China is strong on research and development but requires resources if it is to compete in the global biotechnology market, says Felix Chen, chairman and chief executive officer of Aptus Holdings, a pharmaceutical outsourcing company.
While the mainland's potential market is huge, it is fragmented. There are about 6,000 companies in the medical-products sector across the country, producing between 6,000 to 8,000 traditional Chinese medical products and about 4,000 types of Western drugs. Only about 1 per cent of Western-style drugs manufactured in the mainland have been developed there, while the remainder are generic drugs.
The mainland market is also localised, which can act as a barrier to entry and expansion. For example, products made in a factory based in Sichuan may have a presence in that province only.
Other barriers include geographical constraints, competition and a lack of market understanding and experience, Mr Chen says.
With China's accession to the World Trade Organisation, the healthcare industry will soon be subject to various reforms and deregulation, including new restrictions and a tightening of the drug approval process.
While the mainland consumer has faith in Chinese medicine and continues to use it for a variety of ailments, the hospitals and clinics use Western drugs, says Mr Chen, although in the past 10 years Western medicine has been promoted through increased advertising.
The growing Chinese biotech industry has prompted many companies to jump on the marketing bandwagon, claiming affinity with the industry even though they may not, strictly speaking, be very high tech, says Mr Chen.