China looks offshore to inject new life into ailing domestic drug industry

Chinese watchdog aims to raise local standards by targeting developed markets

PUBLISHED : Monday, 28 November, 2016, 7:02am
UPDATED : Monday, 28 November, 2016, 7:06am

Beijing has embarked on an ­ambitious goal to have a range of Chinese brand-name and generic drugs approved in developed markets by 2020.

But some analysts said the ­domestic industry might struggle to compete on price and brand ­recognition.

The 2020 targets are part of the national drug safety watchdog’s drive to improve standards in a pharmaceutical industry riddled with a multitude of poor-quality generic products.

Pharmaceutical companies are encouraged to establish international sales channels and cultivate made-in-China brands
Government guidelines

Under guidelines issued by six government agencies, including the National ­Development and Reform Commission and the China Food and Drug Administration (CFDA), the country aims to have three to five brand-name drugs and more than 200 generics in developed markets by 2020.

“Pharmaceutical companies are encouraged to establish international sales channels and cultivate made-in-China brands,” the guidelines said.

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Some companies have already started the process – nearly 100 generic drugs were approved for registration and 50 brand-name drugs entered international clinical trials last year, according to government figures. At home, authorities approved 210 brand-name drugs for clinical trials, with 15 proprietary drugs and 110 ­generics approved for production between 2010 and 2015.

China is the world’s second-biggest pharmaceutical market and of the 107,000 drugs it has approved for use, 95 per cent are generics, many of which are of poor quality and do not match the standards of brand-name equivalents.

To lift standards and encourage the development of new drugs, Beijing announced last year that all generics approved before October 1, 2007, and that were on the National Essential Medicine List, must be assessed to ensure they were as effective as brand-name offerings.

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In a People’s Daily article earlier this month, CFDA chief Bi Jingquan said the assessments for consistency were a big step forward to improve the international competitiveness of the domestic industry, and to lower the health care burden.

Boston Consulting Group partner and managing director Chen Baiping said similar assessments had helped transform Japan’s pharmaceutical industry.

The main issue is whether the cost of manufacturing such drugs is competitive and whether such drugs can sell well
Chen Baiping, Boston Consulting Group

Chen said many mainland companies were already working on getting – and likely to get – US regulatory approval.

“The main issue is whether the cost of manufacturing such drugs is competitive and whether such drugs can sell well,” he said.

Chen said that even if the ­generics did pass the tests for consistency, brand-name drugs by multinationals would still be the preferred option among doctors and patients.

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But overseas players might be affected much further down the track when the price gap narrowed and the profit margin thinned to the point of unprofitability, he said.

It is not a target that money alone can achieve
Shi Lichen, Dingchen Pharmaceutical Management Consulting

Shi Lichen, founder of Dingchen Pharmaceutical Management Consulting, said the target for Chinese generics should not be too much of a challenge.

“But for brand-name drugs, it’s a different story,” Shi said.

“It is so difficult to have one drug approved, not to mention five by 2020. It is not a target that money alone can achieve.”