HONG KONG: Chinese pharmaceutical stocks jumped after the government said it plans to expand tax breaks to rare-disease treatments and speed the approval process for cancer drugs.
The CSI 300 index of health-care stocks traded in Shanghai and Shenzhen rose as much as 3.4% in early trading Tuesday, to the highest level of the year.
Kangmei Pharmaceutical surged as much as 10%. In Hong Kong, Genscript Biotech rose as much as 8.7% and Wuxi Biologics Cayman added as much as 5.5%.
The value-added tax on 21 drugs for rare diseases will be cut to 3% from March 1, according to a statement from the State Council after an executive meeting.
Premier Li Keqiang reiterated the government will speed the approval of new cancer drugs, lower prices and include more such treatments into the country’s medical reimbursement system.
“It’s good news for both domestic and international makers for rare disease drugs,” said Jialin Zhang, a senior health-care analyst with ICBC International Research in Hong Kong.
“We expect international drug makers will benefit more from the tax cut because they are running ahead on developing drugs for rare diseases.”
The move is the latest effort by China to introduce new medicines more quickly and cheaper in the world’s second-biggest pharmaceutical market, as a growing middle class seeks access to better drugs and health care.
The government is racing to get access to top treatments as China faces some of the highest rates of cancer, diabetes and liver disease in the world.
China’s drug regulator announced a list of 48 foreign drugs that were urgently needed last year and that it’s looking to approve if certain requirements are met, an agency representative told official state television CCTV in January.
In December, it approved an anemia treatment from AstraZeneca and FibroGen ahead of the US and other markets.
The policy on rare-disease drugs followed tax breaks enacted last May that cut value-added tax for all domestically produced cancer-fighting medicine to 3% from 16%.
The government also applied zero duty to imported drugs, including alkaloid treatments with anti-cancer effects, and proprietary Chinese medicines, from the previous range of 3% to 6%.