China Today: Defining the Chinese Biopharmaceutical Market - A relatively liberal regulatory environment and huge market potential are leading to rapid industry expansion - BioPharm International

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China Today: Defining the Chinese Biopharmaceutical Market
A relatively liberal regulatory environment and huge market potential are leading to rapid industry expansion


BioPharm International
Volume 20, Issue 1


Eric Langer
China's thriving economy and evolving political landscape are luring companies from around the world to explore the Chinese biotechnology market.

"How big is it? How fast is it growing?" companies ask. The answers vary by industry segment.


Eliza Yibing Zhou
Our new, in-depth study, Advances in Biopharmaceutical Technology in China, copublished by the Society for Industrial Microbiology and BioPlan Associates, Inc., describes the vitality and breadth of China's biotechnological achievements.

This column is the first in a monthly series that is based on our study. Each installment will explore different aspects of China's biotechnology phenomenon.

HISTORICAL PERSPECTIVE

In 1989 China developed and marketed its first genetically engineered drug, recombinant human interferon alpha 1b. This was considered to be the official launch of China's modern biopharmaceutical industry. Since then, China's biopharmaceutical revenue has grown phenomenally—from RMB 1.8 billion (~$230 million) in 1990 to RMB 30.31 million (~$3.88 billion) in 2005. Although these numbers are still small compared with the size of the biotech industry in the West (Amgen's 2005 revenue was $12.4 billion, and is growing at 18%), this growth is greater than 16-fold. Venture capitalists are optimistic about the opportunity this represents, especially considering the country's 1.3 billion population.

China has developed and commercialized 30 biotech drugs and 150 more biopharmaceutical products are in the pipeline. Over the next five years, 40 new "Class 1" innovative biopharmaceuticals are expected to complete clinical trials and enter the market. "Class 1" refers to innovative biological products that have never been marketed in any country before, according to China's State Food and Drug Administration (SFDA).

The Chinese biopharmaceutical industry is beginning to establish itself as a research-driven, domestic, market-oriented industry. Meanwhile, China is also emerging as a global outsourcing hub for many overseas biopharmaceutical companies, especially those in the United States and Europe.

However, as companies continue to grow their business in China, a number of issues need to be resolved, including biogenerics versus innovative discoveries, intellectual property protection, quality and regulatory oversight, access to venture capital, and enterprise management.

BIOGENERIC MANUFACTURING PROVIDES THE FOUNDATION

Based on the enormous domestic need for biologics, public health policy in China established biogeneric manufacturing as a cornerstone of China's biopharmaceutical industry. As the Western world argued about the definition and legality of biogenerics, the Chinese industry quietly thrived, driven by a relatively liberal regulatory environment and a huge domestic market demand.


Table 1. Major biogeneric Chinese manufacturers
China is the world's most populous country but it has an immature medical insurance system: two-thirds of Chinese citizens are not yet covered by any kind of medical insurance. The Chinese spent less than $20 per capita on medications in 2003, compared with American per capita spending of $700 in the same year. Therefore, inexpensive biogenerics are deemed to play an indispensable role in the country's healthcare system. Affordable biogenerics currently dominate 95% of the Chinese biopharmaceutical market. These include 30 recombinant products, 41 vaccines, 18 blood products, and more than 300 biodiagnostic products.


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