China's position as a force in the globalization of drug development has become clear in the past few years to drug and device development companies large and small around the world. Fueled by three major economic drivers, the China opportunity is created by significant improvement in the quality of overall clinical and laboratory operations, and the maturing of the social, governmental and intellectual property environment.
Different companies and products come to China for different reasons. However, they can all be summarized into three major economic drivers:
Time: Expediting global approval One of the most important drivers for pharmaceutical companies to conduct trials in developing countries is to expedite global approval. The economic return of saving one year in the completion of trials means one more year of patent exclusivity from generic competition, which directly translates to potentially billions of dollars in worldwide sales.
Clinical trials in China fare especially well in this regard. Although the first global multicenter trials were conducted only in 2004, China has already contributed significantly in many high-profile global trials (8% of global recruitment in one recent trial), at recruitment rate three to five times the global average. It has become the country with the fastest growth rate for recruiting trials (47%, compared to the U.S. at -6.5%, Germany at 11.7% and India at 19.6%). The reasons for the rapid patient recruitment have much to do not only with a large population of treatment-naïve patients, but also a welcome environment in which all stakeholders have an interest in participating in global trials, from the regulatory agencies (new drugs, increased expertise in the healthcare system), to hospitals and doctors (income, publication, and peer recognition), to patients themselves (new treatment options at low cost). As a result, integrating China into global trials has become a strategic move implemented from the very beginning of development planning.
Market In synchrony with China's overall economic growth, the Chinese healthcare market is among the fastest-growing in the world. Although currently less than 5% of the global market, it is projected to be the fifth largest healthcare spending nation in the world by 2015. This market opportunity is especially significant for diseases prevalent in the Chinese population, such as hepatitis and certain cancers, and for drugs that show differing ethnic responses in Asia.
- Cost-saving
Cost used to be the most important factor in making outsourcing decisions. When China was first exposed to the concept of pharmaceutical outsourcing, pharmaceutical intermediates and APIs were manufactured as commodities at a deep discount to their cost in the more developed world. API manufacturing is still an important part of outsourcing services in China, but companies and service providers have climbed up the value chain and now provide more sophisticated services such as laboratory research, preclinical and clinical studies, and manufacturing GMP-certified late stage products, in which quality is considered a more important factor in making outsourcing decisions.
However, over the whole development process China still offers substantial cost advantages. This cost benefit is even more important for small to mid-sized development companies. Cost savings can be grouped into three areas:
- Human resources, e.g., salaries for research scientists, PIs (40% of U.S.), CRAs (45% of U.S.), sales representatives
- General level of expense in healthcare system, e.g., hospital stay (8% of U.S.), CT scan (30% of U.S.)
- Scarce resources reflected in cost, e.g. non-human primates for preclinical studies.
If it was economic drivers that made China attractive, the decision to move to China was only made possible by an enabling infrastructure and quality level that has come into line with international standards. Although it has only a short history of western-style development, the Chinese drug development system has evolved quickly in the past decade and is catching up with the world. Since the establishment of the Chinese State Food and Drug Administration in 1989, laws and regulations related to various aspects of drug development have been issued every two to three years: ICH-GCP in 1998 for clinical trials, GLP in 2002 for preclinical study, and GMP in 2004 for pharmaceutical manufacturing. Significant progress in intellectual property protection has also been made in a series of laws and implementing mechanisms since China joined the WTO in 2001. The latest version in 2008 offers further protection and encouragement for innovation, not only for native industry but also international filers. All these measures have come together and created an infrastructure attractive to drug development within less than a decade.
The benefits of developing drugs in China can be offset by great difficulties: a short development history; a maturing, thus fast-changing, regulatory system; an improving but still comparatively low level of quality standards in procedures and human resources; and a market and culture that requires a major adjustment of business mentality. Multinational pharmaceutical companies can overcome these difficulties over time by maintaining a large local presence in management, sales and marketing, government and medical affairs and R&D facilities. However, small- to medium-sized companies often lack the resources to quickly understand the Chinese market and to build a multi-disciplinary management team on the ground that can support the complicated operations required for the long process of drug development.
Modular R&D is created with the goal of building an effective and efficient system for international drug and device development companies to develop, approve and market pharmaceuticals and medical devices in China. We do this using a modular approach, matching your special product needs with research and clinical development service providers in China. We are your consultant in market research, helping you design the best China strategy; we find the right CRO/CMO to develop your product; and we act as your project managers in China to provide on-the-ground monitoring and communications, ensuring your operation runs smoothly.
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