Caixin Explains: How China Is Overhauling Regulations on Genetic Resources

The biotech sector in China is undergoing significant regulatory changes due to rising global competition and the need for better engagement in developing new medical treatments. [para. 1] China possesses the most comprehensive human genetic resources in East Asia, thanks to its large, ethnically diverse population.[para. 2] According to Jin Li from Fudan University, the genetic diversity among China’s 56 ethnic groups makes it an invaluable resource for scientific research and public health. [para. 3] Human genetic resources include organs, tissues, cells, and genetic materials such as blood, saliva, and cerebrospinal fluid, which are crucial for new drug development and central to national biosecurity. [para. 4][para. 5]

The biotech industry in China has been constrained by stringent regulations introduced in 2015. These regulations involve strict supervision over the collection, preservation, transportation, and use of human biological materials, resulting in lengthy approval processes that stymie innovation. [para. 6][para. 7] To address this, China began transferring regulatory control of genetic resources from the Ministry of Science and Technology (MOST) to the National Health Commission (NHC) in early 2023 to focus on public health. [para. 8] The NHC has been revising these rules to streamline procedures, enhance regulatory efficiency, and invigorate biopharmaceutical research. [para. 9][para. 10]

China's regulatory overhaul began in March 2023 with a national legislative restructuring plan. By July, MOST closed its Genetic Resources Office, and in March 2024, the NHC took over supervision. [para. 12] The NHC conducted several discussions with industry experts to balance necessary regulation with relaxed controls to spur innovation. [para. 13] Main changes proposed include raising the administrative threshold for genetic resource projects and clarifying the definition of foreign entities to reduce unnecessary regulatory overlap and facilitate application processes. [para. 14]

Tight regulation over the past decade led to delays in drug research and increased the difficulty of international cooperation. Studies have shown that the time required for clinical trial approvals in China can be six months longer than in the U.S., significantly slowing new drug development. [para. 17] Tightening regulations since 2019 have also caused a slowdown in genetic research, prompting the industry to call for more efficient regulation. [para. 18][para. 19]

Foreign cooperation has been negatively impacted by strict compliance requirements for exporting genetic data and forming partnerships. Companies classified as foreign entities face substantial administrative costs, deterring foreign investment and pushing entrepreneurs to adopt risky structural strategies such as variable interest entity (VIE) arrangements. [para. 24] These issues highlighted the need for regulatory changes to facilitate international collaboration in biomedical research while protecting biosecurity. [para. 25]

Proposed rule changes aim to raise the threshold for projects requiring approval and narrow the definition of foreign entities, potentially making Hong Kong and Macao more attractive to foreign investors. [para. 27][para. 28] Experts believe that these revisions will make regulation more precise and efficient, benefiting the biotech and research sectors significantly. [para. 29] China's regulatory framework for human genetic resources, established piecemeal since 1998, has evolved into a more comprehensive and strict system by 2019, with recent guidelines incorporating industry feedback to ease requirements. [para. 31][para. 32][para. 34]

Globally, managing human genetic resources is a challenge influenced by geopolitical and economic factors. National security concerns often drive tightened regulations, but experts recommend addressing biosecurity and gene weapon issues precisely to avoid overregulation and public misunderstanding. [para. 36]

These developments reflect China's ambition to balance stringent regulation with fostering a competitive environment in the biotech sector to keep pace with global advancements.