Eliza Yibing Zhou

China's biopharmaceutical industry is entering what some have termed a "Golden Age." The outlook, although generally positive, presents a number of hurdles that may dampen short-term optimism for investors and businesses. But the prognosis, given the current demographic, political, economic, and healthcare situation in China, is positive.

A unique aspect of China's economic planning is its Five-Year Plan, the national economic development guidance that outlines the country's overall development in five-year periods. The Chinese central government established the plan in 1953 as an approach for allocating the national resources necessary for construction, development, and economic expansion. The 11^th Five-Year Plan is for 2006–2010.

This latest plan includes continued investments by the central government in the biopharmaceutical sector to help it become one of the leading industries in China by 2020. The specific objectives for healthcare appear in the "Guidelines for the Healthcare Industry" that were issued last September, based on the national 11^th Five-Year Plan.* The principal objectives of the Chinese healthcare industry include:

• Development and commercialization of 10–15 innovative drugs and vaccines with Chinese-owned intellectual property (IP) rights for the treatment of major, acute infective diseases, or chronic severe diseases.
• Marketing five chemical synthetic finished drugs to US or EU countries.
• The country will foster five large-scale pharmaceutical groups with sales revenue of more than 5 billion RMB ($640 million), promote 10 pharmaceutical distributors with over 3 billion RMB sales revenue ($384 million), and help five domestic pharmaceutical enterprises evolve into international enterprises.

To evaluate the near-term development of China's biopharmaceutical industry, however, it is useful to do more than examine the governement's planning goals, BioPlan Associates has developed more specific projections about China's biopharmaceutical industry, based on data and information from the recent study, Advances in Biopharmaceutical Technology in China, copublished by BioPlan Associates and the Society for Industrial Microbiology. The study indicates that China's biopharmaceutical sales totaled RMB 30.31 billion ($3.9 billion) in 2005 and its 2006 sales are estimated to exceed RMB 36 billion ($4.6 billion). Despite the impact of additional drug price cuts mandated by the government, we predict the Chinese biopharmaceutical industry will continue to see moderate growth through the end of the decade. Over the next five years, we project a rate of 22%, to 80 billion RMB (~$10.3 billion) through 2010. The primary drivers in the industry will be vaccine and protein therapeutics.

"China's biopharmaceutical industry is now embracing strong development opportunities," said Lifeng Wang, CEO of China National Biotech Group (CNBG) at the First International China Biopharmaceutical Symposium (ICBPS) that was held in Beijing in December 2006. "Chinese biopharma enterprises are looking forward to more collaboration with the world's leading biopharma institutions and companies. We expect to achieve a win-win situation with our global partners. The Chinese biopharmaceutical industry is ready to make significant contributions to global disease prevention and healthcare," she added.

CNBG is the largest vaccine manufacturer in China and controls six biological product research institutes and two manufacturing companies. China's vaccine sector is a bright spot in the biopharmaceutical industry. Because of its population, the country is currently the world's fourth largest vaccine market, following the US, Germany, and Japan. As China's population approaches 1.36 billion by 2010 and 1.45 billion by 2020, the country will most likely become the world's largest vaccine market in the future. This change is driven by market demand, a thriving economy, and an improving healthcare system.

CURRENT SCENARIO

China's biopharmaceutical industry has witnessed 20% to 30% revenue growth annually since 2001. Today, China is home to more than 400 biopharmaceutical manufacturers, including 114 manufacturers of genetically engineered drugs and 28 vaccine manufacturers. Over 30 domestically produced protein therapeutic drugs and 41 vaccines have been commercialized in China. The country also exports vaccines, recombinant insulin, and other biochemical raw materials.