Expansion abroad, breakthroughs in China confirm modernization

Intensified policy support, deepening healthcare industry reform, higher-level opening-up, pursuit of innovation-driven development, increasing numbers of the elderly and emerging global opportunities are all combining to make China a strategic player in the global pharmaceutical market.

The country's significance emanates from its status as a humongous consumer market as well as the fact that it is an increasingly crucial linkage in global pharmaceutical industrial and supply chains.

Riding these glad tidings are companies such as Porton Pharma Solutions Ltd, a Chongqing-based Chinese contract development manufacture organization (CDMO). Porton recently announced its plan to establish a research, development and manufacturing site in Slovenia. The project marks Porton's latest move to expand its global footprint.

Such developments reflect the emphasis placed on innovation as part of China's modernization drive, which received pride of place in a report delivered at the opening session of the 20th National Congress of the Communist Party of China on Oct 16.

The country will accelerate the implementation of its innovation-driven development strategy, to achieve greater self-reliance and strength in science and technology, the report said.

It also said efforts will be made to improve the new system for mobilizing resources nationwide, in order to make key technological breakthroughs, and boost China's strength in strategic science and technology.

That's something Porton has been doing for a while now. It provides end-to-end process R&D and manufacturing services across small molecule active pharmaceutical ingredients or APIs, dosage forms and biologics to top multinational pharmaceutical companies as well as startups.

More than 90 percent of Porton's revenue comes from overseas markets where it has operations and offices — the United States, the European Union and so forth. China, of course, is a key market too.

During the first half of the year, the company's revenue was valued at 3.91 billion yuan ($539 million), up 212 percent year-on-year. Its net profit rose 465 percent year-on-year to 1.21 billion yuan.

Experts said China's pharmaceutical sector has been pushed to forge stronger innovation and R&D capabilities, as well as more stable industrial and supply chains, to meet the growing healthcare demand, especially from an aging society.

"While the elderly population in China is increasing, the country has also been deepening reforms in the healthcare sector to spur rapid development in related industries like drugs and vaccines, traditional Chinese medicine and medical devices," said Chen Jia, a researcher at the International Monetary Institute of the Renmin University of China in Beijing.

"That will push the development of Chinese pharmaceutical industrial and supply chains with unparalleled driving force," he said, adding that only through quality innovations and supply-side reforms could China strengthen its pharmaceutical industrial and supply chains to meet increasing medical demand in the aging society.

As China has made substantial progress over the years across the industrial and supply chains of the pharmaceutical industry, from drug development and manufacturing to distribution and logistics, it has been playing a bigger role in the international pharmaceutical markets, experts said.

Specifically, increased R&D and digital capabilities of local players in recent years provide an array of alternative collaboration models for multinational pharmaceutical companies to leverage new and emerging local capabilities in China, the world's second-largest pharmaceutical market that is next only to the United States.

Data from the Ministry of Commerce showed the value of offshore medicine, including traditional Chinese medicine and biotechnology R&D service outsourcing in China, climbed nearly 20 percent year-on-year during the first seven months of the year to 32.8 billion yuan. In 2021, the full-year value was 60.86 billion yuan, up nearly 25 percent year-on-year.

Wang Dongtang, director-general of the department of trade in services and commercial services at the MOC, said the ministry has been promoting high-level opening-up and service trade development in the pharmaceutical sector through measures like supporting pilot works and innovations in service trade, expanding imports and exports of pharmaceutical services, and facilitating the development and upgrade of outsourcing services in the sector.

Jean-Christophe Pointeau, president of Pfizer Global Biopharmaceuticals Business China, said China is becoming an important source of innovations for Pfizer and the world.

"We have seen the rapid development of the Chinese domestic innovative biopharma sector in the last few years as an opportunity for multi-national corporations (MNCs).While we compete within our sector, there are also numerous ways in which our capabilities as an MNC are a natural complement to more agile startups in China' biotech sector. So, there will be more and more opportunities for partnerships," he said.

As of July 2022, Pfizer had 104 projects under study worldwide, covering phase-1 clinical trials to registration application, involving oncology, internal medicine, vaccines, inflammation and immunity, and rare diseases.

Its R&D center in China provides a full range of support services for global pipeline development projects, allowing China to participate in Pfizer's pipeline of global early-stage and pivotal clinical studies as early and as much as possible.

Pfizer China R&D has been collaborating with leading academic and university institutions in China. Through these collaborations, the company continues to advance the development of research and innovative medicines in China, he said.

Similar efforts can be seen at Hangzhou, Zhejiang-based medical device company Venus Medtech. The company reported 210 million yuan in sales revenue in the first half of the year, up 19 percent year-on-year. Overseas sales alone were worth 14 million yuan, surging 151 percent year-on-year.

The first Chinese-made transcatheter pulmonic valve replacement system approved for marketing in Europe, independently developed by the company for the treatment of certain heart valve disease, generated 9 million yuan in sales in only two months after its registration earlier this year.

Wu Yangfeng, executive vice-president of the Peking University Clinical Research Institute, said China's pharmaceutical industrial chain has been undergoing fundamental upgrades in recent years, as the country has ushered in a series of regulatory reforms in the sector since 2015.

"The new medical product review standards and methodologies in China have been internationalized very quickly, as reflected by the rapid improvements in the quantity and quality of new medical product approvals," Wu said, adding this trend has spurred the quality and quantity of clinical trials in China.

In the sector of pharmaceutical R&D and manufacturing services, Chinese enterprises have already taken a leading position in the world, said Wang Rui, vice-president of sales and marketing of Porton.

"There is a very obvious trend in the sector that global demand for pharmaceutical R&D and manufacturing services is looking to China for solutions, thanks to Chinese CDMOs' advantages in cost and efficiency," he said, adding that the company has been pushing for upgrades in its capacity and core capabilities from biocatalysis to digitization. Biocatalysis is a process in which a biological material is used to speed up, or catalyze, a chemical reaction.

"China has a large population of high-end talent and a vast domestic market. Together with the drug regulatory reforms, those factors have been fueling the rapid growth of the country's innovative medicine industry, lifting the country's share in global innovative drug pipelines from a very low base five to six years ago to more than 10 percent by now," he said.

"China is sure to make more contributions to world pharmaceutical industry as the Chinese innovation and manufacturing forces in the sector continue to expand."

However, experts also said Chinese pharmaceutical companies still need to strengthen R&D and innovation capabilities if they want to further increase their presence in global markets, especially in developed economies.

Researcher Chen of Renmin University said Chinese enterprises must become more alert to variations in regulatory environments in different countries. The best way for them to increase their global presence is to continually improve their product and service quality.