China promises faster drug approvals, equal treatment for U.S. companies

Last month Johnson & Johnson ($JNJ) CEO Alex Gorsky laid out plans for J&J's expansion in China, but also opined about the antitrust investigations and the lag in drug approvals that make business difficult for Western drugmakers. As if in direct response to his observations, U.S. and Chinese trade officials announced on Thursday that China will streamline drug approvals and promised equal treatment of U.S. and Chinese companies in pricing probes.

Zhang Xiangchen, an assistant minister of commerce, told reporters in Chicago that China expected to clear out a backlog of approvals in two to three years, the Associated Press reports. One step that will be taken, he said through an interpreter, will be to "reduce as much as possible needless clinical trials."

The result for the pharma and medical device industries should be an "increase in U.S. exports and U.S. jobs in these two important sectors," the news service quoted U.S. Commerce Secretary Penny Pritzker saying.

The Commerce secretary said there was "significant" agreement that China would treat Chinese and foreign companies equally in antitrust investigations. U.S. and European businesses of all kinds have been complaining they are being targeted as a way for China to protect its domestic industries. Zhang said at the gathering that China, when possible, would allow U.S. companies to have their lawyers with them during meetings on antitrust issues. U.S. executives have said they often have had to face accusations without a legal expert to help them.

The apparent easing of restrictions comes following a tumultuous couple of years for pharma ignited when a GlaxoSmithKline ($GSK) employee in China blew the whistle on a travel slush fund the company was using to bribe doctors and hospital administrators to buy its drugs. GSK confessed to some of the allegations and agreed to slash some drug prices to appease officials. In September it was fined $500 million, while its former top executive, who had faced the possibility of life in prison, was instead given the equivalent of a suspended sentence. A U.S. investigator and his wife, who had been involved in the company's internal investigation, were less fortunate. They were sentenced to a couple of years of prison time for violating Chinese law while collecting info.

During the weeks following the public accusations against GSK, many Western drugmakers reported being visited by Chinese investigators. The market also cooled dramatically as Western firms and Chinese doctors and hospital administrators got spooked by the crackdown, leaving companies to report depressed sales in China.

Johnson & Johnson is one company that has experienced the difficulties of doing business in that country, having been fined for "monopolistic pricing" in its contact lens business. But Gorsky said last month that J&J was undeterred by what has happened and was looking for deals that would boost the company's pharma sales there. Last year, J&J's revenues from pharma, consumer and devices were about $3 billion, up 12% from the year before.

- read the AP story

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