China forecasted as the fastest growing biologics market over the next decade with Chinese NCEs within 5 years

International-domestic pharma partnerships to drive next wave of growth, alongside emerging Chinese multinational CMOs.

In fact, of the international companies surveyed, a remarkable 85% believe that China is set to have the fastest growing biologics sector over the next decade, whilst 65% 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% 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% of domestic companies are also searching for international partners, and their primary goal is to increase the ‘company’s knowledge and development base’.

Interestingly, 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’. Emphasising the shift towards developing higher manufacturing and regulatory standards, over 60% of companies surveyed are already implementing GMP standards, 40% Quality by Design, 40% continuous improvement, and nearly 20% either six-sigma or OPEX.

International companies also share a renewed confidence in the improvement of standards within the Chinese market, with over 50% stating that they believe ‘commercial manufacturing can be competently outsourced within China’. Moreover, nearly 30% believe both ‘CMO activity’ and ‘clinical drug supply and formulation services’ can be competently undertaken by Chinese companies — most remarkably, 27% believe ‘US 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% investing in cold chain storage technology, 16% in ADC development, 43% commercial and scale-up facilities and perhaps most interestingly, 27% in continuous processing. Continuous processing remains at the cutting edge of the industry and is predicted to revolutionise 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. Firstly, 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. Secondly, 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 US-style GDUFA system to alleviate these pressures and an overwhelming 94% stating that the ‘CFDA must grow rapidly to a comparable size to the US FDA if it is to properly regulate its industry’.

The reports ends by stating that in 5 years’ time, 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.

Another area international pharma is increasingly looking to invest in, is traditional Chinese medicines (TCMs), with 79% of companies seeking to enter this market in the next few years. The consensus amongst international pharma and generic companies is that “if you can’t beat them, join them”, as clearly, there remains an overwhelming growth opportunity to be harnessed.

Overall, confidence in the short-term growth remains extremely high, with 25% of domestic companies believing China will soon be the world’s top biopharma innovator. Emphasising this shift, 41% 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 5 years. Not only do 60% of foreign organisations, who are already present in the market, project their sales will grow by more than 25%, 15% are even predicting a staggering growth of 200% or greater over the next 5 years. Similarly, over 70% of Chinese firms are either ‘confident’ or ‘extremely confident’ in the sustained buoyancy of the Chinese market and 65% of Chinese firms expect growth of around 20% in the next year alone. A further 26% anticipate growth at 20-40%, with 8% expecting to double in size. This suggests that despite a recent, relative slow-down in the overall Chinese economy, the pharma sector remains extremely buoyant.

“This report mirrors our experiences on-the-ground during CPHI China 2016 where there was a clear confidence in future prospects from both international and domestic companies. What is noticeable is a renewed commitment to investing for longer-term growth, with partnerships and manufacturing deals becoming increasingly ambitious. The API and generic market will remain extremely strong and biologics investment and production will proliferate. Our research suggested that within 5 years China is going to be challenging on a number of fronts – with international CMOs and perhaps even locally researched and developed NCEs. Already this year, we have seen a considerable expansion of the event to 35,000 attendees, a 5000 increase, and we are looking to grow alongside the Chinese pharma economy,” said Chris Kilbee, Group Director Pharma, UBM EMEA.