CHINA - FRESH START FOR THE INFANT FORMULA MARKET: 192 INFANT FORMULAS HAVE OBTAINED A CFDA REGISTRATION NUMBER

On 25 August, China’s Food and Drug Administration (CFDA) has announced that a wave of infant nutrition companies and products have passed its new registration programme. It includes 36 enterprises and 192 formulas, including 9 overseas enterprises and 27 domestic enterprises.

In order to better regulate the infant formula market and in order to ensure formulas meet nutritional needs for growth and development of infants and young children, CFDA has implemented the “Administrative Measures for Product Formula Registration of Infants and Young Children Formula” on 1st Oct 2016. Under this regulation, each infant formula manufacturer can only produce a maximum 9 products (i.e. 3 series and 3 formulas for each series). Meanwhile, unregistered formulas (both offline channels and cross-border e-commerce channels) will be restricted from sale as from 1 January 2018. It is apparent that the implementation of this regulation will soon reshuffle China infant formula market.

On the forum on the update on infant formula registration held in Beijing on 15 August, the CFDA indicated that 769 dossiers had been received, of which 565 domestic and 174 foreign. This entailed 114 enterprises (81 domestic enterprises and 33 overseas enterprises). Meanwhile on 14 July, the CFDA also re-confirmed that the deadline is still 1st Jan 2018 and the deadline will not be extended even though 2 out of 3 overseas infant formula manufacturers still did not submit a dossier.

At present, large domestic and overseas infant formula manufactures have already obtained approval for at least 3-6 formulas (or 1-2 series) and these companies already comprise >70% of the Chinese market. A new wave of approved manufacturers and products be issued soon according to the CFDA. For the time being, formulas which have not been approved can still be sold until the indicated expiry date. Meaning that there is only a small risk of supply shortages in the market after the 1st of January 2018-deadline.

There is no doubt that the first waves of approved infant formula manufacturers already obtained a competitive advantage. Since they have more time to organize their production and marketing activities, the easier to win the trust of distributors and consumers.

According to the Regulation, unregistered imported formulas can only be sold in China market with inspection and a quarantine certificate issued before 1st Jan 2018. In general, the time from production to getting inspection and quarantine certificate in China is approx. 3 months. So for those who have already submitted dossier and not yet been approved, it is better to consider suspending or decreasing the production of the existing product. Meanwhile it is critical to make sure the product in the coming few months fully complies with China regulations. Any non-compliance during the next few months will have a negative impact on the approval of the submitted dossier.

Currently, there are still 72 infant formula manufactures which have not submitted their formula registration dossiers, of which about 45 are overseas infant formula manufacturers. Most of the foreign companies are very interested to go on to get their share in the Chinese market. But many small and medium-sized companies still face various challenges to submit their dossier. Main barriers for these companies to submit the dossier timely appear to be 1) underestimation of the complexity of the dossier preparation and insufficient investment in internal & external resources, and 2) insufficient understanding of the Regulation and its update. Registration regulations were updated and adjusted during the last 4 months, however, manufacturers and importers were not able to get reliable information and expert interpretation on time. Infant formula producing enterprises should speed up the preparation of their dossiers with proper investment to get registration approved as early as possible.