At the Crossroad - Bring Innovative Drugs Into China’s Biopharmaceutical Market

Like many U.S. and European biopharmaceutical companies, you may also face this ongoing question: Whether to expand the clinical trials and out-license rights of your innovation into the rapidly growing biopharma market in China? 

With a total value of $130 (1) billion in 2018, China has become the second-largest market in size and growth in the world of biopharma. The total biopharmaceutical product sale in China is projected to reach $145 - 175 billion by 2022 (2). The following perspectives will address some key concerns biopharmaceutical companies are facing, in terms of the regulatory landscape, market access, reimbursement system, and intellectual property protection: 

1. Regulatory reform in China provides a brighter outlook for innovative and patented products. Thanks to a series of reforms from the China Food and Drug Administration (CFDA, now called the National Medical Products Administration or NMPA) since 2017, China made comprehensive efforts to improve the new drug approval process. The first was to clear the registration application backlog, resulting in a significant reduction of the review timeline. Another was the implementation of a Priority Review Pathway to accelerate the development of drugs with significant clinical value, such as novel drugs that treat severe or rare diseases, products in short supply, early generics, and drugs whose global clinical trial applications in China parallel those in the US or EU (3).

2. Lower-cost clinical trials and shortened timeline for accelerated approval also provide a favorable environment for global companies to license out innovative drugs to China. There are many advantages to conducting clinical trials in China such as a large patient population base, a vast and growing network of hospitals qualified to conduct high standard clinical trials, strong support from the government for international partnerships, streamlined regulatory environment for clinical trials and new drug approval, and strong enthusiasm for international collaborations. For example, clinical trials with centers in China as proportion of all clinical trials has increased steadily from 3.6% in 2010 to 9.1% in 2019 (4).

 
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3. A broadening of market access and reimbursement came at reduced drug prices. Market access in China is evolving rapidly, and China has approved a record number of 45 innovative foreign drugs in 2018, and 53 in 2019 (5). These approvals follow a series of policy moves to provide public funding and enable a population of 1.4 billion to access new and life-saving drugs, especially cancer therapies. However, in 2018, as a result, 17 cancer drugs were added to the national reimbursement drug list (NRDL) with an average of 57% discount (6).

4. China’s intellectual property protection for foreign biopharmas has generally improved. In early 2020, China announced that it will set up a resolution mechanism for drug patent disputes and increase legal protection for patents that would encourage overseas pharmaceutical companies to introduce additional novel medicines. The mechanism allows patent holders to receive notifications when another party seeks approval for a treatment that can potentially infringe on the original patents. This mechanism also enables patent holders to have sufficient time to take action against copycat products before they reach the market (7). For more IP protection insights, please check MSQ’s latest webinar “China’s “Hatch-Waxman Act”-IP Strategy for Innovative Drugs Entering China Market” 

To conclude, there are compelling opportunities despite a few challenges in China’s biopharmaceutical market from the perspectives of the regulatory landscape, market access, reimbursement system, and intellectual property protection. For U.S. and European biopharma companies, when you set your sights on expanding to the China market, you should prepare a careful development and market strategy centered on looking for reliable and experienced partners to take advantage of the opportunities and minimize any potential challenges.  

References

1. IMS Market Prognosis 2017-2021: China, QuintilesIMS, March 2017. 

2. Joy Persaud, “Chinese pharma market primed for growth after sweeping reforms”, Pharmaphorum, 25 September 2018. 

3. The State Drug Administration issued the Technical Guidelines for Accepting Data on Overseas Clinical Trials of Drugs, Drug Administration Shanghai, 11 July 2018.   

4. Clinicaltrials.gov.

5. “2017 new medicines in China eruption: 39 imported foreign medicines go to market and 174 type 1 new medicines in application”, E-med agency, 26 February 2018.

6. “Drugmakers gain more access to China, but at a price”, The Wall Street Journal, 27 November 2018.

7. China’s push for innovative drugs gets patent boost under trade deal with U.S., S&P Global, Market Intelligence, 21 Jan, 2020.