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Politics

Japan to block foreign investment in medicine amid coronavirus

New law to deem makers of vaccines and ventilators critical to national security

Japan is moving to protect its pharmaceutical and other sensitive industries from foreign influence as the coronavirus pandemic is teaching a hard lesson about relying on overseas supply chains.   © Reuters

TOKYO -- Japan plans to prevent foreign companies from acquiring domestic pharmaceutical and medical equipment makers, Nikkei has learned.

The Japanese government will include companies that operate in the fields of vaccines, medicine and advanced medical equipment like ventilators on its list of sectors deemed critical to national security.

Legislation passed in November lowers the ownership threshold for prescreening foreign investments in sectors related to national security from the current 10% to 1%. The list specifies 12 sectors like telecommunications and nuclear power, but given the coronavirus pandemic, the government will also add fields like medicine.

In recent weeks, Japan's Fujifilm Holdings has gained global attention for its anti-flu drug Avigan, which is being tested as a treatment for Covid-19.

The government not only wants to protect the country's pharmaceutical industry but maintain a stable supply of medicines and medical equipment, demand for which is surging as countries scramble to treat patients around the world.

The importance for medical businesses has become much stronger amid the pandemic. The Japanese government has decided that the risk to national security and to the lives of Japanese is too great to allow companies with medical-related technology and production facilities to be taken over by foreign capital.

In medicine, Tokyo will include businesses that treat and prevent infectious diseases on its list of specified sectors. The classification will cover companies that handle raw materials, pharmaceuticals, vaccines, serums and formulation.

In the medical equipment segment, makers of products that are difficult to manufacture or for which few alternatives would be available when an infectious disease spreads globally will be included on the list.

They will include makers of ventilators, heart-lung machines, infusion pumps and artificial dialyzers, all of which require advanced manufacturing and quality control.

The government aims to implement the revised Foreign Exchange and Foreign Trade Act next month, with the aim of preventing foreign, particularly Chinese, influence in these industries.

The government plans to begin enforcing the ammended law, which adds pharmaceutical makers and the medical equipment industry to the list, by July, after soliciting opinions from the public.

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