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

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Q291 · 在进行财务规划时，我应该如何考虑“通货膨胀”对长期运营成本的影响？独立链接

When undertaking long-term financial planning (for example, over 3 to 5 years), you must consider the impact of inflation; otherwise, your budget will soon become disconnected from reality. Inflation pushes up operating costs across the board, including staff salaries (employees will seek increases to offset the rising cost of living), rent (landlords may raise it on renewal), utility bills and the cost of some locally sourced materials. A simple and effective approach is to set a reasonable annual growth rate for operating expenses in your financial forecast for each future year, for example, by reference to Hong Kong’s average inflation rate over the past few years (usually around 2–3%), and increase the figures accordingly.

📘 Regulatory basis

Although no regulation directly requires you to include inflation in your budget, a robust, forward-looking financial plan is one of the implicit standards regulators use to assess whether you are a “fit and proper” licence holder and whether the company can “continue operating”.

📗 Drew Tang's recommendations

In addition to considering inflation on the cost side, you should also consider it on the revenue side. Does your pricing strategy have enough flexibility to adjust in response to rising costs? We recommend reviewing your pricing structure regularly to ensure that inflation does not continue to erode your profit margins.

📕 Risk notice

Ignoring the impact of inflation can lead to a substantial overestimate of your long-term profit projections. A business plan that appears profitable in its first year may be loss-making three to five years later as costs continue to rise. This is particularly risky for businesses that require long-term investment before returns are realised, such as pharmaceutical research and development.

Q292 · 如果我的药品业务涉及跨境电商，其收款和结汇过程会产生哪些额外费用？独立链接

Selling medicines overseas through cross-border e-commerce platforms involves a range of additional payment collection and foreign exchange conversion costs not found in traditional trade. These costs mainly include: 1. ‘Payment gateway fees’: international payment services such as Stripe and PayPal charge a percentage of the transaction amount (typically around 2.9% plus a fixed fee). 2. ‘Platform commission’: if you sell through a third-party e-commerce platform such as Amazon or Tmall Global, the platform takes 5% to 15% of sales as commission. 3. ‘Currency conversion fees’: banks or payment platforms charge a conversion spread or fee when converting foreign currency sales proceeds into Hong Kong dollars. 4. ‘Withdrawal fees’: a fixed fee may apply when withdrawing funds from a payment platform account to your Hong Kong bank account.

📘 Regulatory basis

Medicines that you sell through cross-border e-commerce must still comply with the import and medicine regulatory laws of the destination country or region. In addition, your receipt of payments must comply with Hong Kong’s anti-money laundering (AML) and counter-financing of terrorism (CFT) requirements, and you must ensure that the source of funds is legitimate.

📗 Drew Tang's recommendations

When setting a pricing strategy for cross-border e-commerce, all the transaction costs mentioned above must be calculated accurately. We recommend preparing a detailed cost analysis table that takes every potential expense into account, to ensure your final prices cover all costs and generate a reasonable profit.

📕 Risk notice

The greatest financial risk is underestimating these “fragmented” transaction costs. Each cost may seem small, but together they can eat into most of your profits. In addition, refund and consumer protection policies in different countries and regions can be very strict, while high return rates can lead to additional logistics and inventory losses.

Q293 · 我应该如何设定我的药品零售价格？是成本加成法定价好，还是参考市场定价好？独立链接

Setting retail prices for medicines is a complex decision that involves balancing multiple factors; there is no single “best” method. Common strategies include: 1. Cost-plus pricing, which adds a fixed gross margin to your purchase cost. This approach is simple and straightforward, and ensures each transaction makes a profit, but may not maximise profits. 2. Market-oriented pricing, which takes as a reference the prices charged by your main competitors for the same medicine. This approach ensures that your prices are competitive, but if your costs are higher than theirs, it may result in slim margins or even losses. A mature pricing strategy generally combines the two approaches and adjusts prices according to different product characteristics, such as exclusivity and brand recognition.

📘 Regulatory basis

Although there is no pharmaceutical price control in Hong Kong, the Competition Ordinance prohibits anti-competitive conduct such as “price fixing”. When referring to market prices, you must make independent decisions and must not agree standard prices with other pharmacies or suppliers.

📗 Drew Tang's recommendations

We recommend that you adopt value-based pricing. In addition to costs and competition, consider the unique value you can offer customers, such as professional advice on medicines, a convenient location and a comfortable shopping environment. These added-value benefits can support setting a price slightly above that of competitors and thereby achieve higher profits.

📕 Risk notice

Although pricing too low may attract customers in the short term, it is dangerous over the long term. It can damage your profitability and trigger a destructive price war, ultimately harming the health of the industry as a whole. Prices that are too low may also make consumers question the source and quality of your medicines.

Q294 · 我的公司需要进行年度审计，聘请会计师事务所的费用大概是多少？独立链接

In Hong Kong, the fees charged by a practising accountancy firm for a company’s annual audit mainly depend on the scale of its business and the complexity of its transactions. For a small or medium-sized pharmaceutical wholesaler or retailer with annual turnover of several million Hong Kong dollars and a simple business model, the annual audit fee is usually between HK$8,000 and HK$20,000. If your company is larger, with annual turnover reaching tens of millions of Hong Kong dollars, or engages in complex international trade or transactions in multiple currencies, the audit fee may rise to tens of thousands or even more than HK$100,000. The fee usually also includes preparing and submitting your profits tax return.

📘 Regulatory basis

Under section 429 of the Hong Kong Companies Ordinance, unless a company is dormant, the annual financial statements of every limited company registered in Hong Kong must be audited by an independent Hong Kong practising accountant.

📗 Drew Tang's recommendations

When choosing an accountancy firm, do not focus on price alone. You should choose a firm with some understanding of the pharmaceutical industry, a good reputation and effective communication. A good auditor should be more than someone who “checks the books”; they should also be your business adviser, helping identify potential risks from a financial perspective and suggest improvements.

📕 Risk notice

Failure to complete the annual audit and submit the tax return on time may result in fines from the Inland Revenue Department and the Companies Registry. Continued non-compliance may lead to prosecution of company directors. In addition, an audit report issued by an unknown or poorly regarded firm will carry much less credibility and may be an obstacle when you need to apply for a bank loan or attract investors.

Q295 · 在财务上，我应该如何规划和管理公司的现金流？为什么它比利润更重要？独立链接

Cash flow planning and management are the lifeblood of a business and are even more important than profit. A company can make no profit in the short term, but without cash for even one day it may fail. Effective cash flow management includes: 1. Preparing a cash flow forecast to estimate monthly cash inflows (such as sales receipts) and outflows (such as rent, salaries and payments for goods) over the next 6 to 12 months, so that future funding gaps can be anticipated. 2. Accelerating collection of receivables to recover payments from customers promptly. 3. Managing payables by making reasonable use of credit terms without damaging supplier relationships. 4. Maintaining a healthy cash reserve by keeping enough cash in the bank to cover 3 to 6 months of operating costs and meet unexpected events.

📘 Regulatory basis

Although no regulation directly prescribes a company’s cash flow level, persistent cash flow difficulties may prevent you from paying staff wages or statutory amounts, such as MPF contributions and tax, on time, thereby breaching the Employment Ordinance or the Inland Revenue Ordinance.

📗 Drew Tang's recommendations

“Profit is an opinion, cash is a fact.” Profit in financial statements includes many accounting estimates (such as depreciation), whereas the cash in your bank account is the real resource available for use. We strongly recommend making cash flow management a core agenda item at your monthly management meetings, and keeping a close eye on the health of the company’s “lifeblood”.

📕 Risk notice

The most dangerous situation is “profitable insolvency”: the company is profitable on paper, but so much cash is tied up in receivables and inventory that it cannot pay debts as they fall due, ultimately triggering a liquidity crisis and collapse. This is particularly common in rapidly expanding businesses.

Q296 · 如果我的药房接受医疗券或保险公司的直接结算，这在财务处理上有什么需要注意的？独立链接

Accepting health vouchers or offering direct settlement with insurance companies can be a good way to attract customers, but particular care is needed in financial administration: 1. “Increased accounts receivable”: unlike cash transactions, you need to submit claims to the government (the health voucher scheme) or insurance companies to receive payment. This process usually takes several weeks or even months and ties up cash flow. 2. “Additional administrative work”: you need dedicated staff to process and reconcile these claims, ensure they are accurate and track payment progress. 3. “Potential bad-debt risk”: some claims may not be recovered if the documents submitted do not meet requirements or there is a dispute over the terms with the insurance company. You should set up a dedicated subsidiary ledger for these receivables in your accounting system.

📘 Regulatory basis

Healthcare service providers participating in the Elderly Health Care Voucher Scheme must comply with the relevant rules and audit requirements set by the Department of Health. Improper use of, or fraud involving, health care vouchers is a serious criminal offence.

📗 Drew Tang's recommendations

Before deciding whether to join these schemes, you must carefully assess their impact on your cash flow. We recommend starting by working with one or two large, reputable insurance companies, then gradually expanding the scope of cooperation once you are familiar with the process and have assessed the administrative costs. Ensure that your POS system can support this complex settlement method.

📕 Risk notice

If you rely too heavily on this business model, where payments are not settled immediately, without sufficient cash-flow reserves, your pharmacy may face liquidity problems. You must strike a healthy balance between the additional sales generated by attracting customers and the cash-flow pressure caused by delayed receipts.

Q297 · 在香港，药品经营企业处置过期或不合格药品，其相关的财务成本和程序是怎样的？独立链接

In Hong Kong, the disposal of expired or non-conforming medicines is a strictly regulated process that incurs costs. These medicines must be handled as “chemical waste” by a waste collector holding a specific licence issued by the Environmental Protection Department (EPD). The main costs are: 1. “Collection and transport fees”: the waste collector will charge according to the weight or volume of the waste. 2. “Treatment fees”: depending on the chemical properties of the medicines, special methods such as incineration may be required, at a higher cost. 3. “Administrative costs”: staff time is needed to segregate and record the waste and arrange its disposal. In the financial statements, the book value of medicines written off in this way must be fully written off as an operating loss for the current period.

📘 Regulatory basis

Under the Waste Disposal (Chemical Waste) (General) Regulation (Cap. 354C), anyone who produces chemical waste must register as a “chemical waste producer” and appoint a licensed collector to dispose of the waste in accordance with Environmental Protection Department requirements. Improper disposal is a criminal offence.

📗 Drew Tang's recommendations

We recommend that you enter into a long-term service contract with a reputable licensed chemical waste collector. At the same time, establish a clear internal medicines destruction SOP (Standard Operating Procedure) to ensure that every step, from identification and segregation to recording and final handover, is documented for inspection by the Department of Health or Environmental Protection Department.

📕 Risk notice

Carelessly discarding expired medicines is extremely dangerous and irresponsible. If discovered, you may not only face prosecution by the Environmental Protection Department and substantial fines, but may also have your licence revoked by the Department of Health for breaching medicines regulations. The price of this kind of ‘saving’ is one you cannot afford to pay.

Q298 · 如果我计划未来将公司出售或寻求上市，在财务规划上需要从早期就注意哪些方面？独立链接

If you have a long-term exit plan, such as being acquired or listing through an IPO, you must plan and manage your finances to the highest standards from the first day the company is established. Key points include: 1. “Clear and orderly accounts”: appoint a reputable accounting firm to ensure that every account is clear, compliant and able to withstand the most rigorous due diligence. 2. “Sound internal controls”: establish and enforce strict internal control procedures covering procurement, sales, inventory, financial approvals and all other areas. 3. “Impeccable compliance record”: maintain a clean record in all areas, including tax, employment and pharmaceutical regulation, with no material breaches. 4. “Clear shareholding structure”: avoid complex, opaque shareholding arrangements.

📘 Regulatory basis

Whether it is the buyer's lawyer in an acquisition or the sponsor and HKEX in an IPO, they will conduct extremely detailed due diligence on the target company's financial and compliance status. Any deficiency could become an obstacle to the transaction or even cause it to fail.

📗 Drew Tang's recommendations

We recommend that you “begin with the end in mind” from the outset. Even if your business is currently small, you should hold yourself to the standards of a company preparing for a public listing. Sound financial and governance structures are not just for a future exit; they also support the healthy development of your current business and risk control. This is an investment that can deliver long-term returns.

📕 Risk notice

If, in the early stages of the company’s development, there are numerous off-the-books transactions, tax irregularities or unclear related-party transactions, these “historical sins” will become major obstacles when seeking an exit in the future. Resolving these historical issues can be extremely costly or even impossible, ultimately causing you to miss the best time to exit.

Q299 · 在制定年度预算时，我应该采用“增量预算”还是“零基预算”的方法？独立链接

When preparing an annual budget, you can choose from different approaches. The most common are incremental budgeting and zero-based budgeting. Incremental budgeting makes small adjustments to the previous year’s budget or actual expenditure based on expected changes, such as inflation or business growth. It is simple and quick, and suits established businesses with stable business models and little change in their operating environment. Zero-Based Budgeting (ZBB) requires every department or item of expenditure to start from “zero” in each new budget cycle and justify its necessity and reasonableness again. This approach is more complex and time-consuming, but can effectively prevent waste of resources and is suitable for companies requiring in-depth cost control or business restructuring.

📘 Regulatory basis

The law does not prescribe the budgeting method a business must use. Whatever method is adopted, the final budget should ensure that the company has sufficient resources to meet all its statutory obligations, including compliance, tax and labour responsibilities.

📗 Drew Tang's recommendations

For start-up pharmaceutical companies, we recommend adopting a “zero-based budgeting” approach in the first year and carefully justifying every item of expenditure. Once the business is stable, you can switch to “incremental budgeting” to improve efficiency. However, we recommend conducting a thorough “zero-based budgeting” review every three to five years to reassess the justification for all expenditure and prevent organisational rigidity and budgetary slack.

📕 Risk notice

The main risk of relying on incremental budgeting over the long term is that it may conceal deep-rooted inefficiencies and encourage the mindset that “if it was done this way last year, it should be done the same way this year”. The budget ceases to be a tool for optimising resource allocation and becomes merely a numbers game, gradually eroding the company’s competitiveness and profitability.

Q300 · 作为药品公司的创始人，我应该给自己发多少薪水？这在财务和税务上有什么讲究？独立链接

As a founder, setting your own salary requires balancing your personal needs, the company's interests and tax implications. The key is reasonableness. For tax purposes, the salary you pay yourself is treated as an operating expense of the company and may be deducted from assessable profits. However, this deduction is conditional on the salary being “reasonable”, having regard to your responsibilities as a company executive, industry salary levels and the company's ability to pay. If the salary is excessive and far above the market rate, the Inland Revenue Department may challenge its reasonableness and treat the excess as a “disguised dividend”, disallowing it as an expense deduction.

📘 Regulatory basis

Section 16 of the Inland Revenue Ordinance allows deductions for expenses incurred in producing assessable profits, while section 17 provides that expenses not incurred in producing those profits are not deductible. The “reasonableness” of directors’ remuneration is key to determining whether it was wholly “incurred in producing profits”.

📗 Drew Tang's recommendations

During a company's start-up period, we recommend that founders draw a relatively low, ‘token’ salary that covers their basic living expenses, leaving more funds in the company for development. Once the company achieves stable profitability, the salary can be increased to the market level. Another option is a ‘low basic salary plus high performance-based dividends’ structure, closely linking personal returns to company performance. This can also demonstrate your commitment and confidence when raising funds from external investors.

📕 Risk notice

Insisting on paying yourself a high salary despite the company’s cash-flow constraints is extremely damaging to team morale and investor confidence. It sends a dangerous signal to the outside world that you are putting personal interests ahead of the company’s interests. In addition, an unreasonably high remuneration arrangement is a common ‘red flag’ in tax audits and can trigger unnecessary tax disputes.

Hong Kong Drug Licence FAQs

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