Heavy Chinese investments lead to a transforming market

The Chinese biomedical sector is rapidly transforming from a manufacturing base to an innovation hub by investing billions of dollars and setting up innovation centers in a bid to catch up with the west by the end of the 12th Five-Year Plan, according to Lux Research. The R&D investments totaled a cumulative $160 billion last year, and came close to surpassing Japan’s spending. In addition, these investments are paying off with exponential increases in pharma related patent filings, catapulting the Asian giant past the United States and Japan. The pace establishment of 15 new drug innovation centers and clusters is remarkable, with super clusters forming around five major provinces.

“Every five years, the central government convenes committees to submit planning documents, which are reviewed, approved, and rolled up into one large strategic investment plan with articulated goals to accomplish over the subsequent five years,” says Kevin Pang, Lux Research director and a contributor to the report, Mapping the Chinese Biomedical R&D Landscape.

Two additional key takeaways from the report are: Oncology and cardiovascular diseases receive outsized attention in the Major New Drug Innovation Program as the domestic demands grow along with population aging; and although domestic market expansion now provides room for all players, Chinese pharmaceutical companies will naturally look outside to lucrative markets in North America and Japan with time.

The Major New Drug Innovation Program began in 2009 and has since emerged as the source of innovation in China with the production of more than 3,000 patents and 12 products. In 2012, China had more than $4.5 billion in funding and set goals of developing 30 new innovative drugs. The nation is targeting the discovery of 100 new drugs by 2020.

Pang told R&D Business Pharma Connect that the cumulative funding of $160 billion in China last year is a new record. “What is also striking is the year over year rate of growth of investment, which over the past four years has increased at a much faster pace than many western countries we benchmarked it to,” he says.

The report is part of the Lux Research China BioPharma Intelligence service. According to China BioPharma, companies seeking to succeed in China must perform the following tasks: Understand government funding guidelines and regulations as China seeks to accelerate development of its healthcare industry to meet its emerging demographic needs; follow the funding to find the emerging innovation clusters, labs, centers of excellence, and companies, as China invests for the long term; regard China as a “one country-two markets” opportunity to accurately gauge opportunities; and develop a dynamic and aggressive partnering strategy to tap innovation, navigate the regulatory maze, and build a robust go-to-market capability.

According to Pang, in broad terms, most of the larger pharmas are pursuing to varying degrees the first two points. “Roche is a good example in where they are investing in R&D and experimenting with novel partnership models, including offering insurance policies that guarantee access to their drugs,” he told R&D Business Pharma Connect. Regarding the third point China BioPharma outlines, Pang says, “Medical device companies have taken the lead because of the urban-rural dichotomy.”

China Investing Billions in Bid to Catch up with Western Pharma

Posted: July 2013

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