In the news: Uber faces setback with taxi app rules, VW gets probed and Eli Lilly expands local partnership

China sets outline for draft car-hailing regulations

The Ministry of Transport has intensified scrutiny of online private car-hailing services, with new draft rules requiring them to place their servers in China, share data with local transport authorities, register their cars as taxi services, enforce driver qualification requirements, sign labor contracts and buy insurance for their vehicles and passengers. They also ban drivers from working for multiple ride-hailing app providers at the same time and stipulate that foreign companies must obtain a telecommunications license and undergo possible national security checks. The draft rules are open for comment in the next month. These rules will translate to additional costs and complications for providers like Uber. While it says it already stores data within the country's borders, it will have to set up quite the HR network to legitimize its drivers as employees (an issue Uber is facing in multiple jurisdictions). Also, the Shanghai transport authority recently granted Didi Kuaidi a license to legally operate an online car-booking platform, while Uber is yet to get one, in addition to a telecommunications license (very difficult for foreign companies). These are a challenge, but this is too big of a market to pass up on. Uber will have to act smartly in China, as well as in India, its next biggest market, which also just issued its own guidelines for taxi apps.

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Volkswagen probed for emission standards compliance in China

China has joined the US, Europe and Japan in probing Volkswagen AG after its emissions-rigging scandal. The Ministry of Environmental Protection says it is investigating whether the carmaker's imported and locally produced vehicles comply with its emission standards. None of the 11 million diesel-engine vehicles that don't meet standards are produced in China, though about 1,900 have been imported, said the ministry. Volkswagen has been ordered to submit timely reports about its compliance. Volkswagen is dealing with a global scandal that has civil and criminal implications in some of the most highly regulated markets. For China, a country with increasingly strict consumer protection and environmental laws and compliance standards, to join the investigation is an especially significant setback.

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Eli Lilly expands Innovent partnership to develop cancer treatments

Eli Lilly is broadening its existing partnership with four-year-old Chinese biotech company Innovent Biologics, to develop up to three cancer treatments both inside and outside the country, and collaborate on commercializing the drugs over the next decade. Suzhou, China-based Innovent can reportedly receive payments totaling more than $1 billion if the products reach certain milestones. China has rapidly rising cancer rates and registers about 3 million new cases each year, according to the World Health Organization. Partnering with a local start-up was a good move. This deal gives Eli Lilly a big boost to introducing its biotech-style drugs in China and to developing its immune system-activating drugs and biosimilars – two hot areas. It also gives Innovent the chance to pick up tips from a company with global expertise. We have discussed that it would more fruitful for foreign pharma companies to have a specific focus – whether it is a type of drug or stage of R&D – when investing in China, as it is not profitable to generalize. The way forward is to find a niche and develop innovative drugs on the ground.

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