China ranks as the second largest pharmaceutical market in the world and provides enormous market entry opportunities for the life sciences industry.
Strong growth is forecast for Chinese pharmaceuticals over the next decade, with a projected market value of US$575B for 2022.
Although well established in the pharmaceutical industry, China is a new and unfamiliar market for most of the emerging companies in the United States.
According to McKinsey’s recent report, The dawn of China biopharma innovation, China’s biopharma industry is entering a new phase “characterised by three major trends: faster drug development, deeper differentiation, and the ambition to make an impact on the global innovation landscape.”
Despite some risk, entering the Chinese market is of great value and can be successfully navigated as long as companies are armed with an understanding of where the market is today and what the expectations are for growth over the next several years.
Rapid regulatory reform in China demonstrates its commitment to bring its pharmaceutical regulations into line with international standards.
Its regulatory evolution – from establishing the restructured China Food and Drug Administration in March 2013 to its current incarnation as the National Medical Products Administration (NMPA) – has meant closer alignment to both FDA and ICH (International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use) standards in many areas.
Since China joined the ICH in 2017, the NMPA has gradually transformed the regulations to implement international standards and support the innovation of the domestic biopharma industry as well as promote faster entry of international drugs, fueling the growth of biopharma startups in this rapidly evolving environment.
4 Key Benefits to Entering the Chinese Pharma Market
Outreach to the China market for pharmaceutical collaboration increasingly should be a strong consideration for various US companies. The rate of new drug development has been impressive.
The Center for Drug Evaluation (CDE) granted over 200 New Drug Applications (NDAs) from 2016 to 2020, according to data from GBI, a provider of intelligence and analytics for the Chinese pharmaceutical market.
At the same time, NMPA began introducing priority reviews in 2016 as a way to streamline new drug approval procedures.
According to that same McKinsey report, as a result of the NMPA’s actions, “the proportion of drugs under priority review increased from 14 percent in 2016 to 77 percent in 2019.”
According to CDE data released at the 2021 Chinese Society of Clinical Oncology conference, the NMPA has granted 34 conditional approvals based on clinical data.
The strong development of China’s pharmaceutical infrastructure presents several key benefits for US companies, including the following:
- The Chinese pharmaceutical market has put multiple policies in place to encourage new approaches to resolving the nation’s unmet clinical needs. As noted here, China has implemented new and distinctive approval and regulatory processes to stimulate drug development and therapeutic applications. For those products with significant clinical value, acceleration programs provide rapid access into Chinese product application review.
- The dynamic patient population and growing number of clinical sites with GCP capacity further advance product regulatory development.
- The comprehensive acceptance of foreign clinical data and regulatory convergence with other ICH countries adopted by the Chinese market presents another advantage to market entry.
- China’s NMPA has made successful advances in evolving its regulatory frameworks to absorb, manage, and sustain a robust development and manufacturing market, and has become a party to key international standards organisations like the ICH. Similar to other global regulatory mechanisms, NMPA provides multiple pathways for therapeutic candidates to seek accelerated review and approval in China, allowing data from international studies to be used within the overall application to China’s FDA.
Real world evidence (RWE) also has been gradually accepted by Chinese regulators.
RWE studies expand flexibility in patient recruitment and trial design, as well as timely treatment for rapidly progressing diseases.
The RWE pioneering province of Hainan alone has produced three drugs and 13 medical devices novel to China, resulting in three NMPA approvals.
Considerations to Facilitate a Successful Pharma Entry in China
While entry into the Chinese market offers significant benefits, there are strategic considerations to weigh in order to realise positive results.
As a first step, there are four action items any company can take to ensure a more successful entry to the Chinese pharmaceutical market:
- Understand the challenges, such as reliance on first approval status, indication, population, and therapeutic areas.
- Engage with the most experienced knowledge partner who can provide strategic, guided navigation through potential obstacles.
- Research development candidates and marketed products to determine potential profit outcomes.
- Face the headwinds and find the tailwinds during the ongoing post-COVID recovery.
China is an accessible market, but a deep knowledge of clinical sites, their performance, and their ability to support trial conduct in a compliant manner is central to conducting clinical programs in China.
For example, in addition to NMPA regulations, each province may apply their own specific requirements to the conduct of trials within those regions.
These practices will influence how clinical studies should be managed among the highest quality sites.
In addition to differences in medical practices, China’s ethics committee approval and Office of Human Genetic Resources Administration (OHGRA) processes are not fully aligned with regulatory precedent.
The Chinese market presents potential variations in standards, approval and application procedures, and conformance to global trends. In such cases, expert consultation can assist with understanding and responding to these variations.
How Expertise Overcomes Risk in New Business Ventures
Successful companies today understand that competition motivates otherwise unachievable innovation.
However, intensive competition in innovative treatments presents another risk requiring strategic consideration.
When weighing the opportunities and challenges of entering such a market and, in turn, confronting such risks, the benefits of a knowledgeable and experienced partner cannot be ignored.
Over the next three to five years, we anticipate that China will continue to provide attractive entry for products with significant clinical value in the following ways:
- Acceleration programs for pharmaceutical products and medical devices demonstrating clinical value
- Acceptance of foreign clinical data, as well as regulatory convergence with other ICH countries.
- Acceptance of real-world data playing an increasingly important role in China
A company considering entering this potentially lucrative market needs to ask themselves if they are prepared to participate.
With knowledge of the current Chinese market, as well as experience in drug development and delivery, a properly prepared company can reap the full value of entering the Chinese market.
Martin E. Zuzulo is Managing Director, Americas at Widler & Schiemann, LLC. He has more than 30 years of experience in life sciences & pharma industry consulting.
His expertise spans the entire R&D Value Chain, primarily in Quality, Regulatory Affairs, and Manufacturing.
Based in Princeton, NJ, he specialises in helping emerging and maturing companies establish robust and fit-for-purpose processes and quality systems to support their strategic objectives.
You can connect with Martin through LinkedIn.