivity protections.

2. Market Exclusivity

The 2025 Opinions propose granting market exclusivity for orphan drugs, pediatric drugs, first-to-market generics, and exclusive traditional Chinese medicines (“TCM”). Currently, market exclusivity is limited to first-to-market generics and certain TCMs. 

Under the 2022 Draft Implementing Regulations of DAL, market exclusivity terms were introduced as follows:

• Orphan drugs: Up to 7 years, conditional upon the undertaking from the MA holder (“MAH”) to guarantee the supply of the drug. The MA application of an orphan drug that is clinically urgent will be subject to priority review. The market exclusivity may be terminated if the MAH fails to comply with this undertaking.
• Pediatric drugs: Up to 12 months for the first approved drug for a new variety, dosage form or indication for use for children, or the addition of a pediatric indication or dosage and administration. The MA application of a pediatric drug will be subject to priority review. 

3. Optimized Review and Approval 

To expedite the availability of innovative drugs and medical devices, the 2025 Opinions mandate improvements in regulatory timelines and processes. The NMPA currently offers expedited pathways for drugs (including breakthrough therapy, conditional approval, priority review and approval, and special approval) and medical devices (including innovative product registration procedure, priority registration procedure, and emergency registration procedure). The 2025 Opinions emphasize the accelerated review and approval processes to meet urgent medical needs and support pharmaceutical innovation. Key measures include:

• Pre-application guidance: The NMPA will strengthen pre-application guidance for clinical trials, reducing communication delays.
• Priority review and approval: Applications for urgently needed cell and gene therapies, overseas-approved drugs, combination vaccines, radiopharmaceuticals, substitutes for rare and endangered medicinal materials, as well as high-end medical devices such as medical robots, brain-computer interface devices, radiotherapy device, medical imaging device, innovative TCM diagnostic devices, and high-end implantable and interventional medical devices will receive priority review and approval.
• Accelerated timeline: Clinical trial application review and approval will be reduced from 60 to 30 working days. Bioequivalence trials will be optimized. Supplemental drug application review and approval will be reduced from 200 to 60 working days. API management will be optimized.
• Reduced vaccine testing lead time: The review and approval lead time for seasonal flu vaccines will be reduced from 60 to 45 working days or less. 
• Streamlined inspection: The dosages required in each batch for inspection in drug registration, biological product lot release, and imported drug customs clearance will be reduced from 3 times the dosages of full inspection to 2. A priority inspection pathway will be provided to innovative drugs and medical devices, and those urgently needed for clinical use. 
• Optimized generic drugs review and approval: The regulatory framework for generic drug review, inspection, and approval will be optimized to ensure higher quality standards. Oversight of contract research, manufacturing, and post-approval changes will be strengthened. Consistency evaluation for generic drug quality and efficacy will be expanded to include eye drops, patches, and sprays.

4. Incentivising Orphan Drug Innovation

The 2025 Opinions propose to accelerate the review and approval of orphan drugs and medical devices. Key reforms include: 

• Reducing or exempting clinical trials for qualifying innovative orphan drugs and medical devices;
• Reducing the number of registration inspection batches for orphan drugs from 3 inspections to 1, and reducing the dosage of each batch from 3 times the dosage of full inspection to 2; 
• Coordinating the registration verification and post-marketing inspection of imported orphan drugs and shortening the approval time for overseas verification; 
• Allowing medical institutions to import clinically urgently needed orphan drugs and medical devices that have not been registered and marketed in China; 
• Encouraging high-level medical institutions to develop rare diseases treatments and diagnostics for which similar products are not yet available in China.

5. Promoting International Cooperation

To encourage multinational pharmaceutical companies to expand their presence in China, the 2025 Opinions emphasize alignment with international standards and streamlined cross-border processes. Key measures include:

• Harmonization of standards: China is aligning the drug evaluation standards with International Council on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH). International multi-centre clinical trials and synchronized global approvals will be encouraged.
• Segmented biologics production: Pilot programs will enable segmented production of biologics, enabling manufacturing processes (e.g., for antibody-drug-conjugates and multivalent vaccines) to span multiple locations under unified quality standards. Foreign MAH will be permitted to leverage domestic manufacturing facilities or outsource production to Chinese contract manufacturing organizations. 
• Optimized importation: Commercial-scale batches for overseas-approved drugs produced before MA approval can be imported and sold, expediting market entry. 

6. Enhanced Health Insurance Coverage

The 2025 Opinions encourage the inclusion of innovative drugs and medical devices in insurance coverage to enhance accessibility and affordability. Pharmaceutical companies are urged to self-assess newly marketed drugs based on their pharmacological and clinical value for reimbursement and inclusion in the National Reimbursement Drug List. Additionally, there will be an establishment of a multi-tiered health insurance system to support diversified payment options, with commercial health insurances complementing basic medical insurance. 

Next Steps

The 2025 Opinions set out a framework for the next stage of developing China’s life sciences sector. Key regulations, including the Implementing Regulations of DAL, are undergoing revisions and these will contain detailed measures on data exclusivity, market exclusivity, expedited review pathways, and enhanced compliance in China. We will send further updates when the new Implementing Regulations of DAL are published.