CICC HealthCare Working Group Meeting, 12 October 2023

Dear Members and Friends,

The China-Italy Chamber of Commerce is glad to inform you that the webinar “CICC HealthCare Working Group Meeting“, was held on October 20th, 2023. The online meeting aimed at showing the members the activities that the healthcare working group has been carrying out highlighting some Chinese policies that support healthcare companies and explaining some key points of the Anti-corruption campaign.

During the event, Michelle Xing (CFO of Shanghai BraccoSine Pharmaceutical ) stated that the Biomedical industry in Shanghai is aiming to achieve the following goals:

• By 2025, the industry scale exceeded CNY 1 trillion, with a  manufacturing output value of CNY 240 billion
• Continuously improve the distinctive development effect of  the “1   +5+X” industrial park
• By 2025, the proportion of R&D investment to operating  revenue of enterprises above designated size will exceed 8 %
• By 2025, there will be approximately 4 pharmaceutical manufacturing enterprises with annual sales revenue exceeding CNY  1 0 billion, 3 the world’s top 50 pharmaceutical manufacturing or medical device enterprises, and an increased number of listed companies by 25.

Healthcare companies may look for various kinds of supporting policies at different levels which could be:

• National e.g., High and New Technology Enterprise  (“HNTE”), Super deduction for R&D  expenses for Corporate Income Tax purposes, etc.
• Shanghai Municipal e.g., Regional Headquarter, Foreign-funded R&D Center, Support for  Innovation and manufacturing of drug and medical devices, Technique  Transformation Project, etc.
• Pudong District e.g., preferential corporate income tax rate for new set-up company, preferential individual income tax rate for foreigners,  district-level headquarters, Support for clinical research, financial rewards for HNTE, etc.
• Area e.g., financial subsidies for companies in  Zhangjiang area, Lingang area, etc.

Additionally, HIGH AND  NEW  TECHNOLOGY  ENTERPRISES  (“HNTE”) are eligible for a preferential corporate income tax rate at 15  %, and R&D SUPER-DEDUCTION is eligible to claim an additional  100% deduction on top of their actual eligible R&D expenses. To stay updated with the different policies, Michelle Xing suggests referring to the “Shanghai Biomedical Industry Investment Guide”.

Following Michelle Xing’s speech, Andrea Sorgato (Associate at Zunarelli Business Consulting (Shanghai) Co., Ltd.) highlighted the key points to implement for the correction of malpractices in medical procurement and medical services from China's new anti-corruption campaign. The three main types of malpractice are divided into three fields:

1)    Malpractices in medical industry management and government sector

2)    Malpractices in the academic and scientific sector

3)    Malpractices in public procurement, medical services, and BMI sector

Following his speech, Fujian Bing (Director of Government Affairs Menarini) presented the Menarini Group, which is a fully integrated privately owned pharma company with a long and successful heritage in strategic partnering across the globe, mentioning some corruption risks in hospital channel sales, focusing on corruption risks in retail clerk training.

To conclude the event, Valtero Canepa (Coordinator of the HCWG and General Manager of Shanghai BraccoSine PharmaceuticalBracco) talked about the future activities of the working group, which include the organization of two types of webinar: one type focusing on the Chinese side, aiming to understand what Italy can offer in terms of healthcare and the other one focusing on how to help Italian companies that are already operating in China or are planning to enter the market. The HCWG is also currently organizing a meeting between some Chinese hospitals and Italian hospitals to open a dialogue between the parties. This goes to show how the Working Group is not here just to provide products and services but to also create opportunities for discussions between its members, which can lead to new collaborations.

Kind Regards,

The CICC Team