How to Secure NMPA Approval for A Nutraceutical Product in China
By Cheng Li Ph.D., MSQ Healthcare Investment Associate
As the living standard in China has been increasing steadily with a growing aging population, the nutraceutical market in China is expanding at an unprecedented speed.
In China, nutraceutical products are regulated by the National Medical Products Administration (NMPA), governed by the State Administration for Market Regulation (SAMR). The registered nutraceutical products are eligible to use the “blue hat” icon on the packaging and allowed to claim the approved functions and benefits.
Nutraceutical products are broadly categorized as vitamin/mineral supplements and health food. In 2016, an essential reformation of the registration policy became effective, which largely benefits the approval processes of vitamin/mineral supplements. In July 2016, Health Food Registration and Filing Management Measure was implemented, which aims to reduce the administrative approval processes of nutraceutical products and to stimulate the market vitality. The filing pathway does not require clinical studies and is much faster (5-6 months vs. ~2-3 years for a typical registration process). To be eligible for the filling pathway, raw materials and auxiliary materials used for the nutraceutical products must be listed in the Health Food Raw Materials Directory. Currently, only vitamin/mineral supplements are eligible to the filling pathways, as the only valid China Health Food Raw Materials Directory is for vitamin/mineral supplements. In the future, it is expected that the directory will expand to cover health food, and the filing pathway will become the major pathway for nutraceutical products approval.
The introduction of filling pathways led to booming new supplements to the market from 2017. However, the implementation of the new policy caused an unexpected delay in the approval process for health food, the other arm of the nutraceutical products in China. The filling pathway also might lead to a more homogenous and competitive supplements market.
Health food refers to nutraceutical products other than vitamin/mineral supplements and claims to have specific health functions with physiological effects on the human that can be evaluated. There are 27 prespecified functional claims*, such as antioxidative, enhancing immunity, and different claims require different clinical studies (animal studies only, human studies only, or both). Given the clinical trials and inspection, the regulatory process for health food could be three years, not to mention the delayed approval processes caused by the introduction of the filling pathway for supplements. The overall cost of the registration process is estimated to be CNY 1-1.5M.
The nutraceutical market in China is long dominated by domestic nutraceutical companies. However, as more plays are swarming to the market, companies are looking for new assets to increase their profitability and further differentiate themselves from competitors. A popular way adapted by big companies is to actively seek for M&A and equity investment opportunities with overseas nutraceutical companies, as overseas brands are more favored by Chinese consumers. For instance, in December 2016, H&H group completed the acquisition of SWISSE, Australia’s largest supplements company, with AUD 1.7 B. Meanwhile, pharmaceutical companies in China are carefully evaluating nutraceutical assets to broaden their business portfolio. In February 2018, Harbin Pharmaceutical Group, China’s second-biggest drug maker with over CNY 6B revenue, acquired 40% of GNC equity with USD 300M.
It should be noted that the number of registered domestic nutraceutical products outnumber imported products by roughly 50 times in the past ten years. For an overseas nutraceutical company who wants to launch their product in China, collaborating with domestic company appears to be an easier way as Chinese companies are more familiar with the regulatory processes and they have well-established offline selling channels. As China becomes an inevitable market for the nutraceutical products and the demand from the domestic companies, it is expected the collaboration between China and overseas will continue to be active with some more jaw-dropping numbers.
*Currently, only nine out of 27 functional claims can be evaluated for health food
Source: MSQ Ventures Research