Development of biogenerics, perhaps more accurately termed biosimilars, today is more a function of intellectual property
(IP) and politics rather than scientific factors. With the approval of biogenerics no longer hypothetical, the global industry
must now determine pathways for efficient development. China's rapidly growing biopharmaceutical industry plays a significant
role in the biogenerics picture. A key question, addressed in
Advances in Biopharmaceutical Technology in China
, a recent study conducted by BioPlan Associates and the Society for Industrial Microbiology, is whether China's biogenerics
industry is moving in the right direction, or in a disorganized way with little consideration for IP issues (See
, May 2007, "For Biopharma Considering China, Are IP Fears Unfounded?")
Most healthcare policymakers in China and in the West recognize that generic drugs are important to healthcare policy. Because
biopharmaceuticals are currently among the most expensive therapeutics on the market and many blockbuster biopharmaceuticals
are losing patent protection, the biogenerics industry will likely expand.
In China and India, where regulatory and IP standards for biogenerics are more liberal, a biogenerics industry is already
thriving. In China, the presence of a substantial biogenerics industry reflects a growing need to provide modern healthcare
to its domestic populations, at a reasonable cost. Although China sells its products primarily domestically, many US and European
drug innovators struggle with the impact such biogenerics may have on commercialization opportunities and IP protection.
BIOGENERICS AND BARRIERS TO EXPANSION
Biological products in China are mostly biosimilars or biogenerics of Western-invented products. This situation is changing
as Chinese biopharmaceutical companies and venture capital firms invest in product innovation. However, the country's relatively
low investment in R&D and the late development of its recombinant DNA technologies have resulted in most biologics production
being based on non-Chinese IP. In recent years, however, government support has encouraged greater innovation in biological
products marketed in China. Still, there are obstacles hindering the industry's success including the following:
- Low levels of product commercialization: Inexperience in manufacturing processes increases production costs and makes large-scale
- Inadequate market expansion: Products that may be highly successful in the US, such as erythropoietin (EPO) and growth hormone
(GH), tend to yield smaller sales revenues in the Chinese market. Population structure and retail pricing of these drugs are
relevant factors contributing to the disparities.
- Small-scale production with duplicated investment: 21 genetically engineered drugs and vaccines have been approved for marketing
in China. While just one or two manufacturers could meet market demands, multiple producers duplicate production.
- Relatively few products have proprietary IP rights: The technology behind many products is not adequately protected—many are
produced on a small scale, with small profit margins.
- Limited managerial and technical leadership: There is a need for more experienced and talented technical professionals.
PHARMACEUTICAL INDUSTRY BACKGROUND
China produces more generic drugs than any other country in the world. Since the 1950s, China has manufactured these products
to supply its domestic demand. Today, generic drugs still dominate the Chinese pharmaceutical market. However, we are seeing
more domestic innovation, and the market share of innovative drugs increased from 17% in 1997 to 20% in 2003.1 For healthcare policy, economic, and scientific reasons, generic drugs have played a key role in the Chinese pharmaceutical
market and this trend will most likely continue in the future.
China began developing innovative drugs only recently. Its ability to innovate remains relatively limited, partly due to the
current capital investment climate. In contrast, most Chinese drug manufacturers have produced generic drugs for several decades.
China's technical competence in producing generic drugs and its advantage in raw materials have made the country a global
off-patent crude drugs processing center.
In the early 1980s, the Chinese pharmaceutical industry began to modernize. However, Chinese pharmaceutical companies did
not develop innovative drugs because of financial and technical obstacles. Patent laws were not a significant consideration.
When China's patent law was first enacted (April 1985), it excluded drugs from patent protection. China's Drug Administration
Law (July 1985) specified that pharmaceutical products that had never been manufactured in China were 'new drugs.'