China gives preferential tax rate for generic drugmakers

BEIJING (Reuters) - China will offer preferential tax rates to generic drugmakers, setting corporate income tax for qualified high-tech firms at 15 percent, China's cabinet said in a policy document on Tuesday.

The State Council also said it would draw up new incentives aimed at encouraging the development and production of generic drugs, a move it said would help safeguard public health, reduce medical bills and spur innovation.

The document said China would aim to create a system that encourages producers to copy "clinically necessary" drugs, including those in short supply and used to treat children, prevent major communicable diseases, or handle public health emergencies.

The health commission will produce regular lists of drugs in short supply in order to encourage drugmakers to raise production, the cabinet said.

To balance the interests of patent holders with those of the general public, China will also aim to strengthen enforcement of intellectual property rights and establish "early warning" mechanisms to prevent generic drug producers from infringing patents, the document showed.

The protection of intellectual property rights in China has been a long-standing bone of contention for foreign firms, with fresh complaints from the United States about patent infringements now threatening to trigger a trade war.

China has been trying to improve access to medicines, speed up its drug approval process and cut healthcare costs, as part of a wide-ranging 2016-2030 "healthy China" plan aimed at raising life expectancy.

(Reporting by Beijing Monitoring Desk and David Stanway in SHANGHAIEditing by Christopher Cushing)