The 1,000 new cars that appear every day in Beijing every day symbolize rapidly rising incomes; but the resulting pressures on its weak infrastructure show up clearly in contrast: These cars cause so much pollution that Beijing will ban a third of its autos (one million cars) to clean up the air before next summer's Olympics. This situation might be a metaphor for the country's biopharmaceuticals industry: strong prospects, but weak infrastructure. Venture capital and intellectual property issues have gotten attention and appear en route to resolution; but serious gaps remain. Most would agree, however, that the question is not if China becomes a biopharmaceutical powerhouse, but when, and in which segments. Will it be R&D? Biosimilars? Manufacturing/outsourcing? Gene therapy?
The Chinese government has already stated where it believes its biotech industry will be in the next 15 years: In August of this year, China's Minister of Science and Technology, Wang Gang, announced that the country is adopting a 15-year, three-stage strategy to develop its high-tech bio-economy and to create world-class science in biotechnology. According to the plan, by 2010 the country will emerge from a "technology accumulation" stage and move to an "industrialization" stage. The government is targeting nearly $400 billion in annual output from its biotechnology industries, and it sees the segment as a cornerstone of China's national economy by 2020.
Does China's recent progress suggest this is a reasonable possibility? The sheer size of the country's population creates great economic and political pressure to focus on healthcare policy, economics, and infrastructure to ensure the future well being of its citizens. The substantial long-range goals set by the Chinese leadership may be difficult to achieve, however, considering the other demands that are being placed on its economy.
Despite these problems, most life sciences companies worldwide are considering business strategies that include China. This article reviews developments in the last 12 months (from September 2006 to September 2007), as a way to assess how far China's biopharmaceutical industry has come and its prospects for the future.
A REVIEW OF THE STATISTICS
To assess the current situation in China's biopharmaceutical industry, it is worth reviewing the following statistics:
- China's gross domestic product (GDP) growth has been running at full bore (nearly 8% per year) since 2000.
- Its pharmaceutical industry represents 5% of the world total.
- Life sciences revenues in China grew 40% in 2005.
- By 2010, China is expected by many analysts to become the world's fifth largest pharmaceutical market.
- Pharmaceutical sales in China will likely exceed $24 billion by 2010.
- European and American bioscience companies are rapidly forming alliances, opening R&D facilities, planning for sales and marketing operations, and projecting large investments in China over the next 10 years.
- The number of bioventure deals in 2004 in Asia reached 3,200, matching the total of 3,300 for Europe and the US. The Chinese contribution to this number is increasing rapidly.
- Offshore IPOs for Chinese companies are picking up. This year, Simcere Pharmaceutical issued an NYSE IPO as a generics manufacturer, and 3SBio Inc. went public on the NASDAQ. Sinovac was the first Chinese biotech company to go public in 2004 (on the AMEX).
- Though nearly all of China's biologics are copies of Western inventions, China has developed more than 30 biotech drugs and has more than 150 in the pipeline. There are more than 200 Chinese biopharmaceutical companies, and numerous biogeneric drugs, including epoetin alpha and recombinant human granulocyte colony-stimulating factor, are legally manufactured in China.
- The growing technical experience of Chinese biotechnologists is demonstrated by the fact that that 20% of international, peer reviewed papers in life sciences have at least one Chinese national as an author.