Contract Research in China: A Catalyst for Pharmaceutical Industry Growth
Contract research is both a vehicle for Chinese pharmas to expand their R&D expertise and quality levels, and a bridge for them to enter global markets.
By Yibing Zhou, BioPlan Associates, Inc.
Shanghai Institute of Materia Medica (affiliated with the Chinese Academy of Science) has been collaborating with GlaxoSmithKline in the development of a chemical compound database since early 2005. Chongqing Pharmaceutical Industry Institute (affiliated with Shanghai Fosum Pharma) reached an agreement in early 2006 to work on drug development with a U.S. company.
So far, 15 laboratories in China have received SFDA-issued GLP certifications; eight more laboratories have passed the GLP examination and are waiting to receive the certification. It is estimated that 30 laboratories will be GLP-certified by the end of 2006. 
Chinese CROs in Shanghai Focus on Drug Development
On Feb. 22, 2005, Shanghai Biopharmaceutical R&D CRO Service Base and Shanghai Pudong Biopharmaceutical R&D CRO Service Center formally opened in the Shanghai Zhangjiang Hi-tech Park. The Center, which plans to become the largest CRO facility in Asia, will operate under U.S.GLP standards. It projects annual revenue of more than 2 billion RMB (U.S. $250 million) — 10 times its current level. The Center itself plans to attract over 5 billion RMB (US$625 million) in biotech investment from within and outside China over the next five years.
“The Center is dedicated to improving the overall research level of all the pharmaceutical companies in Zhangjiang Park through promoting efficient interactions among these companies,” said Qing Li, a spokesperson for the Center. “Previously, companies operated independently and individually, which formed many small [market] ‘dots.’ Today, we are connecting all these dots to form a complete industry chain…We plan to promote the ‘Zhangjiang’ Pharmaceutical CRO Brand [to the world].”
Shanghai Zhanghiang Hi-tech Park represents a new frontier for biotechnology in China. The Center plans to send a strong signal that China’s biopharmaceutical contract research industry is ready for high-speed expansion.
“So far, 29 Chinese CROs have settled in our center and more companies are preparing to join us over time,” said Hui Lin, associate director general of the Biopharmaceutical Association of Pudong New Area, during the Center’s opening ceremony.
“It is very good that our company is participating in global drug research and development. This improves our innovation capability,” said Dr. Ying Luo, president and CEO of Shanghai Genomics Inc., one of the leading biotech CROs that has joined the Center. “As [more] Chinese CROs obtain overseas research contracts, it will help them keep pace with worldwide pharmaceutical R&D. It will allow them to advance the frontiers of technology, and establish standards for managing and operating drug R&D facilities. It will also aid CROs in making profits more quickly, and therefore facilitate future expansions.”
Dr. Luo’s company obtained a contract research project from Johnson & Johnson concerning cancer-related gene clones in Feb. 2005, and signed a two-year collaboration agreement with the Dutch biopharma firm Organon in January 2006 for research involving identification of a more selective steroid hormone receptor modulator.
Dr. Ge Li, president of Wuxi Pharma Tech, China’s largest pharmaceutical CRO, is very optimistic about the contract research industry in China. “In the next few years, we hope our company will continue growing by more than 50% annually,” he said.
Dr. Li founded his company, which is located in the Shanghai Pudong New Area, in 2001 in association with other “Hai Gui” (Chinese nationals who return to China after gaining professional experience in Western biopharmaceutical companies) like himself. His company has grown rapidly and has become the largest pharmaceutical R&D service company in China. It is also the world’s fastest-growing pharmaceutical chemistry service company. Its revenue soared from 25 million RMB in 2002 to 170 million RMB ($21 million) in 2004. Wuxi Pharma Tech has established stable collaborative relationships with 70 clients around the world, including 26 of the world’s leading pharma and biopharma companies. This success story is documented in a Harvard Business School case study. 
Joint Venture CROs in Beijing Specialize in Clinical Research
In Beijing, CROs have been gaining momentum through international sources, and are preparing for a boom. The world’s leading CROs (MDS Pharma Services, Quintiles Transnational, Covance, etc.) have had operations in Beijing since the late 1990s. Since then, a growing number of Western CROs have been coming to Beijing to build clinical research bases and animal experimental centers. The Danish CRO, Center for Clinical and Basic Research (CCBR), invested $10 million to build a GCP research base in Beijing’s Zhongguancun Life Science Park in 2005. U.S. Bridge Pharmaceutical Inc. recently invested $4 million to build an experimental animal service company. In August, the largest CRO (Sino-U.S. joint venture) in Beijing, Pharmaron (Beijing) Pharm. Tech, opened its new research lab (80,000 sq. meters) in the Beijing Economic and Technological Zone. This company receives $5 million in contract research work annually.
“In the past three years, Beijing has promoted 29 projects in the biopharmaceutical arena and invested RMB 3.6 billion (U.S. $450 million). We are promoting more [international] biopharmaceutical CRO projects to settle in China,” said Ting Lei, director of the Beijing Pharma and Biotech Center.
The industry in Beijing has formed a professional CRO service commission through the joint efforts of the Beijing Biotechnology Association and the Beijing Zhongguancun Biotechnology and Pharmaceutical Association. This commission will serve the same purpose as the Shanghai Zhangjiang CRO Service Center. Pharmaceutical CROs in Beijing are working together to provide services for the entire R&D chain.
Venturepharma, Beijing, is one of the largest joint-venture CROs in China focusing on preclinical research and drug registration. Over the past few years, the company has completed preclinical studies for more than 400 state-level new drugs in China and has applied for 70 patents inside and outside China. Beijing KendleWit Medical Consulting Co., founded jointly in 1997 by Kendle International Inc. (U.S.) and the Beijing Wets Sci. & Tech. Co., is another well-known clinical CRO in China.