Timing is everything.
Just over a decade ago, the pharmaceutical industry and R&D in China was dominated by generics and plagued with insufficient technical capacity and fewer investments at the initial stage of novel drug development.
Although China’s entry in the global pharmaceutical R&D industry started relatively late, substantial government support and a thriving economy, has changed the industry. In recent years, the country, as a whole, has achieved colossal success in building a modern industry.
China’s success is, in large part, the result of the countries Thousand Talent program, a 2008 government initiative targeting Chinese-born academics and workers who trained overseas – in the United States and Europe – and encouraging them to ‘come home’ with promises of grants and tax breaks.
In addition, the Chinese government has increased funding focused on graduating large numbers of university-trained Chinese scientists, which, in turn, helped the growth of venture capital and private equity funds that can directly invest in Chinese biopharmaceutical industries.
And the results of these targeted ‘investments’ have been impressive.
Combined with a burgeoning middle-class and rapidly-aging society, China presents vast opportunities for R&D, making the country an important innovator of pharmaceutical products. Managing a worldwide supply chain, in 2017, China invested approximately US $13.2 billion in medical and pharmaceutical R&D. This accounts for 8.9% of the total global medical and pharmaceutical R&D investment in the same period.
But with the enhancement of R&D, the strengthening of the regulatory framework and the perfection of clinical trial data of audits and inspections, R&D spending is expected to continue to increase.
A report published by Chisult Insight showed that China’s pharmaceutical R&D spending is expected grow to US $29.2 billion in 2021, representing 18.3% of the total amount of the global pharmaceutical R&D in that year.
Over the last decade there has been a growing number of Chinese contract development and manufacturing organizations (CDMO), such as MabPlex International (Yantai 264006, Shandong, China), that offer integrated, end-to-end services and open-innovation platforms to support pharmaceutical R&D and manufacturing for both small and large molecules.
From Generics to Innovative drugs
Leading Chinese pharmaceutical companies, historically focusing on the manufacturing of generics, are now investing in, and building, capabilities designed to develop and manufacture new and innovative drugs.
Their intent is to draw on the specific needs of Chinese patient’s needs, while, at the same time, capitalizing on knowledge from other markets, including Europe and the United States.
“Although China’ is the world’s second largest pharmaceutical market after the United States, some of the most effective modern medicines are not yet available.”
This approach is further supported by a group of innovative biotech companies founded over the past five years that focus on addressing global unmet medical needs.
According to health-care information company IQVIA, in 2017 China was the world’s second-largest national pharmaceutical market worth $122.6 billion. China is also the biggest emerging market for pharmaceuticals with growth expected to reach $145 billion to $175 billion by 2022.
As a result, today, the biotechnology industry in China is at a turning point, with many key elements in place for innovation: an educational system churning out doctorates and strong basic research, substantial financial backing from both private investors and public sectors, regulations that are becoming globally harmonized, a changed legal environment designed to effectively secure Intellectual Property (IP) rights – which are among the most valuable resources for pharmaceutical and biotech companies – and a vibrant group of entrepreneurial leaders with ambitions for China and abroad.
Unmet medical needs
Western pharmaceutical and biotechnology companies, both in the United States and Europe, interested in working with Chinese biotechnology and life science industries, find a country facing significant unmet medical needs — particularly in cancer, neurology and diabetes — and a rapidly aging, often medically naïve (untreated) population. This, in turn, makes China unique for clinical trials.
Although China is the world’s second largest pharmaceutical market after the United States, some of the most effective modern medicines are not yet available.
Of 42 anti-cancer drugs approved globally in the past five years, for example, only four are currently available in China. With reforms on the way, this is expected to change rapidly.
Recent regulatory changes bring imported drugs to China more quickly, and local biotechnology and pharmaceutical are racing to develop novel, advanced, therapeutics for both the domestic and global markets.
Attractive for R&D
A generally low-cost base, a large pool of highly qualified research subjects, increased scientific capabilities, local industry’s knowledge, a general lack of regulatory and cultural impediments often found in other countries and insight into the country’s growing drug markets have made China an attractive country for R&D.
And following the implementation of comprehensive government reforms in the regulation of drug development and clinical trials, the country has become even more attractive.
In 2015 the Chinese government reformed the China Food and Drug Administration’s (CFDA) review and approval system for drugs and medical devices. These reforms have had a profound impact on the entire healthcare industry in China, affecting both Chinese and foreign companies pursuing development and registration of pharmaceutical drugs and medical devices in China. The CFDA reforms initiated less than 3 years ago and the regulatory changes these reforms have brought are expected to catalyze the pharmaceutical industry in China.
Since the reform began, the CFDA has issued hundreds of new policies, guidelines, and draft opinions to optimize the regulatory landscape. The results – progress – in reforming the system has been significant.
- The backlog of 22,000 drug applications reported in August 2015 have been to about 8,000 by the end of 2016;
- A total of seventeen batches of 227 applications, including both Clinical Trial Applications (CTAs) and New Drug Applications, were granted priority review status by June 2017.
- Since the beginning of the reform, 10 provinces are now running Drug Marketing Authorization Holder pilots.
- The number of reviewers at the Center for Drug Evaluation has increased from about 150 in 2015 to 600 by the end of 2016. It is expected that this number of reviewers will further grow in the years ahead.
- An expert-committee system that taps into external expertise to support review and approval of innovative drugs is being established.
However, regulatory changes are ongoing in China. And while the impact of new reorganizations, such as the establishment in March 2018 of the new State Market Regulatory Administration (SMRA) and State Drug Administration (SDA), which will replace the CFDSA, are still unknown, the results will be far-reaching.
Global Clinical trials
The current regulatory approval for pharmaceutical agents in China is, in many cases, based on clinical trials that have been carried out in the country. But in order to be designated Investigational New Drug a Chinese legal entity must submit the drug registration application. And since clinical trial applications are also considered to be drug registration applications, overseas drug manufacturers in the United States or Europe interested in conducting clinical trials in China without legal representation in the country, must apply for product registration through an agent with professional knowledge and familiarity with Chinese laws and regulations.
In contrast to many other countries, the CFDA is also responsible for authorizing the import of Intellectual Properties (IPs). Prior to the import or manufacture of medicinal products protected by IPs, the CFDA needs to issue an import drug license for each individual IP.
This has a direct impact on the development of clinical trials. For example, for multi-center trials, documentation demonstrating that the clinical trial’s imported drugs have been prepared according to good manufacturing practices (GMPs) should be included in the application dossier.
The CFDA will, however, prioritize the review and approval of foreign innovative drugs, such as novel, investigational antibody-drug conjugates (ADCs) that are either manufactured in China, manufactured at a facility in the United States or European Union and are simultaneously under review for marketing authorization by the U.S. Food and Drug Administration (FDA) or the European Medicines Agency (EMA).
In addition, the drug testing institute must conduct sample testing and specifications verification of the IP in order to issue a Certificate of Analysis as part of the CFDA’s approval requirements for all registered drugs.
Finally, as part of the approval to conduct clinical trials, China has a decentralized process for the ethical review of clinical trial applications. As part of this process, approvals are required from institutional level ethics committees for each trial site. This process is implemented through a three-tiered framework consisting of national ethics committees, provincial ethics committees, and institutional level ethics committees.
In contrast, United States (US) has a decentralized process for the ethics review of clinical trials in which the sponsor is required to obtain approval from an institutional level ethics committee, referred to as institutional review boards (IRBs), for each study.
Many of the new regulations and requirements as well as new requirements yet to be implemented, have also contributed to the global pharmaceutical industry’s interest in conducting clinical trials in China. This has directly led an increased interest by US and European companies to work with a Chinese contract research organization (CRO) and contract (development) and manufacturing organizations (C(D)MO) such as MabPlex International.
The regulatory environment has, no doubt, boosted China’s ambitions plans to be a primary market for CROs and CDMOs. Most of the top 20 multinational pharmaceutical companies have been expanding their footprint in China by setting up R&D facilities through various legal structures. And global biopharmaceutical companies including Bristol-Myers Squibb (BMS), Pfizer, Roche, GlaxoSmithKline (GSK), Johnson & Johnson and Novo Nordisk are developing partnerships with Chinese companies.
While this approach mitigates traditional development risks, it also leverages local efficiencies, allowing global biopharmaceutical companies to add operational value due to familiarity with the market and regulatory requirements. In turn, this leads to shortened approval times and reduced development costs.
Made in China 2025
Growth in the Chinese biopharmaceutical industry is also expected as a result of a recent designation of biotech, in addition to other industries like robotics, aircraft, and electric cars, as one of the targeted industries in which the country wants to achieve an independent major position in by 2025.
Currently, China has ambitions for exporting generic medication around the globe. This ambition is evidenced by the growing number of generic drugs approved by regulatory agents in the United States and Europe.
This growth has been quite impressive. In 2017, Chinese pharmaceuticals obtained U.S. Food and Drug Administration approvals for 38 generic drugs, up from 22 such approvals in 2016.
However, in addition to becoming a manufacturing hub for generic drugs, China has also ambitions to develop and manufacture novel, innovative, pharmaceutical agents, as is evidenced by the development of antibody-drug conjugates (ADCs).
Today, antibody-drug conjugates are among the most complex drugs available. By combining an antibody with a cytotoxic payload, these drugs are directly targeting cancer cells, while, at the same time, leaving healthy cells alone.
The complexity is evidenced by the fact that since 2000, when the first ADC was approved in the United States, only 3 other antibody-drug conjugates have been approved, while more than 150 investigational agents have been or are currently in a clinical development program.
In an article published in the July 2018 edition of the International Immunopharmacology, researchers and scientists from RemeGen (Yantai 264006, Shandong, China) and MabPlex International, RemeGen’s development and manufacturing partner, confirmed the development of novel treatment options for B-cell lymphoma, one of the most refractory tumors.
Jointly established by Rongchang and Professor Fang Jianmin, RemeGen has developed a novel antibody-drug conjugate called RC48. In September 2015 this investigational agent became the first ADC in China to be approved by CFDA for inclusion in clinical trials.
RC48 is mainly used for the treatment of HER2 over-expression in gastric cancer, lung cancer, breast cancer, ovarian cancer, and bladder cancer.
Among the growing CDMOs in China is MabPlex International. Based in Yantai, a port city in Shandong province, China, and founded in 2013, the company specializes in the development and GMP manufacturing of recombinant proteins, antibody therapeutics and antibody-drug conjugates for its global customers.
From its inception, the company was designed to aide Western pharmaceutical companies, especially companies focusing on the development of innovative drugs, especially complex agents like antibody-drug conjugates or ADC. To accomplish the goal of attracting foreign clients, the company is establishing a track record by working with Chinese biotechnology companies to ‘win over’ these Western companies. And while some of MabPlex’ Chinese clients are looking to develop and manufacture drugs for the Chinese market, other companies are intently focusing on the development of complex, novel drugs to supply Western markets.
Partnerships between Western pharmaceutical companies and Chinese CDMOs – to develop novel, innovative, drugs, has been rapidly growing.
These partnerships may take various forms, each with their own challenges, risks and benefits. One option includes a licensing agreement. Other options may include co-development or a joint venture.
With the tremendous advantages made by China’s industrial advances and progress made over the last decade, US and European companies can greatly benefit from developing these partnerships with Chinese companies
This is especially so in the development of novel, innovative, pharmaceutical agents.
To take advantage of the options, we will address the unique position of China in the global biopharmaceutical industry and the benefits working with Chinese R&D may bring to Western pharmaceutical companies, like MabPlex International in a two-part webinar.
This webinar series “Drug Development in China: What you Need to Know,” will include a discussion of important steps in bio manufacturing, research & development and drug development in China and a discussion of challenges and treats, trends in biopharmaceutical manufacturing, clinical trials and regulatory issues. A discussion of the regulatory reforms, which includes the transition of the CFDA to a new State Market Regulatory Administration (SMRA) and a new State Drug Administration (SDA) will also be included.
¹In March 2018, China established the State Market Regulatory Administration (SMRA), which will take on the responsibilities of the China Food and Drug Administration (CFDA) and several other government entities. The SMRA’s State Drug Administration will replace the CFDA. However, regulating the life sciences and healthcare space in particular, the restructuring also establishes a new State Drug Administration (SDA) which will be supervised by the SAMR. The reorganization acknowledges that the regulation of drugs, medical devices and cosmetics products still requires a highly specialized and dedicated government agency. The new SDA will maintain its own branches at the provincial level and leave the post-approval enforcement duties at the lower municipal and county levels to the consolidated SAMR branches. The new agency is expected to become one of the most powerful market regulators to address the ever-mounting concerns about drug and food safety, protection of intellectual property and product quality issues in general.
²This webinar will also include the latest (available) updates regarding the ongoing regulatory reforms in China, which includes the transition of the CFDA to a new State Market Regulatory Administration (SMRA). Although information about SAMR’s restructuring and appointments, as well as any new policy goals and initiatives are expected to be released in due time, it is yet unknown whether the SAMR and the new State Drug Administration (SDA) which will be supervised by the SAMR, will change direction from the course set by the CFDA or continue to implement the previous CFDA reform initiatives. The reorganization may might delay actual implementation of previously announced initiatives.
Last Editorial Review: October 9, 2018
Featured Image: Photo by Hanny Naibaho on Unsplash