China Needs More Drugs - OZY | A Modern Media Company

China Needs More Drugs

China Needs More Drugs

By Alfred Romann

This picture taken on March 14 shows health workers preparing to destroy fake medicines seized in Beijing in recent months. The rapid growth of Internet commerce has led to an explosion of counterfeit drugs sold around the world, with China the biggest source of fake medicines, pharmaceutical experts said as the illicit trade is now believed to be worth around 75 billion USD globally, with criminal gangs increasingly using the web to move their products across borders. CHINA OUT AFP PHOTO (Photo credit should read STR/AFP/Getty Images)


China now files roughly a third of the world’s patent applications. Could one of them be the next Advil?

By Alfred Romann

Greg Scott and his team spend a lot of their time digging for drugs — in Chinese patents, that is. Last year alone, around 928,000 patent applications were filed in China, roughly a third of the 2.6 million applications annually filed worldwide. “We try to identify novel drug candidates,” says Scott, the president of ChinaBio, a Shanghai-based consultancy focused on the innovative drug industry. “And we do find some, but we have to go through a lot of patents before we find one.”

It wasn’t supposed to be this tough. In 2009, when a pair of Chinese companies developed and produced a swine flu vaccine in just 87 days, the achievement was expected to be pivotal for China’s growing biotech industry. Swine flu had appeared in Mexico that April and crossed the Pacific in a month. By August, China had developed the first vaccine, thanks to Sinovac Biotech and Hualan Biological Engineering. Hualan repeated the feat last year with an avian influenza vaccine. Despite those major hits, China still has a big drug problem: It hasn’t made a single blockbuster it can call its own or market globally.

Everyone knows China is great at process innovations — it can make things like vaccines faster and cheaper than most countries. And the country is now the world’s largest patent generator, with applications having risen 12.5 percent last year, compared with a 5 percent rise in the U.S. and a drop in both Europe and Japan, according to China’s State Intellectual Property Office and the World Intellectual Property Organization. But when it comes to making brand-new things, China often, well, flops.

China is famously slow at processing applications for new research, trials and drug registrations.

Why can’t the nation that invented gunpowder, the compass and paper produce more wonder drugs? For starters, there’s still a major gap between the approaches China takes and those taken by regional powerhouses South Korea and Japan, not to mention Europe and the U.S. In China, many drug patents are for a single substance and don’t have commercial prospects, says Jamie Davies, head of pharmaceuticals at Business Monitor International, a market research firm. “Most of those patents are questionable,” he notes. 


Another problem is access to information. In North America or Europe there’s plenty of easily accessible information. Clinical trial data is available on a single website in the U.S., for instance, and there are open regulatory hearings and debates, webcasts and conference calls by pharmaceuticals, foundations and NGOs. In China, though, there’s little to none of that — the China Food and Drug Administration (CFDA) publishes the bare minimum on drug applications and approvals, and companies sometimes don’t even pick up the phone when called.

Then there’s the issue with risk aversion. China is the biggest producer of active pharmaceutical ingredients, which are used to make drugs. India’s famous generics industry would come to a grinding halt without these, but it’s difficult for Chinese companies to give up lucrative and guaranteed manufacturing and turn to risky and expensive drug research that may not pay off. Even if the companies do develop something promising, they often run into regulatory hurdles, as China is famously slow at processing applications for new research, trials and drug registrations.

Employees work on the production line of Shufeng Jiedu Capsule, a Herbal Medicine for treating avian influenza patients, at a workshop of Anhui Jiren Pharmaceutical Co., Ltd on April 8, 2013 in Bozhou, China.

Employees work on the production line of Shufeng Jiedu Capsule, an herbal medicine for treating avian influenza patients, on April 8, 2013, in Bozhou, China.

Source Getty

How this all ends up playing out is simple: Some efforts at true innovation flounder. Consider traditional Chinese medicine (TCM), which, for a while, the government and drug companies placed great hope on. They started scouring the thousands-year-old discipline for key ingredients to come up with Western-style drugs. Hutchison China MediTech boasts a library of 50,000 products extracted from approximately 1,200 TCM herbal compounds, but after several years of work, the Shanghai company has just one TCM-based drug in clinical trials. “The government is still promoting TCM,” says Scott, “but that is mostly a face-saving move.” (Hutchinson did not respond to a request for comment.)

In some respects, however, China has come a long way within this sector in a relatively short period. Scott recalls visiting the National Institute of Biological Research when he first arrived about eight years ago. He had been impressed by the number of papers they had published. “They showed me a ream of papers and I said, ‘Where is your IP [intellectual property] on this?’” he recalls. “They said, ‘We don’t have any.’”

In addition to filing more patents to protect some of that IP, universities and researchers in China are also working to speed up the country’s drug-development progress, while multinational pharmaceutical companies are setting up factories and labs there and domestic companies are expanding. At the same time, the government is pushing for more innovation to move its economy away from brawn (manufacturing) and toward brains (knowledge). A more intellectually productive biotech industry would be a huge step in that direction.

That’s why the government has announced that innovation — as well as biotechnology, in particular — will become a pillar of future economic growth. There’s even a five-year plan for medical tech that spells out targets such as 30 key breakthrough technologies and drugs for 50 diseases. And earlier this year, the CFDA appointed a new chief with a remit to speed up the notoriously slow drug registrations and approvals; the agency is also using outside experts to evaluate applications. “Things are definitely changing,” says Scott.


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