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China extends drug patents to 25 years

Move to ease US trade friction will benefit global pharmaceuticals

Five extra years of patent protection would give makers of name-brand drugs more time to profit in Asia's biggest market.   © Reuters

BEIJING -- China will lengthen patent protection on pharmaceuticals to up to 25 years from 20 starting this month, in a move that appears aimed at deflecting U.S. criticism over intellectual property violations.

Beijing has also scrapped import tariffs ranging up to 6% on 28 categories of drugs, including those used to treat cancer.

Patent protection typically lasts 20 years, but drugmakers spend much of that time on clinical trials to clear regulatory hurdles, which reduces the period they can sell new drugs without competition from generic versions.

Japan, the U.S., the European Union and other advanced economies grant up to five years additional protection to patented drugs to allow drugmakers more time to recoup investments in development. 

China had been wary of an extension. Beijing believed a longer term would benefit only foreign makers of name-brand drugs, since many Chinese drugmakers produce generics, which would be kept off the market for longer. Extending the wait to introduce generics would also mean higher prices for consumers.

"The sudden extension is without a doubt a response to the trade frictions between China and the U.S.," said a patent lawyer in Beijing. The longer term could help bridge their gap on trade practices by offering more protection to foreign drugmakers, which in turn could encourage greater U.S. exports to China.

China's pharmaceutical market is now worth more than $120 billion, second only to America's. China imported more than $55 billion worth of drugs last year, and these numbers are expected only to grow as the population ages.

Japanese drugmakers see big opportunities in China's patent decision. Astellas Pharma already sells hundreds of millions of dollars worth of products here yearly. The additional patent protection "is a huge benefit, since China is the largest market in Asia," a company representative said.

"China has far more generic products and generic drugmakers than Japan," said Toshio Miyashita, chief financial officer at drug development startup Solasia Pharma. "Maintaining patents helps prevent loss of brand value."

But generics makers are less enthusiastic. "China is already a difficult market, and the longer patent term would mean delays in marketing generics and more challenges to entry," said a source at Nichi-Iko Pharmaceutical.

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