China will extend the patent protection term for pharmaceutical products from the current 20 years to 25 years beginning in May, according to information released by Chinese authorities. This move is seen as aligning with developed countries and is accompanied by the cancellation of import tariffs on cancer medicines and other drugs. In addition to easing trade tensions with the United States, China appears to signal a stronger stance on protecting foreign intellectual property rights.

Although the standard patent protection term is 20 years, most pharmaceutical patents spend a substantial amount of time in clinical trials. As a result, the effective patent life remaining after approval is significantly shortened.

Japan, the United States, and the European Union already allow up to a five-year extension of pharmaceutical patent protection. China is expected to follow the same approach by offering an extension of up to five years, provided that the pharmaceutical company has applied for marketing authorization both in China and overseas.

Previously, China had been cautious about granting extensions for pharmaceutical patents. Due to the large number of generic drug manufacturers in China, patent-term extensions for new drugs were believed to benefit mainly overseas pharmaceutical companies.

A Beijing-based attorney commented that the sudden decision to extend the patent term for pharmaceuticals is intended to ease China–U.S. trade tensions. Stronger IP protection will enable newly developed foreign drugs to enter the Chinese market more easily, while the removal of import tariffs of up to 6% on 28 types of cancer drugs will further facilitate access.

China’s pharmaceutical market has now exceeded USD 120 billion, making it the second largest market in the world after the United States. In 2017, China imported more than USD 55 billion worth of pharmaceutical products. With the country’s rapidly aging population, the pharmaceutical market is expected to continue expanding. For companies with competitive drug portfolios, China will become an increasingly important export destination.

Japanese pharmaceutical manufacturers believe that China’s extension of pharmaceutical patent terms will significantly benefit the industry. Astellas Pharma, one of the major Japanese companies already active in overseas markets, sells hundreds of billions of yen worth of drugs in China each year. The company stated that “China, now the largest pharmaceutical market in Asia, will bring substantial benefits as patent-term extensions take effect.”

(Source: Nikkei / Nikkei Chinese Edition)