It is China month here at Bioassociate, and in our previous post we covered the new initiatives filed in the latest set of 5-year plans aimed at making China a competitor in the originator pharma space.
Without a doubt, Chinese Pharma will be steadily rising to prominence over the next decade, but currently the country's pharmaceutical industry, in particular the domestic innovative medicine landscape, is highly fragmented and in need of a kick-start.
Despite all that, China already boasts some degree of innovative output across many
industries. Patent applications by
Chinese industry and academia have achieved a staggering 33% growth in recent
years—faster than any other country—and innovative pharmaceutical patent
filings are also on a steady average 13% annual increase. At the moment, pharmaceutical
companies performing R&D in China are still rare, and the majority focuses
on traditional medicines. The
government is anticipating the construction of up to 100 intensive research
incubators across the country, including a 25,000 m2 world-class lab
in Guangzhou, and is pledging dedicated support to developers of prescription
drugs. For the time being, however, the
pharmaceutical arena in China can be described as a young industry poised for a
leap forward.
Pharma MNCs with Chinese bases are expected to lead the way in R&D at present, and, since a go-ahead from the government, R&D partnerships with local companies are on the increase, particularly because, due to government restrictions, partnerships and M&As have become an easier entry route for foreign pharma. By 2016, it is estimated that 80% of all MNCs will be engaged in R&D activities in China, paving the way for healthy industry growth.
Pharma MNCs with Chinese bases are expected to lead the way in R&D at present, and, since a go-ahead from the government, R&D partnerships with local companies are on the increase, particularly because, due to government restrictions, partnerships and M&As have become an easier entry route for foreign pharma. By 2016, it is estimated that 80% of all MNCs will be engaged in R&D activities in China, paving the way for healthy industry growth.
Patent Filings
Much in contrast with global IP trends,
domestic patent applications in China have shot up in recent years (fig. 1),
dominated by electrical machinery, digital communication, computer technologies
and pharma in 2010.
China’s drive to generate value through
intellectual property has been difficult to miss: PCT filings by Chinese
companies have been on a drastic increase in recent years (fig. 2) and have
significantly superseded top filing countries in terms of growth rate (fig. 3).
In terms of domestic pharmaceutical patent
applications, traditional medicines still dominate the field, but are
threatened to be overtaken by non-traditional (innovative) medicines (fig. 4).
In general, pharma applications have
exhibited an increase of nearly 13% in the last four years. The majority of
Chinese pharma patent applications originate in academia—a clear sign of an
impending improvement in the availability of intellectual capital.
The Chinese
Pipeline
Chinese companies developing drugs are few and
far between at present. Although
pharmaceutical exports average at US$ 67 billion annually, virtually none of
the revenue is derived from innovative products, and the proportion of R&D
investment to sales revenue is poor in China on a global scale, let alone in
comparison with the US and the EU (Fig. 5).
The volume of drugs in pre-marketing stages is
more substantial, although the drug pipeline is still being viewed with
beginners’ caution by domestic players. In terms of domestic drug registration
volumes, the SFDA has been registering roughly 25 INDs and 3 NDAs a year (with
virtually no NDAs in the last three years), versus an average of 35 yearly NDAs
in the US (fig. 6). The ratio of IND (clinical trials) to NDA (permission to
market) registrations is more substantial in China than in developed pharma
markets of the US and the EU, which is en par with the early stages of
development of the industry. Furthermore, the SFDA introduced crucial additions
to pharmaceutical regulations in 2007, which caused a drop in the number of
registered drugs.
A total of 187 therapeutics are undergoing clinical
trials throughout China, the majority of which are in Phase I trials (fig.7)
Interestingly, in terms of therapeutic focus, the second most popular therapeutic target for Chinese pharma is infectious disease (fig. 8), which has for some time slipped down the priority rankings of Western Pharma (fig. 9), but is making a comeback in light of growing antibiotic resistance around the world, and the growing importance of pharmerging markets.
In contrast, R&D and clinical trial
statistics in the US and EU have until recently reflected the major ailments of
the developed world—that is, until the generification of blockbusters such as
Lipitor, and until pharmerging economies have begun to divert therapeutic focus
away from the common first-world conditions such as Central Nervous System and
Cardiovascular disorders. In 2010, the therapeutic focus of Western pipelines
lay for the most part in CNS, cardiovascular and respiratory targets—but by
2011 this focus has visibly shifted towards oncology and infectious disease.
R&D Hubs
and Technology Transfer Centers
Effective R&D commercialization is an
economic necessity for a country attempting to ramp up its research intensity.
Government initiatives are likely to yield a promising number of
research-intensive hubs across the country.
On the agenda is the expansion of Economic and Technological Development
Zones, whose purpose is to cluster hi-tech development, increase R&D export
and attract foreign investment. Since
2006, the number of development zones increased from 14 to nearly 54 today.
Some of the more visible bio-arenas already in
operation are the east-coast city of Taizhou, which hosts China’s only
national-level science park: Taizhou National Medicine Hi-Tech Industry Development Zone
(China Medical City), established in 2009 and already nurturing a number of
pharmaceutical companies. In 2011, Avenue Capital Group—a global asset
management company, has signed an agreement with the Medical City for the establishment of China Medical City-Avenue
Bio-Pharmaceutics Equity Investment Fund, with a projected size is RMB 2
billion (~ US$ 315 million). The aim of the fund will be to invest in bio-pharmaceutics, drug distribution,
medical instruments and hospital construction in China Medical City.
Upon completion, the park is expected to be home to around 500 companies and 50 university and other
research institutions.
Another prominent government-owned innovation hub is the Tianjin
Research Centre of Basic Medical Sciences, established in 2005 and
affiliated with Tianjin Medical University. The center has recently partnered
with Huya Bioscience, an
international leader in accelerating the global development of China's
pharmaceutical innovations, in order to facilitate the commercialization of the
latest developments emanating from Tianjin—already one of the most saturated
bio-hubs in China.
In order to facilitate partnerships with foreign companies, the
government has participated in the establishment of China’s “Drug Valley” – a
state-level biotech and pharma industrial zone in Zhangjiang, Shanghai, now
hosting over 100 residents amongst whom are locally partnered AstraZeneca, Eli
Lilly and GSK. Some of the initiatives to encourage global players to engage
with local ones include technology transfer fairs, intermediary on-site
agencies which specialize in facilitating dialogue between partners, and
certain breaks in the customs bureaucracy for partnered foreign entrants.
Perhaps one of the most famous government agencies in China is BGI—formerly the Beijing Genomics Institute—one of the leading genome
sequencing facilities in the world. With a US$ 1.5 billion government backing,
BGI was responsible for fully sequencing the genomes of rice, the SARS virus
and the first Asian genome. BGI is currently partnered with the Asia Cancer
Research Group (ACRG), which works with the likes of Lilly, Merck and Pfizer on
the advancement of knowledge about prevailing cancers in the Asian populations.
Among other successful commercializing entities are
Beijing’s Institute of Materia Medica, boasting intensive drug discovery
and effective commercialization of over 100 chemical entities to date, the Daxing Biomedicine Industrial Base recently built by the Beijing
municipal government, and the multitude of clusters in Beijing and Tianjin
which became the focus of the latest 5-year guidelines.
Check back next week for China's current prominent emerging R&D players!
