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China moving from generics to home-made drugs
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China, already a global powerhouse in high-tech areas from solar panels to bullet trains, is turning its industrial might to the challenge of making more of its own drugs for a vast and aging population.
Given the 10 years or more it typically takes to bring a new medicine to market, original 鈥淢ade in China鈥 treatments won鈥檛 arrive overnight, but multinationals are already encountering more competition from local generic drugs that look set for a quantum leap in quality.
The stakes are high. China is the world鈥檚 second biggest drugs market behind the United States, and fast food, smoking and pollution have fuelled a rise in cancers and chronic heart and lung diseases.
The country also has more diabetics than any other in the world, with numbers expected to hit 151 million by 2040 from 110 million today, according to the International Diabetes Federation.
That has made China a sweet spot for Denmark鈥檚 Novo Nordisk: the world鈥檚 biggest insulin producer has mined a rich seam in the country since opening production facilities here in 1995.
By 2010, it dominated 63 percent of China鈥檚 insulin market. But it has recently been losing ground to local competitors cheered on by the Chinese government.
鈥淐hina is going to be tough for us for the next couple of years,鈥 said Chief Science Officer Mads Krogsgaard Thomsen. 鈥淩ight now, the country is very focused on building domestic production.鈥
Local rivals are selling both cut-price basic insulin and sophisticated modern versions, including a biosimilar copy of Sanofi鈥檚 Lantus made by Chinese biotech specialist Gan & Lee Pharmaceuticals.
Greater local competition is also evident in other areas, helping the top 10 Chinese drugmakers grow sales 12 percent on average this year, according to IMS Consulting 鈥 twice the rate of multinationals, which suffered a setback from a bribery scandal at GlaxoSmithKline two years ago.
Increasing local competition is part of a structural upheaval in China鈥檚 hospital-dominated prescription drug market.
Selling drugs to patients at a hefty mark-up 鈥 especially off-patent Western 鈥渂randed generics鈥 鈥 often accounts for 40-50 percent of Chinese hospitals鈥 revenues. But the authorities are now pushing a policy of zero mark-ups, initially in smaller county hospitals.
鈥淏randed generics are something that exist today, but the need for them in 10 years time is not going to be there,鈥 said Luke Miels, AstraZeneca鈥檚 global portfolio head.
That means foreign firms will be more reliant on new, patented medicines, although the scale of demand for such expensive products is uncertain in a country with only basic health insurance cover.
Pivotal to the transformation of the market is the China Food and Drug Administration, led by boss Bi Jingquan since January.
The watchdog has promised to speed up approval of innovative new drugs, which can take 5-7 years, while cracking down on substandard local generics.
鈥淭his creates lots of opportunities for local Chinese companies that have a strong focus on innovation,鈥 said a spokesman for China鈥檚 Fosun Pharma, which sees itself among the winners.
It is not alone. A cluster of drug research labs in Shanghai highlights the promise of China鈥檚 life sciences sector. The area brings together multinational and local firms, alongside contract research businesses and small biotech operations.
Among the latter is Hua Medicine, led by Chinese-born, Western-educated Chief Executive Li Chen, who used to run Roche鈥檚 China R&D centre. Now he is developing a novel diabetes treatment, licensed from Roche, while working on Hua鈥檚 own promising leads.
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