China’s innovative drug industry boosts competitive advantage through R&D

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(Yicai Global) Oct. 16 — China’s innovative medicine industry has grown rapidly in recent years, driven in part by regulatory reform launched in 2015.

Chinese pharmaceutical authorities began approving innovative class 1 drugs developed by local companies in 2017 and only one new product got the green light from the regulator. Since then, the number of drugs given the green light has increased year on year to 36 last year, according to data from China’s National Pharmaceutical Industry Information Center.

The total number of new local medicines authorized containing active substances not previously approved was 72 between 2017 and 2021.

China is narrowing the gap between itself and the United States as the Asian country’s approval figures are comparable to those of the United States with similarities in drug categories, Sinolink Securities wrote in a recent research note. . The approval difference between the same types of drugs in China and the United States is gradually narrowing.

While business for local companies is booming, several talents who previously worked for multinational pharmaceutical companies have jumped ship. For example, Wu Xiaobin, former general manager of Pfizer China, joined BeiGene in April 2018.

The funding landscape is also improving. Since 2018, the Hong Kong Stock Exchange has allowed unprofitable biotech companies to list, which has eased fundraising pressures for local medical startups and, at the same time, provided a new exit channel for investors. in venture capital.

Additionally, since 2018, the National Healthcare Security Administration has become faster at including more innovative drugs in public health insurance, facilitating monetization.

Strengthening R&D strength

Domestic enterprises have significantly increased their research and development spending in recent years, with the corresponding compound annual growth rate reaching 28.3 percent since 2018, according to Sinolink Securities.

Pharmaceutical companies listed on the Shanghai and Shenzhen stock exchanges spent 67.2 billion CNY (9.3 billion USD) on R&D last year. Meanwhile, those listed in Hong Kong have paid 56.9 billion yuan for the same purpose.

Some Chinese companies have authorized the use of their new products by multinational pharmaceutical companies in order to speed up their access to foreign markets. In July, Kelun Pharmaceutical, based in Sichuan province, and CSPC Pharmaceutical Group, based in Hebei province, authorized foreign pharmaceutical companies to continue development of their innovative drugs under development, and each of them is expected to earn over $900 million. This would have been simply unimaginable 10 years ago.

In addition to products, domestic companies also license their technologies. For example, cancer treatment developer Adagene announced in March that it had entered into an exclusive research cooperation and technology licensing agreement worth up to $2.5 billion with Sanofi, headquartered in Paris.

Companies that license technology can achieve greater returns with lower development costs, Peter Luo, president of Adagene, told Yicai Global. But the premise is that the company has, in fact, developed world-class proprietary technology, he added.

Publishers: Tang Shihua, Emmi Laine

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