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The government plans to strictly limit foreign investment in firms that make medical goods and drugs amid the COVID-19 pandemic, sources said Wednesday.

The government fears that if foreign capital, particularly from China, buys up Japanese manufacturers of ventilators and other advanced medical apparatuses, it will become difficult to sufficiently monitor domestic production and exports of such products, the stable supply of which is essential to national security.

To protect Japanese products from increasing international “enclosure” moves targeting medical and pharmaceutical supplies, the government plans to add the medical sector to the list of industries with great security significance as soon as July. The list is part of controls enforced under the revised foreign exchange and foreign trade control law, set to go into force in May.

The amended law, enacted last November, requires companies in industries deemed important for security to report in advance investment deals with foreign nationals and have the deals examined by authorities, if planned foreign stakes reach 1 percent. Before the law amendment, they did not have to report acquisition deals representing less than a 10 percent share of ownership.

Foreign investments in companies in 12 particularly important sectors, including nuclear energy and cybersecurity, have to go through especially rigorous advance checks.

Set to be placed under the stricter protection from foreign control are producers of advanced medical equipment such as ventilators, artificial lungs and dialyzers, as well as developers and manufacturers of pharmaceutical ingredients and blood serums, the sources said. Vaccine makers are already among the original 12-industry group.

Elsewhere around the world, the United States has applied the Defense Production Act, which allows the government to control the production of goods by the private sector, to medical supplies, in view of the increasing number of deaths and seriously ill patients due to the new coronavirus that causes COVID-19. Israel is said to be using its intelligence agency to gather face masks and virus test kits.

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