Page 148 - 2018 White Paper on the Business Environment in China
P. 148
8 White Paper on the Business Environment in China
Beijing wants to go from “Made in China” to “Created in Stanley Analyst Sean Wu claimed, “We anticipate a
China” (Tiezzi). turnaround in health care stock prices this year after their
weak performances in 2015 and 2016.” Wu said policy
Authorities announced that Made in China 2025 is the headwinds had tempered his company’s enthusiasm, “but
first step in a loosely defined three-stage plan to overtake we think the drug segment pressures are beginning to
rival manufacturing hubs such as Japan, the U.S. and subside.” He added that investors should focus on stocks
Germany by 2049—the 100th anniversary of the founding of companies with strong research and development
of the People’s Republic of China (Lee). Indeed, China capabilities and rich product pipelines (Li, Good Times).
started from scratch to become the world’s largest exporter
of high-tech products, but that doesn’t necessarily reflect China’s pharmaceutical advancement has profound
the country’s indigenous innovation capabilities in high implications for global health, especially in its potential to
technology. Although their share has decreased to 72.1 open up access to affordable life-saving drugs. China’s active
percent in 2013 from 79.3 percent in 2002, wholly owned pharmaceutical ingredients (APIs) have been essential in
foreign enterprises and joint ventures have continued to the fight against infectious diseases such as avian flu and
dominate exports in this sector. State-owned enterprises’ malaria, but Chinese pharmaceutical leaders are not just
share also dropped to 5.6 percent while the share of content to be an API supplier. Domestic low-cost, skilled
privately owned enterprises increased to 22.2 from 5.7 in labor and contract research organizations have flourished
2002. This may indicate the gradual but rapid coming-of- in providing support to the pharmaceutical, biotech, and
age of the private sector in China’s high-tech industries medical device industries. China has over 300 contract
(Sun and Cong). research organizations (CROs) that provide preclinical
and clinical research services to multinational companies,
Pharmaceutical signaling China’s innovation potential in pharmaceutical
research and development. Perhaps the most well- known
China is currently the world’s second-highest investor is WuXi PharmaTech, a company that employs more
in pharmaceutical research and development and is chemists than any other CRO in the world. China’s place
positioning itself to overtake the top spot from the U.S. in the global market was reinforced by a growing number
by 2023 if not before. The outpouring in Chinese cash has of overseas returnees who received their training outside
provoked many policymakers to ask if the country’s drug of China. About 40 percent of the returnees between
industry could become the next high-stake player in global 2009 and 2012 had expertise in biomedical science. By
public health and access to medicine. In 2011, Chinese 2012, China became the world’s leader in global active
official policy mandated development of its domestic pharmaceutical ingredient manufacturing and exports
pharmaceutical industries and invested over $1.1 billion with a yearly outpouring of over 800,000 tons (Huang).
toward new drug development (Huang). Yet by January
2016, China’s share of the global drug market was only Imitate vs. Innovate
1.5 percent. Generic drug sales represented 80 percent of
all domestic drug sales in 2015, a decline from 92 percent The conventional U.S. wisdom is that China imitates
in 2007. The country had accrued a massive backlog of rather than innovates. Chinese pharmaceutical companies
drug applications. The average review time was three have long been known for the manufacturing of generic
years, but some drugs had to wait as long as eight. The and almost generic drugs discovered or developed in
primary problem was that only 120 employees in China other areas of the world. Rather than a simply copycat
Food and Drug Administration (CFDA) were responsible industry, China has begun to trade on this expertise with
for technical reviews, an office that handled as many as foreign partners. Beijing Tide Pharmaceutical Company’s
10,000 applications per year. The CFDA reported that it manufacturing standards are high enough to be the
reviewed 9,394 new drug applications in 2015, an increase first Chinese drug company allowed to export injectable
of over 90 percent from the previous year, and also opened pharmaceuticals to Japan, a substantial first step toward
a second drug evaluation center in Shanghai to support its the U.S. market. This vertical integration is an essential
main office in Beijing (Fassbender, China is hungry). first step towards offering U.S. collaborators a turnkey
option to bring products into the Chinese market and
February 2017, a South China Morning Post headline then ultimately back to the U.S. shores. China has been
predicted “Good times ahead for Chinese pharmaceutical an overlooked research and development investment
firms as policy environment turns favorable”. Morgan perhaps for too long. Companies such as Chia Tai Tianqing
148
Beijing wants to go from “Made in China” to “Created in Stanley Analyst Sean Wu claimed, “We anticipate a
China” (Tiezzi). turnaround in health care stock prices this year after their
weak performances in 2015 and 2016.” Wu said policy
Authorities announced that Made in China 2025 is the headwinds had tempered his company’s enthusiasm, “but
first step in a loosely defined three-stage plan to overtake we think the drug segment pressures are beginning to
rival manufacturing hubs such as Japan, the U.S. and subside.” He added that investors should focus on stocks
Germany by 2049—the 100th anniversary of the founding of companies with strong research and development
of the People’s Republic of China (Lee). Indeed, China capabilities and rich product pipelines (Li, Good Times).
started from scratch to become the world’s largest exporter
of high-tech products, but that doesn’t necessarily reflect China’s pharmaceutical advancement has profound
the country’s indigenous innovation capabilities in high implications for global health, especially in its potential to
technology. Although their share has decreased to 72.1 open up access to affordable life-saving drugs. China’s active
percent in 2013 from 79.3 percent in 2002, wholly owned pharmaceutical ingredients (APIs) have been essential in
foreign enterprises and joint ventures have continued to the fight against infectious diseases such as avian flu and
dominate exports in this sector. State-owned enterprises’ malaria, but Chinese pharmaceutical leaders are not just
share also dropped to 5.6 percent while the share of content to be an API supplier. Domestic low-cost, skilled
privately owned enterprises increased to 22.2 from 5.7 in labor and contract research organizations have flourished
2002. This may indicate the gradual but rapid coming-of- in providing support to the pharmaceutical, biotech, and
age of the private sector in China’s high-tech industries medical device industries. China has over 300 contract
(Sun and Cong). research organizations (CROs) that provide preclinical
and clinical research services to multinational companies,
Pharmaceutical signaling China’s innovation potential in pharmaceutical
research and development. Perhaps the most well- known
China is currently the world’s second-highest investor is WuXi PharmaTech, a company that employs more
in pharmaceutical research and development and is chemists than any other CRO in the world. China’s place
positioning itself to overtake the top spot from the U.S. in the global market was reinforced by a growing number
by 2023 if not before. The outpouring in Chinese cash has of overseas returnees who received their training outside
provoked many policymakers to ask if the country’s drug of China. About 40 percent of the returnees between
industry could become the next high-stake player in global 2009 and 2012 had expertise in biomedical science. By
public health and access to medicine. In 2011, Chinese 2012, China became the world’s leader in global active
official policy mandated development of its domestic pharmaceutical ingredient manufacturing and exports
pharmaceutical industries and invested over $1.1 billion with a yearly outpouring of over 800,000 tons (Huang).
toward new drug development (Huang). Yet by January
2016, China’s share of the global drug market was only Imitate vs. Innovate
1.5 percent. Generic drug sales represented 80 percent of
all domestic drug sales in 2015, a decline from 92 percent The conventional U.S. wisdom is that China imitates
in 2007. The country had accrued a massive backlog of rather than innovates. Chinese pharmaceutical companies
drug applications. The average review time was three have long been known for the manufacturing of generic
years, but some drugs had to wait as long as eight. The and almost generic drugs discovered or developed in
primary problem was that only 120 employees in China other areas of the world. Rather than a simply copycat
Food and Drug Administration (CFDA) were responsible industry, China has begun to trade on this expertise with
for technical reviews, an office that handled as many as foreign partners. Beijing Tide Pharmaceutical Company’s
10,000 applications per year. The CFDA reported that it manufacturing standards are high enough to be the
reviewed 9,394 new drug applications in 2015, an increase first Chinese drug company allowed to export injectable
of over 90 percent from the previous year, and also opened pharmaceuticals to Japan, a substantial first step toward
a second drug evaluation center in Shanghai to support its the U.S. market. This vertical integration is an essential
main office in Beijing (Fassbender, China is hungry). first step towards offering U.S. collaborators a turnkey
option to bring products into the Chinese market and
February 2017, a South China Morning Post headline then ultimately back to the U.S. shores. China has been
predicted “Good times ahead for Chinese pharmaceutical an overlooked research and development investment
firms as policy environment turns favorable”. Morgan perhaps for too long. Companies such as Chia Tai Tianqing
148
