Since 2015, China’s position in the global biopharmaceutical ecosystem has been getting higher and higher, driven by multiple factors such as regulatory reforms, capital assistance, and a constantly improving innovation environment. At present, biopharmaceuticals in China are approaching an inflection point. The Chinese biopharmaceutical industry is no longer a “in China for China” industry, but has become an industry that may have a significant impact on the global biopharmaceutical industry chain. This article explores how China will impact the global biopharmaceutical ecosystem by 20281.
Development status of China’s biopharmaceutical industry
Thanks to its strong manufacturing base, China’s biopharmaceutical industry has gradually come into line with many international standards. Since 2015, China’s biopharmaceutical innovation ecosystem has achieved rapid development.
An overview of China’s position in the three most important areas of facilitators, industrial chain capabilities and innovation capabilities is explained below:
Facilitating factors
China and China’s local biotech companies’ efforts to improve and comply with regulatory policies, catch up with global financing levels, and carry out cross-border cooperation and transactions have strengthened the catalysts for industry development.
Regulatory Reform and Consolidation
Since 2015, China has been working to bring its regulatory system more in line with global standards. For example, more than quadrupled the number of reviewers at the Center for Drug Evaluation (CDE)—from about 150 to more than 700—reducing the backlog of drugs awaiting approval. In 2021, CDE released guidelines emphasizing patient-centeredness and clinical value. China also joined the International Conference on Harmonization of Technical Requirements for Human Drug Registration (ICH) in 2017 and actively promoted the implementation of ICH guidelines. As of July 2022, China has nearly implemented all Level 2 guidelines under the plan.
financing level
The development of Chinese biotech companies has benefited from the influx of massive capital. According to BCIQ survey data, the amount of venture capital investment in the industry increased from US$4 billion in 2015-2017 to US$12 billion in 2018-2020, thereby creating a solid foundation for IPOs. As of early 2022, China trails only the United States in the market capitalization of biotech companies established since 2015. To expand capital sources, more and more Chinese biotech companies are listing on two or even three exchanges. However, this momentum has also eased. Many biotech companies that have gone public since 2018 are trading below or close to their IPO valuations, and the funding window has shrunk amid falling stock markets and stretched biotech valuations.
Cross-border transactions
Between January 2020 and May 2022, China concluded 46 external licensing agreements and 160 internal licensing agreements with European and American biopharmaceutical companies, according to medical data provider GBI. External licensing deals revolve around two main models: partnerships with leading multinational biopharmaceutical companies (partner model), and bundles with pharmaceutical platforms that aim to provide patients with more cost-effective and accessible medical services (pharma platform model ). An example of the partnership model is that in 2021, Seagen of the United States pre-acquired the rights of RemeGen’s HER2-targeted antibody conjugate (ADC) new drug-Vidicizumab outside Asia for US$200 million in 2021. An example of the pharmaceutical platform model is the business partnership between an Indonesian company and several Chinese biotech companies to sell their products to Southeast Asia.
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