How is innovation in the pharmaceutical industry in China changing?

China has long been one of the key pharmaceutical manufacturing hubs in the world, providing the world with intermediates, pharmaceutical ingredients and generic drugs. Now, with China’s continued economic development we are seeing continued progress in China’s ability to develop new pharmaceutical products and technologies. Here we take a quick look at some of the reasons for this change.

1. Understanding of the importance of the Chinese market by multinationals

Although the pharmaceutical industry as a whole has long been involved with China, it is only within the last 10-15 years that China as a market has become more of a focus for multinationals. China’s overall rise in wealth has also seen a rise in the market for pharmaceuticals. For big pharma the Chinese market is a huge untapped resource with a lot of potential that has led to investment in large R&D hubs. No longer just the workshop for big pharma, there has been an increasing recognition of the growing importance of the Chinese market in multinational headquarters with has seen greater resources and talent focus

2. Chinese returnees

The return of western educated expat Chinese and the increased numbers of Chinese students studying at universities outside of China, especially in the USA and Europe has brought increased talent into the Chinese employment market. As Chinese returnees start to occupy a multitude of positions within companies the Chinese pharmaceutical industry has experienced a change in mind set across the entire value chain, but especially in development where western education and training see the biggest impact. The change from a China focused mind set to a global mind set is crucial for ongoing innovation.

3. Increased regulatory support

The Chinese government has been striving to put in place better drug regulatory and approval systems to help China become a global centre for innovation; as well as to develop and introduce home grown pharmaceuticals to a worldwide market. Restructuring of the SFDA, improved and harmonized administration procedures for clinical trials, increased transparency in the drug approval process are all regulatory improvements which will help new product innovation.

4. Increased Infrastructural support

China in the last 10-20 years has provided increased assistance to companies looking to innovate new products. Tax breaks, incubator centres, science parks and special high tech zones have provided the framework for innovation to start to develop in the Chinese market

A perennial problem China has had with respect to innovation has been the perceived lack of IP protection. Although IP protection is still a major issue that can discourage innovative companies from entering the market, China is making improvements which should eventually lead to greater home grown and foreign investment in innovation.