Survey Says China to Lead Biologics Boom

According to a CPhI Pharma Insights report, China will be the fastest growing biologics market over the next decade

CPhI Worldwide, organized by UBM EMEA, announces the findings of the latest CPhI Pharma Insights report on the Chinese pharma economy.

Of the international companies surveyed, 85 percent believe that China is set to have the fastest growing biologics sector over the next decade, while 65 percent predict patented new chemical entities (NCEs) will be discovered and developed within the country in as little as 5 years’ time. The driving force behind these findings is the growing biotechnology and R&D industry, which is heavily supported by the Chinese government.

As a result, big pharma and generic manufacturers are increasingly attempting to gain access to the Chinese market, with 74 percent of international companies looking to “increase or initiate partnership with local companies.” This remains a key trend as both international and Chinese companies are seeing natural synergies — Chinese companies benefit from increasing their knowledge of advanced technologies and international companies benefit from market access with a partner familiar with its complexities. These arrangements and strategic alliances will proliferate over the next few years, as 90 percent of domestic companies are also searching for international partners, and their primary goal is to increase the “company’s knowledge and development base.”

Over half of the domestic respondents believe the Chinese manufacturing sector will advance their manufacturing capabilities in complex formulations and biologics to levels comparable to those in the West within the next 3-5 years. Emphasizing the shift towards developing higher manufacturing and regulatory standards, more than 60 percent of companies surveyed are already implementing GMP standards, 40 percent Quality by Design, 40 percent continuous improvement, and nearly 20 percent either six-sigma or OPEX.

International companies also share a renewed confidence in the improvement of standards within the Chinese market, with over 50 percent stating that they believe “commercial manufacturing can be competently outsourced within China.” Moreover, nearly 30 percent believe both CMO activity and clinical drug supply and formulation services can be competently undertaken by Chinese companies — most remarkably, 27 percent believe U.S. and European drug supply can also be completed by manufacturers within the country.

The report concludes that the chief driving force behind rising standards within the Chinese market — and therefore its export potential — has paradoxically been an increased awareness amongst domestic consumers and the desire for more tightly regulated, higher-quality drugs.

Chinese companies are increasingly investing for the future, with 21 percent investing in cold chain storage technology, 16 percent in ADC development, 43 percent commercial and scale-up facilities and perhaps most interestingly, 27 percent in continuous processing. Continuous processing remains at the cutting edge of the industry and is predicted to revolutionize pharma manufacturing over the next decade. However, its initial set-up costs and new learning’s are high, implying a significant change in approach from Chinese companies.

Two major challenges were identified as potential drag factors. First, finished drug supply of solid dose forms is not showing the accelerated pace of development that the biologics sector is experiencing, and the report postulates that “too much ground has been ceded to Western and Indian manufacturers” who lead this sector internationally. Second, as China’s overall pharma economy expands, the CFDA is experiencing greater backlogs and regulatory bottlenecks. The domestic industry strongly supports the implementation of a U.S.-style GDUFA system to alleviate these pressures, and an overwhelming 94 percent stating that the “CFDA must grow rapidly to a comparable size to the U.S. FDA if it is to properly regulate its industry.”

The report says, in five years the Chinese pharma market will look very different, with generics and APIs still being exported in huge numbers, but alongside this, there will also be a well-established biologics and research industry, with multinational CMOs. In fact, it is likely that in as little as 5-10 years’ time, there will be Chinese patented NCEs — which have been researched, clinical-trial manufactured and distributed by Chinese companies — specifically developed for local patient cohorts.

Overall, confidence in the short-term growth remains very high, with 25 percent of domestic companies believing China will soon be the world’s top biopharma innovator. Emphasizing this shift, 41 percent believe future biologic sales will be predominantly led by international exports.

The majority of foreign companies are forecasting explosive growth in China as the country’s healthcare system evolves over the next five years. Not only do 60 percent of foreign organizations, who are already present in the market, project their sales will grow by more than 25 percent, 15 percent are even predicting a staggering growth of 200 percent or more over the next five years. Similarly, more than 70 percent of Chinese firms are either “confident” or “extremely confident” in the sustained buoyancy of the Chinese market, and 65 percent of Chinese firms expect growth of around 20 percent in the next year alone. A further 26 percent anticipate growth at 20-40 percent, with 8 percent expecting to double in size. This suggests that despite a recent, relative slow-down in the Chinese economy, the pharma sector remains buoyant.

For more information about CPhI Worldwide, please visit www.cphi.com/europe/home and for a full copy of the CPhI China Pharma Insights report 2016 please see http://ubm.cphi.com/china-2016-market-report/.

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