HONG KONG DRUG LICENSING

Hong Kong Drug Licence FAQs

Search 500 Hong Kong drug licence FAQs on applications, personnel, premises, quality systems, ongoing regulation, renewals and acquisitions.

Information status: The original FAQ material dates from 2025 and is provided for topic-based reference; it does not represent an individual verification of all 500 FAQs against current rules. For application, fee, renewal, change, product or prescription requirements, please refer to the current official forms and guidance.

Official information from the Drug Office Official information from the Chinese Medicines Board

找到 50 条结果，第 2／3 页。每页显示 20 条；无需启用 JavaScript。

Thematic illustration for pharmaceutical licensing business queries and document organisation services — Discuss actual operating questions one-to-one to clarify the next decision.

Q271 · 为支持药品业务的启动和运营，我可以从哪些渠道寻求融资？银行贷款的难度大吗？独立链接

There are several ways to finance your pharmaceutical business: 1. “Personal funds and investment from family and friends”: this is the most common way to get started, but roles and responsibilities should be clearly defined. 2. “Commercial bank loans”: you can apply to a bank for an SME loan or commercial loan. 3. “Government funding schemes”: the Hong Kong Government offers various funding schemes for technology and SMEs, some of which may be relevant to your business. 4. “Private equity or venture capital”: if your project is distinctive and has high growth potential, it may attract professional investors. Bank loans are relatively difficult to obtain because the pharmaceutical industry is specialised and heavily regulated, so banks are very cautious when assessing applications. They will need to see a highly professional and detailed business plan, as well as evidence that your team has the expertise to operate the business.

📘 Regulatory basis

When assessing a loan application, banks may indirectly refer to the Department of Health’s licensing guidelines. They need to ensure that your business model is based on lawful and compliant operations; otherwise, the lending risk is too high.

📗 Drew Tang's recommendations

A business plan prepared with assistance from professional consultants such as us at RGYS: RGYS may assist with document preparation and project coordination within the written scope of services; the respective responsible parties must verify personnel qualifications and statutory roles and take responsibility for professional judgements, while approval is determined independently by the competent authority. The plan should include not only clear profit forecasts but also a complete set of compliant operating arrangements and risk-control measures, demonstrating your professionalism and reliability to banks.

📕 Risk notice

The greatest risks when seeking external financing are giving away too much equity or accepting debt with onerous terms. When negotiating with investors or banks, always seek independent legal and financial advice to protect your long-term interests. Do not put yourself in a worse position by taking desperate measures to obtain funding.

Q272 · 作为一家持牌药品公司，在财务报告方面有什么特殊要求吗？独立链接

As a limited company registered in Hong Kong, you must first comply with the basic requirements of the Companies Ordinance: appoint a Hong Kong practising accountant each year to audit the company's financial statements, and submit the audit report and profits tax return to the Inland Revenue Department. Although there are no additional statutory format requirements for the routine financial reporting of pharmaceutical licence holders, in practice and during regulatory inspections your financial records must clearly support your compliance. For example, your purchasing records must trace each batch of medicines to its lawful source and cost; sales records must be clear; and stocktake records must reconcile with the inventory value in your financial statements.

📘 Regulatory basis

The Companies Ordinance (Cap. 622) requires companies to keep accounting records and conduct an annual audit. The Department of Health also has the right to inspect records relating to medicine traceability during Good Distribution Practice (GDP) inspections, including financial documents for purchases and sales.

📗 Drew Tang's recommendations

We strongly recommend using professional accounting software and setting up dedicated accounts to record costs and income directly related to the pharmaceutical business. For example, record “medicine purchasing costs”, “losses from scrapped medicines” and “licence-related expenses” separately. This not only facilitates internal management, but also provides clear and compelling evidence in response to regulatory enquiries or tax audits.

📕 Risk notice

Disorganised financial records pose a serious compliance risk. If your financial statements cannot be reconciled with your medicine Stock Movement Record, the regulatory authority may suspect illegal procurement or sales. This could lead to a reassessment of your licence eligibility.

Q273 · 在我的预算中，应该为市场推广和业务发展预留多少比例的资金？独立链接

The proportion of your budget allocated to marketing and business development depends on your business model. For a licensed pharmacy selling directly to consumers, marketing is essential. Initially, you may need to invest 10% to 20% of projected annual revenue in areas such as brand building, community outreach and online promotion. For a pharmaceutical wholesaler that mainly conducts B2B business, the proportion may be lower, around 3% to 5%, with a focus on building relationships with hospitals, clinics and pharmacy chains. The costs would mainly cover building a sales team, attending industry exhibitions and maintaining customer relationships. A manufacturer of proprietary Chinese medicines will need to invest more in brand building and educating doctors.

📘 Regulatory basis

The Undesirable Medical Advertisements Ordinance (Cap. 231) strictly regulates the advertising of medicines. Advertisements must not suggest that a medicine can prevent or treat certain serious diseases, or contain false or misleading information. All your promotional activities must comply with this legal framework.

📗 Drew Tang's recommendations

In the pharmaceutical industry, the most effective “marketing” is to build a professional and trustworthy reputation. We recommend allocating more of your budget to activities that enhance your professional image, such as holding health seminars, providing professional medication advice, and ensuring that your pharmacist team has up-to-date professional knowledge. Word of mouth is the best advertising.

📕 Risk notice

The consequences of placing unlawful advertisements are very serious. If found guilty of breaching the Undesirable Medical Advertisements Ordinance, you may face not only substantial fines and imprisonment, but also serious damage to your company’s public image and reputation, and your eligibility to hold a licence may even be affected. Always seek legal advice before planning any promotional activity.

Q274 · 如果我的业务涉及从海外进口药品，如何管理汇率波动带来的财务风险？独立链接

For wholesalers needing to import medicines from overseas (such as Europe, the US or Japan), managing foreign exchange risk is an important part of financial planning. Sharp exchange-rate fluctuations can directly affect procurement costs and profit margins. Effective strategies include: 1. “Use forward foreign exchange contracts”: enter into a contract with a bank to lock in the exchange rate for purchasing foreign currency at a future date, thereby fixing costs. 2. “Open multi-currency accounts”: hold a certain amount of commonly used foreign currencies (such as US dollars or euros), buying them when exchange rates are favourable for future payments. 3. “Negotiate pricing terms with suppliers”: try to include a clause in the purchase contract allocating the impact of exchange-rate fluctuations, or seek to agree prices in a relatively stable currency such as Hong Kong dollars or US dollars.

📘 Regulatory basis

Although no regulations directly require foreign exchange hedging, the Pharmaceutical Wholesaler Licensing Guide requires licence holders to have a sound financial position to maintain their business. An inability to manage exchange rate risk effectively may be regarded as evidence of financial instability.

📗 Drew Tang's recommendations

For start-ups, we do not recommend complex foreign exchange derivatives transactions. The simplest and most effective approach is to build an exchange-rate risk buffer (for example, 5%) into your pricing model to absorb a degree of adverse exchange-rate movement. Maintaining a higher gross margin is also fundamental to mitigating various risks.

📕 Risk notice

Ignoring foreign exchange risk entirely may result in a major adverse exchange rate movement wiping out the profit on an entire shipment or even causing a loss. If your selling price is based entirely on the current spot rate and you ignore the time between placing an order and making payment, you may be exposing yourself to financial risk.

Q275 · 在香港经营药品业务，主要的税务责任是什么？利润税率是多少？独立链接

The principal tax obligation for operating a pharmaceutical business in Hong Kong is profits tax. Under Hong Kong’s two-tiered profits tax rates, the first HKD 2,000,000 of assessable profits of a limited company is taxed at 8.25%, while profits exceeding HKD 2,000,000 are taxed at the standard rate of 16.5%. You must submit financial statements audited by a practising accountant and a profits tax return to the Inland Revenue Department within the prescribed period after the end of each year of assessment. In addition, as an employer, you must report employees’ remuneration and withhold tax from payments to certain non-resident service providers.

📘 Regulatory basis

Taxation in Hong Kong is governed mainly by the Inland Revenue Ordinance (Cap. 112), which provides for the assessment and collection of profits tax, salaries tax and property tax. Filing tax returns accurately and on time in accordance with the law is a basic legal obligation for every company in Hong Kong.

📗 Drew Tang's recommendations

We recommend that you engage a professional accountancy firm to handle all tax matters. As well as ensuring that you file accurately and on time, it can plan your tax affairs based on your specific business circumstances, making lawful use of deductions and allowances permitted under tax legislation to optimise your tax burden.

📕 Risk notice

Tax evasion or filing false tax returns is a serious criminal offence in Hong Kong. The Inland Revenue Department has extensive investigative powers. If a business is found to have concealed profits or falsely claimed expenses, it may not only be required to pay the tax due and substantial penalties (which may be up to three times the amount of tax underpaid), but its directors may also face imprisonment. Do not take any chances with tax matters.

Q276 · 我应该如何计算和评估我的药品业务的投资回报率（ROI）？独立链接

Calculating and assessing the return on investment (ROI) for a pharmaceutical business is key to measuring the success of your investment. The basic formula is: ROI = (annual net profit / total investment cost) x 100%. ‘Annual net profit’ is your annual total income after deducting all operating costs, including the cost of goods, rent, salaries and taxes. ‘Total investment cost’ is the total amount of funds invested in starting and operating the business, including licence applications, renovations, equipment, consultancy fees and initial working capital. A healthy pharmaceutical business should have an ROI significantly higher than a risk-free return (such as the interest rate on bank deposits) to compensate for the business risks you take and the effort you invest.

📘 Regulatory basis

Although no regulation directly prescribes a specific ROI, a business that consistently makes losses or generates a very low return may be unable to sustain long-term compliance investment, such as equipment upgrades and staff training, thereby indirectly creating compliance risks.

📗 Drew Tang's recommendations

When assessing ROI, we recommend looking beyond the first year and conducting a dynamic assessment over 3 to 5 years. Medicine businesses usually need time to build a customer base and market reputation, so the initial ROI may be low. Its growth trend is more important. You should also monitor other key financial indicators, such as gross margin and inventory turnover.

📕 Risk notice

When calculating ROI, the biggest pitfall is underestimating the ‘total investment cost’, particularly by overlooking the opportunity cost of the time and effort you put in yourself. A business that appears to generate a positive return may not be a wise personal financial investment if its rate of return is far below the income you could earn from other work.

Q277 · 如果未来我想在香港开设分店或扩大仓库规模，在财务上需要做哪些准备？独立链接

Business expansion is exciting, but it must be built on a sound financial foundation. If you plan to open a branch or expand your warehouse, financial preparation is a priority: 1. “Evidence of profitability”: your existing business should already be consistently profitable and generate sufficiently strong positive cash flow. This gives you the financial confidence to expand. 2. “Dedicated expansion budget”: prepare a separate, detailed start-up budget for the new branch or warehouse, similar to the one for your original start-up and covering rent, renovation, staffing and new inventory. 3. “Financing plan”: identify the source of funding for the expansion—whether retained company profits, new bank loans or shareholder contributions. 4. “Risk assessment”: analyse the new risks that expansion may bring and ensure that you have sufficient reserves to cover any initial losses.

📘 Regulatory basis

Opening each new licensed premises—whether a pharmacy branch or a standalone warehouse—is equivalent to making an entirely new licence application. You must submit a separate licence application for the new address to the Department of Health or the Chinese Medicines Board and pass all inspections.

📗 Drew Tang's recommendations

We recommend a gradual, step-by-step expansion strategy. Before taking the second step, first ensure that the first shop is operating smoothly and that its management model and processes have been standardised and can be replicated successfully. Overly rapid, uncontrolled expansion is where many businesses begin to decline.

📕 Risk notice

The greatest financial risk of expansion is the “cash flow trap”. New shops or warehouses typically require ongoing funding during their initial operating period. Excessive expansion may drain the cash flow of your otherwise healthy parent company and put the entire corporate group in difficulty. Ensure that your expansion plan does not jeopardise the viability of your existing business.

Q278 · 近年来监管机构对药品“追溯”要求日益严格，实施一套电子化的追溯系统大概需要多少预算？独立链接

The budget for implementing an electronic pharmaceutical track-and-trace system varies greatly, depending on the system’s complexity and the scale of your business. A basic system may simply add batch management and serial number scanning to your existing inventory management (ERP) software; this software upgrade may cost tens of thousands of Hong Kong dollars. A more comprehensive system, if it needs to comply with the international GS1 standard, use two-dimensional barcodes (Data Matrix) and establish a data exchange platform with upstream and downstream partners, may involve initial software development, hardware purchases (such as high-speed scanners and servers) and systems integration costing hundreds of thousands or even over a million Hong Kong dollars.

📘 Regulatory basis

Although Hong Kong has not yet made comprehensive electronic traceability mandatory for all medicines, this is the global direction of pharmaceutical regulation. The Department of Health’s Pharmaceutical Wholesaler Licensing Guide expressly requires licence holders to be capable of rapidly tracing and recalling any batch of medicines when necessary.

📗 Drew Tang's recommendations

We recommend that you take a forward-looking approach when selecting an ERP or inventory management system, choosing a software provider whose product already includes, or can readily be expanded to include, medicines traceability features. Treat investment in a traceability system as an investment in future compliance risk management and operational efficiency. A good traceability system not only meets regulatory requirements but also helps you manage inventory in greater detail.

📕 Risk notice

Taking a passive wait-and-see approach to pharmaceutical traceability is dangerous. If the regulatory authorities suddenly announce mandatory electronic traceability at some point in the future and you are unprepared, you may face the risk of having to suspend operations because your system cannot be brought online in time. Technology upgrades take time; you cannot leave things until the last minute.

Q279 · 我的财务预算中，是否需要为可能发生的产品召回（Product Recall）事件预留资金？独立链接

Yes, your financial budget and risk-management plan must make provision for resources in the event of a product recall. Although you do not necessarily need to set aside a specific “recall fund”, you must ensure that your financial position is sufficiently flexible to cope with one. A product recall can give rise to a range of direct and indirect costs: 1. “Logistics and reverse logistics costs”, namely the costs of retrieving and transporting affected products. 2. “Disposal costs”, for the safe destruction of recalled products. 3. “Replacement or refund costs”, for providing replacement products or refunds to customers. 4. “Communication costs”, for issuing notices to the public, customers and regulatory authorities. 5. “Loss of goodwill”, which is the most difficult cost to quantify but may be the most serious.

📘 Regulatory basis

The Department of Health requires all licensed pharmaceutical wholesalers and manufacturers to establish an effective product recall procedure. After receiving an instruction or identifying a problem, you must be able to initiate the recall within the specified time (usually within 24-48 hours) and notify all affected downstream customers.

📗 Drew Tang's recommendations

The best financial protection against recall risks is product liability insurance or product recall insurance. This type of insurance can cover most direct financial losses arising from a recall. We strongly recommend that all pharmaceutical businesses, particularly manufacturers and wholesalers, seriously consider purchasing this insurance as part of their standard operating costs.

📕 Risk notice

A serious product recall, if mishandled or unsupported by sufficient financial resources, could put a company out of business. This is not only a financial blow but also a devastating blow to brand reputation. Failing to prepare is effectively placing the company’s future at the mercy of uncontrollable risks.

Q280 · 申请中成药注册（pCm）的费用大概是多少？这与申请牌照有何不同？独立链接

The fees for applying for “proprietary Chinese medicine registration” (Proprietary Chinese Medicine Registration, pCm) are entirely different from the costs of applying for an operating licence. A licence (such as a wholesale or retail licence) authorises business activities at premises, whereas proprietary Chinese medicine registration is a market authorisation for an individual product. The statutory fee for an application for one proprietary Chinese medicine registration is HKD 9,290. This is only the government fee; the actual cost is much higher. A range of tests and studies must be conducted on the product to demonstrate its safety, quality and efficacy, including, but not limited to, tests for heavy metals and toxic elements, pesticide residues, microbial limits and stability. These tests may cost tens of thousands or even hundreds of thousands of Hong Kong dollars.

📘 Regulatory basis

The Chinese Medicine Ordinance (Cap. 549) requires all proprietary Chinese medicines sold in Hong Kong to be registered with the Chinese Medicines Board under the Chinese Medicine Council of Hong Kong. They may only be marketed after obtaining a Certificate of Registration of Proprietary Chinese Medicine (HKC-XXXXX).

📗 Drew Tang's recommendations

Before deciding whether to apply to register a proprietary Chinese medicine, you must conduct a thorough market assessment and cost-benefit analysis. The investment in research and registration for an individual product must be recoverable through future sales profits. We recommend prioritising products with clear market demand, a distinctive formula or a successful track record in other regions.

📕 Risk notice

The greatest risk is investing heavily in testing and registration costs, only for the application to be refused because the safety or quality data does not meet requirements. Alternatively, even if the product is successfully launched, poor marketing may result in weak sales and prevent recovery of the initial investment. Each product registration is an independent investment decision and requires the same level of prudence.

Q281 · 如果我的公司是初创企业，香港政府有没有提供针对药品行业的财务资助或贷款计划？独立链接

To support local SMEs and the development of innovation and technology, the Hong Kong Government has established various funding schemes, some of which may be relevant indirectly to the pharmaceutical sector. For example, the SME Financing Guarantee Scheme (SFGS) may help you obtain a higher loan amount from a commercial bank. If your business involves innovative technology, such as a new medicine delivery system or the use of artificial intelligence for quality control, you could consider applying for a project under the Innovation and Technology Fund (ITF). However, it should be made clear that Hong Kong currently has no direct financial subsidy specifically for ‘setting up a pharmacy or pharmaceutical wholesaler’. These schemes are generally open to a wide range of applicants, and you will need to frame your business as a project that meets the relevant eligibility criteria.

📘 Regulatory basis

Different government departments or statutory bodies administer the various government funding schemes. For example, the Hong Kong Mortgage Corporation Insurance Limited (HKMCIC) is responsible for the SFGS, while the Innovation and Technology Commission (ITC) administers the ITF. Each scheme has its own application guidelines and assessment criteria.

📗 Drew Tang's recommendations

Government funding schemes generally take a long time to process, and success rates vary. We do not recommend relying on government funding as your main source of start-up capital. A more practical approach is to treat funding applications as a supplementary financial strategy once your core funding is in place, for specific projects such as technology upgrades or market expansion.

📕 Risk notice

Do not distort your core business model to meet the requirements of a funding scheme. Preparing documents for an application takes considerable time and effort; if the application is ultimately unsuccessful, you will incur opportunity costs. In addition, approved funding is usually earmarked for specified purposes and is subject to strict monitoring and audit, leaving limited flexibility in how it can be used.

Q282 · 在做财务预测时，我应该如何设定一个实际的药品销售毛利率？独立链接

Setting a realistic gross profit margin for medicine sales is central to financial forecasting. This rate varies widely in the pharmaceutical sector, depending on your business type and product mix. Wholesalers or pharmacies dealing in patented and branded medicines may achieve higher margins of 15% to 30% because of brand premiums. Margins may be lower, at 5% to 15%, for generic medicines or ordinary health products in highly competitive markets. Margins may be higher for proprietary Chinese medicines, particularly products with exclusive formulations. A practical approach is to review the financial performance of comparable competitors in the market (if they are listed companies) and set a rate based on this together with your procurement costs and pricing strategy.

📘 Regulatory basis

Hong Kong is a free market, and the Government does not directly regulate medicine prices or gross profit margins. However, your pricing practices must still comply with the Competition Ordinance (Cap. 619), which prohibits collusion with other competitors to fix prices and abuse of a substantial degree of market power.

📗 Drew Tang's recommendations

We recommend that you take a conservative approach to financial projections. You could initially set a relatively low gross margin target and conduct sensitivity analysis to test the company’s profitability and cash flow at different gross margin levels. Once the business is stable, gradually improve the gross margin by optimising procurement and increasing the added value of your services.

📕 Risk notice

Overly optimistic gross margin forecasts are a common reason for business plans to fail. They directly lead to overestimated revenue and underestimated costs, ultimately creating a serious funding shortfall. You must account for real-world factors such as market competition, customers’ bargaining power and potential pressure to reduce prices.

Q283 · 我的药房需要安装一套POS和库存管理系统，这部分的预算应该怎么规划？独立链接

When budgeting for a pharmacy point-of-sale (POS) and inventory management system, several aspects need to be considered: 1. “Software licence fees”: these may be paid as an annual subscription (SaaS model) or as a one-off purchase. For a small or medium-sized pharmacy, the annual subscription may range from several thousand to 20,000 HKD. 2. “Hardware costs”: including cash registers, barcode scanners, receipt printers, and computers and servers for back-office management. This may require a one-off investment of 10,000 to 50,000 HKD. 3. “Implementation and training fees”: the software supplier may charge an initial fee for system installation, data import and staff training. 4. “Ongoing maintenance fees”: under a perpetual licence model, an annual maintenance fee of 15-20% of the total software price is usually payable for technical support and software updates.

📘 Regulatory basis

The Code of Practice for Authorised Sellers of Poisons requires pharmacies to keep detailed records of the receipt and issue of all medicines, including batch numbers and expiry dates. A good computerised system is the best tool for meeting this requirement and can effectively prevent errors and omissions in handwritten records.

📗 Drew Tang's recommendations

Price should not be the only consideration when choosing a system. Give priority to suppliers with many pharmacy clients in Hong Kong, a good understanding of local regulatory requirements and the ability to provide local technical support. The operational efficiency gains and compliance assurance provided by a stable, reliable system are worth far more than its cost.

📕 Risk notice

Choosing an incomplete or unstable system to save money is a major risk. Frequent system outages, data loss or an inability to generate reports that meet regulatory requirements can disrupt your daily operations and may even constitute a serious non-compliance issue during a Department of Health inspection. This is a classic case of ‘penny wise, pound foolish’.

Q284 · 如果我的药品批发业务需要冷链运输（Cold Chain Logistics），这会增加多少成本？独立链接

Cold-chain transport is the most costly part of pharmaceutical logistics and can significantly increase your operating expenses. The additional costs are mainly as follows: 1. “Specialist transport vehicles”: you will need dedicated vehicles fitted with refrigeration units and temperature and humidity data loggers. Their purchase and maintenance costs are far higher than those of ordinary lorries. 2. “Validation and calibration”: refrigerated vehicles and cold-chain facilities in warehouses require regular temperature mapping and equipment calibration. 3. “Packaging materials”: validated shippers and coolants must be used; these are consumables. 4. “Higher transport charges”: if you outsource to a third-party logistics company, cold-chain services typically cost 50% to 200% more than ordinary freight transport.

📘 Regulatory basis

The PIC/S GMP Guide and the Department of Health's Guidance Notes on Licensing of Drug Wholesalers impose stringent requirements on the storage and transport of medicines requiring temperature control, such as vaccines and biological products, including uninterrupted temperature records throughout the supply chain.

📗 Drew Tang's recommendations

For start-ups with low business volumes, we do not recommend setting up your own cold chain fleet. A more cost-effective and efficient approach is to work with one or two reputable specialist third-party cold chain logistics companies with GDP certification. This converts high fixed-asset investment into variable operating costs, reducing initial financial pressure.

📕 Risk notice

Any interruption in the cold chain (Temperature Excursion) may result in the destruction of an entire batch of high-value medicines, causing substantial financial losses. More seriously, if the issue is not detected promptly and the medicines are sold, patient safety may be threatened, leading to serious legal and reputational risks. There must be no compromise in cold-chain management.

Q285 · 我是否需要为我的药品业务购买商业保险？主要应覆盖哪些方面？独立链接

Yes, purchasing comprehensive commercial insurance for your medicine business is an essential risk-management measure. You should focus on the following types of insurance: 1. “Public Liability Insurance”, which provides cover for compensation claims for third-party personal injury or property damage arising from your business activities (for example, a customer slipping in your shop). 2. “Product Liability Insurance”, which is of central importance and covers compensation claims for injury to users caused by defects in products you sell. 3. “Property All Risks Insurance”, which covers your assets, such as your shop, warehouse, equipment and inventory, against losses caused by events such as fire, theft and flooding. 4. “Employees' Compensation Insurance”, which is compulsory by law and is commonly known as employees' compensation insurance.

📘 Regulatory basis

The Employees' Compensation Ordinance (Cap. 282) requires all employers to take out employees' compensation insurance for their employees. Although other types of insurance are not compulsory, the Department of Health may consider whether a licence holder is “fit and proper” by taking account of the adequacy of its risk management measures. Taking out insurance is an important part of this.

📗 Drew Tang's recommendations

Insurance is fundamentally about transferring risk. We strongly recommend working with a professional insurance broker who can tailor a comprehensive insurance plan to your specific business (wholesale, retail or manufacturing) and product risks (high-risk biological products or low-risk health supplements). Premiums should be regarded as a key investment in business continuity.

📕 Risk notice

Trying to “save” on insurance is an extremely dangerous short-sighted approach. A serious product liability claim could amount to millions or even tens of millions of Hong Kong dollars, enough to bankrupt any uninsured SME instantly. You could lose not only your business, but potentially all your personal assets.

Q286 · 如果我的业务失败，需要清盘关闭公司，这过程会产生哪些费用？独立链接

If the business unfortunately fails and the company has to be wound up, the process itself will also incur a range of costs. The main costs include: 1. “Liquidator’s fees”: you will need to appoint a practising accountant or lawyer as liquidator to handle all the company’s outstanding affairs, and their professional service fees will be a major expense. 2. “Asset disposal costs”: appraisals and commissions may be incurred when liquidating stock and selling assets such as shelving and equipment. 3. “Severance payments”: under the Employment Ordinance, you will need to pay severance pay or long service payments to eligible employees. 4. “Government fees”: fees for filing various documents with the Companies Registry. 5. “Legal and accounting fees”: professional fees for handling debts, tax clearance and other matters. The process may take several months, and costs may reach tens of thousands to hundreds of thousands of Hong Kong dollars.

📘 Regulatory basis

The Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong prescribes the legal procedures for winding up a company. The liquidator’s primary duty is to repay the company’s debts in the statutory order of priority, including government taxes and employees’ wages, before ordinary creditors.

📗 Drew Tang's recommendations

One of the main advantages of operating as a limited company is “limited liability”, meaning that shareholders’ liability is limited to the amount of their investment. If the company becomes insolvent, your personal assets will generally not be affected, unless you have given a personal guarantee. This is an important reason why we recommend from the outset that clients operate through a company.

📕 Risk notice

Company directors remain legally responsible during the winding-up process. If misconduct is discovered, such as maliciously transferring assets when the company is close to insolvency or engaging in fraudulent trading, directors may be held personally liable and may even be disqualified from acting as directors in future. Ensure that the entire winding-up process is lawful and compliant.

Q287 · 在财务上，如何区分“资本开支”（CAPEX）和“运营开支”（OPEX）？这对我的税务有何影响？独立链接

In financial and tax planning, it is crucial to distinguish correctly between “capital expenditure” (Capital Expenditure, CAPEX) and “operating expenditure” (Operating Expenditure, OPEX). CAPEX refers to long-term investments to acquire or improve fixed assets, such as purchasing property, carrying out major renovations or buying expensive production equipment. These expenses cannot be deducted in full in the year incurred; instead, they are deducted over the asset's useful life through annual “depreciation” or “allowances”. OPEX refers to expenses incurred to maintain day-to-day operations, such as staff salaries, rent, utilities and medicine purchasing costs. These expenses can be deducted in full from assessable profits in the year of assessment in which they are incurred.

📘 Regulatory basis

Sections 16 and 17 of Hong Kong’s Inland Revenue Ordinance define which expenses are deductible and which are not. The tax treatment of capital expenditure is governed mainly by provisions such as section 34 (industrial building allowances) and section 39E (depreciation allowances for machinery and industrial plant).

📗 Drew Tang's recommendations

This distinction directly affects your tax burden. Incorrectly capitalising operating expenses will overstate your assessable profits for the year and result in overpayment of profits tax. Conversely, claiming capital expenditure as a one-off deduction for operating expenses may be regarded by the Inland Revenue Department as improper tax avoidance. We recommend engaging a professional accountant to ensure that every expense is accounted for and treated correctly for tax purposes.

📕 Risk notice

The Inland Revenue Department has strict guidelines and case law on the distinction between capital and operating expenditure. If you lack adequate legal grounds for the treatment of any significant expenditure in your tax return, you may trigger a Tax Audit. If your treatment is found to be incorrect, you may have to pay the tax due and interest, and may also face penalties.

Q288 · 我计划同时经营西药批发和中成药批发，是否需要为这两个业务设立独立的财务账目？独立链接

Although the law does not require separate legal entities or bank accounts for different business lines within the same company, from a management and compliance perspective we strongly recommend setting up separate “cost centres” or “profit centres” in your accounting system for wholesale of western medicines and wholesale of proprietary Chinese medicines. This means you should be able to track and distinguish clearly the sales revenue, procurement costs, inventory value and related operating expenses for each. This gives you a more detailed management perspective and allows you to assess the profitability of each business area accurately.

📘 Regulatory basis

Western medicines and Chinese medicines are regulated by the Drug Office, Department of Health and the Chinese Medicine Council of Hong Kong respectively, under different regulatory frameworks (Cap. 138 vs Cap. 549). Providing clear, separate business records during inspections by the respective regulatory authorities is an important part of demonstrating compliant operations.

📗 Drew Tang's recommendations

Clear separation of accounts can help you make better-informed business decisions. For example, if you find that the profit margin for your proprietary Chinese medicine business is far higher than that for your Western medicine business, you may decide to allocate more resources to the former, or vice versa. Without separate accounting, all your financial data is a muddle and cannot be analysed effectively.

📕 Risk notice

If accounts are unclear or mixed together, a serious compliance issue in one business segment (for example, the discovery of illegally imported Western medicines) may affect your company’s entire licensing eligibility, including its otherwise compliant Chinese medicine business. Financial segregation can provide a firewall to some extent and reduce the likelihood of risk spreading.

Q289 · 药品库存是我的重要资产，在财务上应该如何进行估值？这对我的财务报表有何影响？独立链接

Medicine inventory is usually classified as “inventory” in the financial statements and is an important current asset. Under Hong Kong accounting standards, inventory should be valued at the lower of cost and net realisable value. “Cost” usually refers to your purchase cost and may be calculated using the first-in, first-out (FIFO) or weighted average cost method. “Net realisable value” is the estimated selling price less the related costs of sale. If, for reasons such as medicines nearing expiry or falling market prices, net realisable value falls below your purchase cost, you must make an inventory write-down provision and recognise the loss in the current income statement, thereby reducing your reported profit and asset value.

📘 Regulatory basis

Hong Kong Accounting Standard 2 – Inventories (HKAS 2), issued by the Hong Kong Institute of Certified Public Accountants (HKICPA), sets out detailed requirements for accounting for inventories, including the components of cost, methods of calculating cost and the determination of net realisable value.

📗 Drew Tang's recommendations

We recommend that you establish a strict stock monitoring system and review the expiry dates and market conditions of all medicines in stock regularly (at least quarterly). For medicines approaching expiry (for example, within 6 months), take action early, such as offering promotions, to avoid their ultimately becoming expired products with no value. Proactive stock management is key to reducing impairment losses.

📕 Risk notice

Overstating inventory value is a common form of financial fraud. If an audit or regulatory inspection finds a substantial discrepancy between the book value of your inventory and the results of the physical stocktake, or that you have failed to make adequate impairment provisions for expired or slow-moving medicines, this may be regarded as seriously misleading financial reporting. It can damage the company’s credibility and may lead to legal consequences.

Q290 · 作为公司董事，我是否需要为公司的债务承担个人责任？在财务上如何规避这种风险？独立链接

In Hong Kong, the main advantage of operating as a “limited company” is the shareholders’ “limited liability”. In ordinary circumstances, as a company director or shareholder, you are not personally liable for repayment of the company’s debts. The company’s creditors can claim only against the company itself, and your loss is limited to the share capital you have invested. However, this protection is not absolute. If you are required to provide a “personal guarantee” when applying for a bank loan or other credit for the company, the bank will be entitled to claim the debt from you personally if the company is unable to repay it.

📘 Regulatory basis

The Companies Ordinance (Cap. 622) establishes the separate legal personality of a limited company and the principle of limited liability for shareholders. However, the Companies (Winding Up and Miscellaneous Provisions) Ordinance also provides that, in certain circumstances such as fraudulent trading, the “corporate veil” may be pierced and directors may be held personally liable.

📗 Drew Tang's recommendations

The best ways to reduce personal liability risks are: 1. Operate as a limited company. 2. Make every effort to avoid giving personal guarantees in business activities. 3. As a director, always act with integrity, prudence and due diligence, and do not engage in conduct that may be regarded as fraudulent or improper. 4. Take out directors’ and officers’ liability insurance (D&O insurance) to cover claims arising from inadvertent errors in the course of performing your duties.

📕 Risk notice

Signing a personal guarantee is a very serious decision; do not do so lightly. Before signing any personal guarantee document, you must fully understand the legal consequences and seek independent legal advice. Once you sign, you are tying your personal assets and financial position to the company’s fortunes, and the protection of limited liability will no longer apply.

Hong Kong Drug Licence FAQs

Plan Your Hong Kong Pharmaceutical Licensing Project with Drew Tang