Advice You - Business

Chinese foreign investment law does not permit a Representative Office to carry out direct business activities. It is limited to activit

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

ies such as market research, product promotion, and liaison. It may not charge fees for its services or engage in profit-making activiti

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

es such as direct sales or marketing.

A Representative Office should take special care when performing the following activities:

Billin

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

g Procedures: A Representative Office may neither collect money for its parent company nor invoice clients directly - this must be handl

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

ed by the parent company. This is a tricky and ambiguous area, and it would be wise to subject your Representative Office’s billing proc

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

edures to the scrutiny of a competent professional in China to ensure that it is not operating outside of its scope of business.

Signin

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

g Contracts: All contracts must be signed by the parent company, although a Representative Office can negotiate contracts that are later

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

signed by its parent company.

Employing Staff: Unlike Joint Ventures and Wholly Foreign Owned Enterprises, a Representative Office canno

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

t directly hire employees - it must use an authorized human resources agency. Although most of these agencies are affiliated with local

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

governments, a few are private. Many Representative Offices get around some of the inevitable inconveniences by independently seeking e

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

mployment candidates, having the HR agency ‘refer’ these candidates to them, negotiating salary, etc. directly with these candidates and

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

then having the HR agency make the official hiring referral to the Representative Office. The HR agency would then take a percentage of

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

the employee’s salary each month. Although the above-described flexibility with the rules is common, it is best not to go any further i

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

n treating the HR agency as a formality because a number of Representative Offices that have tried to skirt these requirements have been

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

closed.

A draft Labor Contract Law is widely expected to be enacted soon. Assuming that the enacted law is identical to the draft that

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

is currently in circulation, Representative Offices will be allowed to contract directly with employees during the employees’ first yea

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

r of service.

Activities Outside the Normal Scope of the Parent Company: Even though corporations in Western countries are generally all

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

owed to participate in “any lawful activity”, in China a Representative Office is conceived of as part of the overseas parent company a

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

nd must act within the parent company’s usual scope of business rather than opening up an entirely new business for its parent company (

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

see this site’s section on “Scope of Business” in the “Glossary” section for further details on the “scope of business” concept in China

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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