To foster the growth of China’s biotech and pharmaceutical industry, alongside the ongoing implementation of national-level policies directed at the development of the biotech and pharmaceutical industry, many regions have also consistently introduced regional incentive policies for the biotech and pharmaceutical industry. These policies cover all stages of a pharmaceutical business, including research and development, manufacturing and commercialization.

This article will introduce Shanghai’s incentive policies for the biotech and pharmaceutical industry by combining the contents of the Policies and Measures on Strengthening Investment, Promoting and Accelerating the Construction of a Modernized Industrial System in the New Era (hereinafter referred to as the “Incentive Policies”), which was issued by the General Office of Shanghai Municipal People's Government on April 18, 2023, with other relevant policies that Shanghai has released in recent years.

The Incentive Policies were officially implemented on April 20, 2023, and would be valid for five years. The Incentive Policies have listed the biotech and pharmaceutical industry, alongside integrated circuit and artificial intelligence, as one of the “Three Pioneering Industries”, and encompass a number of incentive measures for the biotech and pharmaceutical industry.

1. Background of the Introduction of the Incentive Policies

1.1 Incentive Policies for Investments in the Biotech and Pharmaceutical Industry were Introduced in Multiple Regions Under the Background of the 14th Five-Year Plan

In November 2018, The National Bureau of Statistics of China issued the Classification of Strategic Emerging Industries (2018) and the biotech and pharmaceutical industry was listed as an emerging industry. The release of the above document shows that the biotech and pharmaceutical industry is not only an emerging industry under the state’s close attention but also an important object for supportive policies.

In November 2022, the Ministry of Industry and Information Technology released a list of 45 national advanced manufacturing clusters, among which five are biotech and pharmaceutical clusters, including “Shanghai Zhangjiang Biomedical Cluster”“Shenzhen and Guangzhou high-end medical device Cluster”“Taizhou, Lianyungang and Wuxi Biomedical cluster”“Beijing-Tianjin-Hebei Life Health Cluster”and “Suzhou Biomedical and high-end medical device Cluster”. To support and promote the healthy development of the local biotech and pharmaceutical industry, these regions where the above clusters are located have all introduced local incentive policies related to the biotech and pharmaceutical industry respectively.

1.2 A Number of Biotech and Pharmaceutical Industry-Related Incentive Policies had been Introduced Prior to the Release of the Incentive Policies in Shanghai

On April 20, 2021, the General Office of Shanghai Municipal People's Government issued the Several Opinions of the General Office of the Shanghai Municipal People's Government on Promoting the High-quality Development of Shanghai’s Biotech and Pharmaceutical Industry, which contained multiple financial support policies for pharmaceutical research and development.

Several Measures on Promoting the Coordinated Development of Biotech and Pharmaceutical Research and Development and Manufacturing in Shanghai, which was released by the Shanghai Municipal Commission of Economy and Information Technology on October 10, 2021, mentioned the provision of financial support, which includes offering preferential support to manufacturing projects, fixed asset investment, technological transformation and other areas by means of free subsidies, incentives, loan discounts and capital injections.

On January 20, 2022, the Shanghai Municipal Commission of Economy and Information Technology issued the 14th Five-Year Plan for the Development of Shanghai’s Biotech and Pharmaceutical Industry, which identified formulating competitive investment incentive policies and optimizing precise services for industrial landing as one of the main tasks of this era.

One October 31, 2022, the Several Incentive Policies for Accelerating the Development of Global Biotech and Pharmaceutical Research and Development Economy and Industrialization in Shanghai was officially put into place.

We have summarized the main incentive policies for the biotech and pharmaceutical industry contained in the above documents. You may please refer to the appendix of this article for further information.

2. Incentives Policies for the Biotech and Pharmaceutical Industry in the Incentive Policies

The Incentive Policies put forward a number of incentive policies for the biotech and pharmaceutical industry, including financial support for high-quality projects, as well as housing subsidies for the introduction of the headquarters, research and development centers and production bases of biotech and pharmaceutical companies:

3. Other Incentives Policies that may Benefit Biotech and Pharmaceutical companies

Although some incentive policies in the Incentive Policies are not specifically designed for the biotech and pharmaceutical industry, they are still applicable to qualified biotech and pharmaceutical companies. These policies mainly focus on financial support for high-end or major projects, project housing subsidies and talent subsidies.

4. Our Evaluation of the Incentive Policies

4.1  The biotech and pharmaceutical industry is widely regarded as a pillar industry that has a great impact on the national economy and people's livelihood. Therefore, various countries have introduced their own incentive policies for the development of the industry. With the release of the “14th Five-Year Plan for the Development of the Medical Industry” in early 2022, the Chinese government has set the development goals for the biotech and pharmaceutical industry for the next five years. To achieve these goals, and to attract more investment, China has introduced incentives not only at the national level, but also at regional levels. This Incentive Policies are the policies and measures issued by the Shanghai government to attract biotech and pharmaceutical companies to invest in Shanghai.

4.2  The financial support policies of regional governments targeting major investment projects usually take the forms of financial subsidies, tax exemptions and rent subsidies. However, most of the funding-related supporting policies mentioned in the Incentive Policies refer to direct financial support in cash. Compared with other forms of financial support, this type of cash-based incentive policy is more specific and can better stimulate enthusiasm for biotech and pharmaceutical companies.

4.3  We notice that the Incentives Policies does not yet include specific methods for applying for or obtaining the support. Based on our experience, relevant government departments may issue relevant implementation rules of the Incentive Policies gradually, to clarify the application procedure and requirements for application materials.

Appendix

Before the release of the Incentive Policies, Shanghai had issued a number of financial support policies for the biotech and pharmaceutical industry, which can be seen in the following main documents:

The Several Suggestions on Promoting the High-quality Development of Biotech and Pharmaceutical Industry in Shanghai

The Several Incentive Policies for Accelerating the Development of Global Biotech and Pharmaceutical Research and Development Economy and Industrialization in Shanghai

The The 14th Five-Year Plan for the Development of Biotech and Pharmaceutical Industry in Shanghai

The Implementation Plan for Promoting the High-quality Development of Municipal Medical Device Industry through Innovative Service Mechanism

The Measures on Promoting the Coordinated Development of Biotech and Pharmaceutical Research, development and Manufacturing in Shanghai

The Notice on the Release of Application Guidelines of 2023 "Science and Technology Innovation Action Plan" Biotech and Pharmaceutical Science and Technology Supporting Project

These incentive policies cover all stages of research and development, manufacturing and commercialization in the biotech and pharmaceutical industry. We summarize the main points of the policies in these documents as follows: