Chinese Firms See Strong Start in R&D

Ren Jinsheng has been taking the lead in the pharmaceutical industry in China for more than 30 years - from a graduate majoring in traditional Chinese medicine to an employee of a pharmaceutical company; from a managerial staff member of a State-owned drugmaker to founder of a private pharmaceutical company; from focusing for medicine manufacturing to being devoted to innovative drug development and commercialization.

Now the chairman of Simcere Pharmaceutical Group is busy building a research and development hub on therapeutic biologics in the company's base in Nanjing, Jiangsu Province.

Called Baijiahui (Chinese for "getting hundreds of businesses together"), the hub will provide a platform for therapeutic biological R&D projects and related startups. Ren said that enhancing the nation's biological medicine R&D capabilities and reducing costs will require the comprehensive and collaborative strength of related enterprises.

"China has unique advantages in therapeutic biologics development. They include the government's support, a rich talent pool, experiences and lessons from mature markets as well as a vast clinical trial base," he said. "However, challenges also exist, the most noticeable being a shortage of self-development."

In addition, some of Ren's counterparts urged the government to enhance intellectual property rights protection and build a strict quality and safety control system in line with international standards. That will benefit both companies and patients, they said.

Promising industry

In the international pharmaceutical market, a shift has been observed from the development of small-molecule medical medicine to that of large-molecule therapeutic biologics, marked by an increase of the biological market share from 13 percent in 2006 to 17 percent in 2010, according to a report from the international consultancy firm Boston Consulting Group.

Global sales of therapeutic biological products reached US$180 billion in 2012, a year-on-year increase of 14 percent, which is expected to remain at 15 to 18 percent over the next five years.

Therapeutic biological drugs are more complicated than medical ones in terms of molecular structure and manufacturing requirements. Meanwhile, biotherapies are said to be safer, more efficient and more directly target debilitating diseases such as cancer and diabetes.

China has designated the biological industry as one of the seven strategic emerging industries in its 12th Five-Year Plan (2011-15), while the therapeutic biologics sector is the priority in the biological industry. Billions of yuan in R&D funds and preferential tax and administrative policies will be offered to Chinese self-development projects.

Last year, 3 billion yuan (US$490 million) had been put into related projects. Wang Jingyuan, an official of the China Chamber of Commerce for Import & Export of Medicines & Health Products, said that more subsidies will be offered this year.

Over the past five years, the annual growth of China's therapeutic biologics sector has been 15 to 18 percent, which is expected to continue. Meanwhile, the share of the sector in China's pharmaceutical industry as a whole has remained at 5 percent.

So far, China accounts for 7 percent of the global pharmaceutical market, while the figure in the therapeutic biologics sector is only 2 percent. "We need to accelerate development of this promising sector," Wang said.

She pointed out that although Chinese drugmakers lag behind multinational companies, which started in the industry more than a decade ago, the Chinese companies have an advantage. "We get a chance to see technologies emerging quickly and then can innovate from there," she said.

A group of Chinese enterprises, including Simcere Pharmaceutical Group, are using this advantage to conduct further development via cooperation with mature international biopharmaceutical giants. A typical case is Simcere's partnership with Bristol-Myers Squibb Co on discoveries and commercialization of cancer therapy and cardiovascular diseases.