China introduces new framework for advanced therapy drug development: Order 818 launches commercial dual-track system

Introduction

On May 1, 2024, China officially implemented the "Regulations on the Clinical Research and Translation Application of Biomedical New Technologies" (Order 818), establishing a new commercialization pathway for advanced therapies such as cell and gene therapy and gene editing. This regulation, issued by the State Council, allows therapies with mechanisms of action at the cellular or molecular level to undergo clinical translation in Class A tertiary hospitals (approximately 1,700 hospitals) without going through the drug registration process of the National Medical Products Administration (NMPA). Once translation approval is obtained, hospitals can begin charging patients for treatment. This move not only simplifies the market launch process for advanced therapies but also sends a clear signal to the global biopharmaceutical industry that China is accelerating indigenous innovation and enhancing international competitiveness.

Industry Context

Globally, cell and gene therapy (CGT) is moving from the laboratory to the clinic, but high R&D costs, complex manufacturing processes, and uncertain regulatory pathways have always been pain points in the industry. Traditionally, when Chinese biomedical companies conduct investigator-initiated trials (IITs), they often partner with any teaching hospital, lacking uniform standards. The introduction of Order 818 provides a "technology track" for these therapies, parallel to the traditional "drug track", aiming to address the dilemma that personalized treatments are difficult to pass through the standard drug approval pathway. Boyang Wang, founder of the Immortal Dragons fund, told GEN: "This is undoubtedly a positive signal, because advanced therapies are often highly personalized and it is difficult for them to go through the standard NMPA pathway."

Key Developments

• Key provisions of Order 818 include:
• Allowing clinical translation and charging fees in Class A tertiary hospitals;
• Setting a risk observation period of 1 to 5 years, after which the technology can transition from the technology track to the drug track;
• Requiring hospitals to have corresponding R&D capabilities and to participate uniformly in institutional standards.

However, regulatory boundaries still need to be refined. The National Health Commission must issue defining guidelines to clarify which technologies fall under Order 818 and which remain under NMPA jurisdiction. The current common interpretation is that therapies intended for large-scale production and widespread use are still regulated by NMPA, while personalized treatments can follow the Order 818 pathway.

Market ImplicationsFor international companies collaborating with Chinese enterprises to develop advanced therapies, the new regulation primarily requires reviewing existing contracts and milestone clauses. Todd Liao, partner at Morgan Lewis & Bockius' Singapore office, emphasized that foreign-invested enterprises must reassess their contracts: "Old contracts were drafted based on a single regulatory pathway and are no longer fully applicable. If milestones are defined solely by NMPA events, a licensee commercializing through hospitals may never trigger payment." He suggests redefining milestones as clinical and commercial outcomes, such as "first paying patient" rather than "first NMPA approval for marketing."

For Chinese companies conducting IITs at small and medium institutions, as well as contract development and manufacturing organizations (CDMOs), Order 818 may have the greatest impact — they need to adjust their strategies by shifting to qualified top-tier hospitals or pursuing the NMPA pathway.

Challenges And Risks

Although the regulatory direction is generally "loosening rather than tightening," challenges remain. First, restrictions on the export of human genetic resources are still strict. Currently, China's human genetic resource data "must never leave Chinese territory." Data-based analysis may have fewer restrictions, but the differences are subtle. Order 818 requires close cooperation with top-tier hospitals, which may complicate data export decisions.

Second, whether Order 818 applies to free trade zones is not yet clear. The 2024 negative list for foreign investment prohibits foreign investment in China's cell and gene therapy development at the national level, but such investment is allowed in the free trade zones of Beijing, Shanghai, Guangdong, and Hainan, provided that the NMPA product registration pathway is followed. The negative list has not yet been updated to reflect the Order 818 pathway.

Future Outlook

Over the next 3-5 years, Order 818 is expected to reshape China's advanced therapy market. In the short term, a wave of contract amendments is anticipated; in the medium term, the new dual-track system will accelerate the commercialization of personalized medicine, especially for therapies such as CAR-T and gene editing. Liao predicts that disputes will be more often resolved through international arbitration rather than Chinese courts.

From a broader perspective, the draft proposal released by the National Health Commission on May 8, 2026, suggests narrowing the scope of human genetic resource restrictions to only nucleic acid sequence data and introducing same-day filing confirmation for international clinical trials. If this proposal is adopted, it will greatly facilitate international cooperation. These regulatory changes indicate that China is gradually building a more open, yet more standardized, innovation ecosystem. Global biopharmaceutical companies need to closely monitor and adjust their strategies.

ConclusionThe implementation of Order 818 is not a regulatory contraction, but a key step in the maturation of China's medical technology industry. It pushes advanced therapies from scientific research exploration to the commercial forefront, while forcing all participants—whether domestic enterprises or multinational giants—to rethink collaboration models and value distribution. In the next three years, the refinement of regulatory details, the alignment of free trade zone policies, and the adjustment of human genetic resource rules will determine whether China can truly become a center for advanced therapy research, development, and manufacturing. For the industry, the only certainty is that change has only just begun.