China’s biotech revolution has undertaken a dramatic transformation which has seen it evolve over recent years to be one of the fastest growing worldwide.
In 2011, China stated that its biomedicine industry was one of seven strategic priorities, and in its Five-Year Plan (2015-2020), the Chinese government mandated that the biotechnology sector should exceed 4% of GDP (Gross Domestic Product) by 2020 in market size.
In 2015, China established its “Made in China 2025” strategic plan which stated that the pharmaceutical industry and other high-tech fields should increase the domestic content of core materials to 70% by 2025.
Following these policy announcements, a wave of regulatory reform (commonly called the “CFDA big bang”) occurred from 2015 to 2017, which established the transformation of the biotech sector that continues to this day. This rapid development of the biotechnology industry is viewed by the Chinese government as being critical to help tackle the challenges facing the Chinese healthcare system, including an ageing population, high morbidity and mortality rates from diseases and the burden of healthcare spending (both public and private).
The following factors are some of the driving forces behind China’s biotech revolution:
Regulatory Reforms by the CFDA
Since 2015, the China Food and Drug Administration (CFDA) has implemented multiple regulatory reforms which has helped streamline the clinical trial process and grow China’s biotech sector. The main reforms that have been transformative include:
Regulations Modelled After International Regulatory Authorities
The China Food and Drug Administration (CFDA) has put in place new regulations which have been based on the United States Food and Drug Administration (FDA). This includes Chinese generic drug manufacturers establishing consistent bioequivalence with the innovator product. The drug manufacturers that meet the standards are awarded favourable treatment which includes getting preferential access to public hospital tenders and prescriptions in China. The Chinese government eliminated the 15% markup hospitals earned when dispensing drugs to offset the higher drug manufacturing prices.
The introduction of self-checking declarations by pharmaceutical companies in clinical trials has freed up the CFDA resources by quickly eliminating clinical trials that aren’t feasible.
National Healthcare Security Administration (NHSA)
The National Healthcare Security Administration (NHSA) was established in 2018 and is responsible for managing basic health insurance schemes in China. This further helps to improve the efficiency of the healthcare system in regards to cost, service quality and value for money.
The NHSA has also added more non-generic medications to the list of those that qualify for patient reimbursement.
National Medical Products Administration (NMPA)
The National Medical Products Administration (NMPA) was created to approve new drugs. It was rebranded in 2018 and has been implementing a clearer and more efficient drug-approval system which is based on global standards. This is also expected to shift the healthcare industry’s focus to innovative drug development.
Market Authorization Holder (MAH)
The Market Authorization Holder (MAH) Law allows the drug innovators to hold the manufacturing licence for a drug, even if drug manufacturing was outsourced. This allows for smaller scale drug manufacturers to be supported and eliminates manufacturing overcapacity.
Developers no longer have to spend too much time and resources on drug manufacturing, which means that they can devote more time and energy to creating new drugs.
This law has particularly benefitted China’s Contract Research Organisations (CROs) and Contract Manufacturing Organisations (CMOs).
National Reimbursement Drug List (NRDL)
An additional 340 high-priced and innovative drugs were added to the National Reimbursement Drug List (NRDL) in 2017. These additions have had a positive impact on the drug industry, as it proved that the Chinese government was ready to subsidise expensive, innovative treatments.
This announcement led to a huge increase in Chinese capital investment in Research and Development (R&D) and manufacturing for innovative, biosimilar and generic drugs, as well as CROs and CMOs.
Since 2018, there have been multiple price negotiations for new drugs on the market which aims to reduce the price burden for patients.
Increase in Investment
Since the Global Financial Crisis, financing for biotechs in China has steadily been increasing thanks to the Chinese investors who are wanting to invest in industries away from real estate and manufacturing.
Building Talent and Technology
The CFDA made it possible for Multinational Corporations to apply for multi-regional clinical trials by removing the pre-requirement that new foreign drugs need to be registered outside of China and be in Phase II or III trials overseas.
The search for biotech expertise has not only targeted Multinational Corporations, but also Chinese PhD researchers studying and working overseas.
China’s “Thousand Talents Plan” is designed to attract overseas talent and promises prestige, attractive remuneration and career opportunities to researchers and employees from high-profile international R&D companies. Returnees have had a huge impact on the biotech industry, as they are the force behind drug approvals, fill peer-review committees and life-science facilities.
The push for innovation is supported by the highest levels of Chinese government
Biologics - The World’s Fastest Growing Biotech Market
Biopharma (biological drugs) are currently the fastest-growing sector in global healthcare. However, it also costs over 20 times more than traditional therapies which is why they attract a higher spend by pharmaceutical companies.
China’s fast-growing biologics market is making crucial breakthroughs in treatments derived from advanced drug and therapy development for cancer and other diseases.
China’s biotech industry has some unique advantages which include:
- Millions of graduate students with STEM-related (Science, Technology, Engineering and Mathematics) backgrounds.
- The cost of clinical trials is lower than other countries which can speed up the drug development process.
- China has expertise in AI (Artificial Intelligence) which can give biotech companies a competitive advantage.
Research firms estimate that China’s biotech industry will be worth in excess of 90 billion by 2023. This is especially due to the rapidly ageing population and the high number of people suffering from cancer and other diseases, who are willing to spend money on innovative treatments. Biotech drugs are now favoured over traditional drugs as they have fewer side effects.
All signs point towards the Chinese biotech industry having a long and bright future ahead of it, which will change the medical and research industry for good.