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Biotech and China: a global opportunity
Pharmaceutical organisations based in China are increasingly interested in the opportunities offered by international markets, especially regarding new drug developments. Director of Business Development at global regulatory and pharmacovigilance service provider ELC Group Sy Chyi Yeoh explains.
Dr Judith M. Sills. Credit: Arriello
Dr Eric Caugant. Credit: Arriello
Changes to domestic market policy and practices in areas such as franchising, online sales and quality control have prompted Chinese pharma companies to review opportunities across Europe and the US.
Chinese companies also benefit from considerable government support for businesses investing in external markets and in 2017, China also joined the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH), pledging to implement the coalition’s standards and guidelines.
However, the value of the local market should not be underestimated. China has pulled ahead of Japan and Europe to become the world’s second-largest pharma market, behind only the US. Growth is strong, with a CAGR of a little over 12%, according to GlobalData estimates, while its value is expected to reach $300.9bn by 2025.
The domestic market is also changing emphasis from generic drugs to more novel therapies and capitalising on the global opportunities for these more-targeted offerings will be a crucial part of the commercial plan for many China-based pharma companies.
There are a number of practical considerations for Chinese firms looking to realise expansion opportunities overseas. Should they establish proprietary operations in their target markets, for instance, buy up local companies, or partner with sales representatives already in situ?
How can compliance be speeded up, especially since the EU has stringent and diverse provisions across the continent? If they do set up a base in Europe, should it still be in the UK? The country was once a favourite destination but now stands outside the EU.
Demand for new drugs
There are indications that there is both huge demand for new drugs for the Chinese market and a surge in new drug development. In 2020, 48 new drugs were approved by China’s pharma regulator, the NMPA National Medical Products Administration, 20 of which were domestic.
Conversely, global pharma companies are keeping an appraising eye on the vast Chinese market. The country now has full membership of the ICH and has teamed this with other moves, such as the adoption of a marketing authorisation system similar to the European one and increased pharmacovigilance (PV) activity.
In addition, time to market is reducing for drugs from abroad. Chinese patients can now increasingly gain access to drugs close to a product’s global launch, rather than much later, which in turn means the prospect of faster ROI for overseas pharma companies.
A blueprint for success
Despite the substantial opportunities, both sides also face practical challenges and have to find the best way to minimise risks while maximising new market potential.
The usual method is to use a clinical research organisation (CRO)/outsourced service provider, either global or local. A competent CRO will be able to bridge the gaps in a company’s knowledge of local regulations, will understand the dynamics of the local market and see where resources are lacking.
There are traditionally strong CRO relationships between the US and China, partly because scientists have moved back and forth between the two countries.
The English language also dominates in the US, and the FDA is the only regulator: teamed with the US’s favourable environment for biotech innovation, these factors continue to cement bonds between the two jurisdictions.
The EU after Brexit
Europe presents more of a challenge for Chinese entrants. The European Medicines Agency harmonises the regulations in the EU as a whole, but each market interprets these in its own way and sets its own local requirements.
This results in a diverse set of parameters for overseas companies to navigate, in addition to Europe’s multiple languages and cultures.
Brexit has also caused issues, as the UK, once seen as the natural jumping-off point for European expansion no longer offers the same bridge to the Continent. Chinese strategies have had to adapt and Germany is now emerging as a popular base.
Germany benefits from a transparent and logical regulatory system, while Spain, another leading contender, offers a cost-effective and flexible approach.
Companies entering European markets for the first time can benefit enormously from on-the-ground support from an experienced CRO.
The EU’s quality and safety standards remain the highest in the world, so developing systems and processes that meet European standards sets a company in good stead for achieving compliance elsewhere.
Established offerings, new markets
For Chinese pharma companies, external markets offer additional potential not just for new drugs but also for existing therapies and products such as active pharmaceutical ingredients (APIs) – and China accounts for around 40% of global API production.
Here, a manufacturer might apply or adapt an existing product for EU use, relocate manufacturing operations to demonstrate a commitment to the European market, or form a local sales partnership with a known EU brand.
Similarly, European manufacturers can now look to China and its now more familiar authorisation process as a new outlet for established products – many of which are considered high-value drugs in the local market.
Cross-border collaboration between China and external markets is proving increasingly popular, with multinationals such as Pfizer having already established joint ventures with Chinese companies to co-develop new products and facilitate acceptance in the local market.
Meanwhile, Chinese pharma companies are buying up whole European SMEs and manufacturing facilities. Some Chinese pharma companies are also investing in European biotechs to stay ahead of the competition back in China.
Finding the right partner
Intercontinental activity is increasing, but finding the right independent help can be challenging. Multinational CROs sometimes charge substantial fees but may still prove weak when it comes to providing precise insight into and experience of the local market.
Few large service organisations have truly specialist capabilities in China compared with their expertise in other regions. This includes not just language support and cultural understanding, but an appreciation of the subtleties that make a relationship work seamlessly. For instance, the fact that Chinese businesses tend to favour the WeChat platform for information sharing.
Few pharma companies can afford to pay steeply for unsuitably generic help when what they need is access to reliable, up-to-date intelligence and insights, and substantive regional and in-country experience.
Finally, it’s worth noting that speed isn’t always of the essence when it comes to building worthwhile business relationships between China and elsewhere: patience can also pay off. But paying due consideration to every opportunity, from every angle, should ensure that pharma companies realise the maximum value from their new ventures in external markets.