Twenty years ago, China’s biotech industry was worth around $2.4bn. This year, its revenues are expected to exceed $1.2tn. That’s a remarkable achievement by any standards, and one that has understandably led to excitement among investors and industry professionals alike. How has it been achieved? How has the sector actually changed and what can we expect to see in the future?
Although China’s government has been heavily involved in supporting and enabling the remarkable expansion of the healthcare sector, the real momentum for such change starts at grassroots level. It can be seen as a consequence of the rising standard of living in the country, which has seen ordinary Chinese people change their perspectives on what’s possible for them and what they might hope for in life. The government has responded by setting out to dramatically improve the availability of basic healthcare in the country, and to cut back on the social and economic effects of disease through measures such as mass vaccination programmes. This has, in turn, required the development of massively expanded infrastructure and created opportunities for the development of new Chinese CROs.
The government’s current five-year plan includes biotech exceeding 4% of GDP by the end of this year, a target that it seems likely to reach. To achieve this, it has been investing heavily in education in related subjects, developing specialist pharmaceutical universities in order to ensure that there will be enough suitably skilled people to fill all the emerging positions. The Healthy China 2030 plan provides an assurance that this investment will continue. It has resulted in China clinical trial quality improving significantly, with experts predicting that it could become the world leader in clinical trial provision within the next few years.
The money behind these changes is coming from two main sources. Firstly, the government has been spending as much as 2.5% of GDP per year on scientific R&D, aiming to cut the burden of ill health within the country and carve out a strong position in the sector internationally. Secondly, foreign investors have increasingly been taking an interest in China, with clinical research proving to be a challenging but exciting investment opportunity with huge growth potential. The improvements resulting from all this activity have made the country an increasingly attractive prospect for foreign companies looking for somewhere to run their clinical trials, as the quality of what is available is impressive and costs are significantly lower than in most Western countries.
Partly in order to attract foreign companies by making life easier for them, China has been making significant changes to its regulatory systems in the sector. The NMPA (National Medical Products Association) – formerly known as the CFDA (Chinese Federal Drug Administration) – has significantly simplified the requirements for foreign companies, moved processing online to cut down on paperwork, and has brought its regulations in line with those used elsewhere in the world. This has made it easier to take a drug or medical device tested in China straight to market in other countries. The NMPA has also made it easier for foreign companies to sell drugs within China, opening up a huge marketplace and contributing further to the underlying cultural change that drives further development.
In its early stages, this process of change was primarily about enabling China to catch up to the standard of healthcare enjoyed by other developed countries, so that its people could have access to the same range of treatments. In light of the progress it has made, it is now starting to shift its focus towards innovation, with top Chinese CRO talent focused in particular on finding better treatments for chronic diseases, thus enabling people to live happier, healthier, more productive lives. Cancer is also a major target and China is becoming a leader in immunotherapy and CAR-T research, both of which are expected to be in high demand around the world within the next few years.
The sheer size of the country, with its population of 1.4 billion people, gives it a distinct advantage in this regard. It’s comparatively easy to find large numbers of individuals suited to participating in clinical trials at any given time, and it means that the economic benefit of any advance scales up impressively – a strong incentive for continued government support.
Considering all this potential, the future for Chinese biotech looks bright – and that’s a fantastic position for any company to be in, given that investors expect this to be one of the most important industries of the 21st century. As life expectancy increases, the diseases affecting Chinese people are changing and that’s encouraging the development of new avenues of research. Anybody who is excited about the potential of this industry needs to keep an eye on China.