GROWING BIOLOGICAL EXPORTS
China's biological product exports are growing rapidly. In 2006, China exported a total of $890 million in biologics to other
countries—a 30.61% increase compared with the previous year. This increasing focus on exports is likely to include expansion
of contract manufacturing services. Tonghua Dongbao Pharmaceutical Co. exported $8 million of recombinant human insulin products
to 10 countries in 2006. Its export destinations included Russia, Poland, Mexico, and other developing countries. The company
is planning to enter the EU and US markets by obtaining required certifications in 2009. It is acquiring a Sweden-based plant,
which has received both EU and FDA certifications, to be its base for manufacturing Insulin in Europe.
Others are following a similar path. 3 S Bio Inc. is also planning to increase its recombinant human erythropoietin (rh EPO)
exports. The company exported a modest $753,000 in recombinant products in 2006, but plans to expand its exports to other
EVOLUTION OF CMO POLICIES
China's pharmaceutical contract manufacturing industry began relatively late due to government-imposed restrictions. Rapid
industry growth and excess in production capacity encouraged the government to modify its policies. Before 1999, the Chinese
government restricted pharmaceutical contract manufacturing, which was generally considered illegal. Back then, the Chinese
Drug Administration Law defined drugs produced by manufacturers who had not obtained production approval numbers as counterfeit
drugs. This provision posed a major barrier to contract manufacturing in China.
Beijing Kawin Bio-tech Co., Ltd., National Engineering Research Center for Viral Bio-Technology
In 1999 the SFDA issued its "announcement concerning regulations on drug production in different places and entrusted drug
processing."2 This allowed drug contract manufacturing; however, crude drugs, blood products, and vaccines continued to be prohibited
from CMO production. In 2001 the SFDA stipulated that, "A drug manufacturer may accept contract production of drugs upon approval
by the drug regulatory department under the State Council...."3 The new law legalized pharmaceutical contract manufacturing in China. In 2003, the SFDA clarified its "regulations on processing
drug for export," noting that Chinese drug manufacturers may conduct contract manufacturing for a pharmaceutical company outside
China.4 In 2004, the SFDA lifted the ban on contract manufacturing of crude drugs.5 In January 2006, a record-keeping regulation clarified that a GMP-certified Chinese pharmaceutical manufacturer may accept
contract processing of drugs from foreign companies, provided the processed drugs are not sold inside China.6 The SFDA regulations continue to exclude vaccines, blood products, and Chinese herbal injections from contract manufacturing.
CURRENT GMP SITUATION
China completed the good manufacturing practice (GMP) certification for all the drug manufacturers present in China in July
2004. Most manufacturers were required to modify their facilities according to the GMP standards before passing GMP inspections.
At the end of 2005, more than 5,000 Chinese drug manufacturers had obtained their GMP certificates. Although the GMP certification
process eliminated a number of small-sized manufacturers, the overall production capacity of Chinese pharmaceuticals increased
dramatically as a result of GMP modification. Manufacturers invested an average of $10.6 million to modify their facilities.
The Chinese government recognized that it must improve the current capacity utilization rate (currently 45% excess facility
capacity),7 and give priority to the pharmaceutical contract manufacturing industry.
BIOPHARMACEUTICAL CONTRACT MANUFACTURING
Biopharmaceutical contract manufacturing in China is young. According to Desheng Zhou, the GM of Beijing Kawin Biotech Co.,
one of China's few biopharmaceutical contract manufacturers, "Today, the biggest challenge for Chinese biopharma CMOs in winning
overseas manufacturing contracts is building confidence with overseas pharmas." Beijing Kawin has a fully automatic production
line in China with a staff of 200 employees, and an output of 100 million vials of Interferon each year.
Other biopharmaceutical CMOs in China include Hangzhou Acon Biotech and Shenzhen Watsingene Engineering Co. Also, some bio-parks
in China, such as the Liuyang Biopharmaceutical Park, have indicated that they plan to become major centers for contract manufacturing