As the world’s second largest economy, China’s biomedical market has developed rapidly and is gradually favored by multinational biomedical companies. Multinational pharmaceutical companies have designated China as a global key strategic market. With the advancement of time, China’s biomedical industry is also gradually developing, including the increasing enrichment of institutional systems, research and development capabilities and product pipelines.
At the fourth session of the 13th National People’s Congress in 2021, the development of biomedicine was constantly mentioned in the government work report released. According to the forecast, the market size of China’s biomedicine industry will exceed 4 trillion yuan in 2022.
Regulatory Policy Reform of Government Organs: Main Areas and Core Policies of Biomedical Industry Reform
In the “Proposals of the CPC Central Committee on Formulating the Fourteenth Five-Year Plan for National Economic and Social Development and Vision 2035” promulgated by the State Council in 2021, it emphasizes “adhering to innovation-driven development and accelerating the development of a modern industrial system”, including China’s biomedical industry, which will be more inclined to develop and support innovative products in the future whether it is pharmaceutical companies or pharmaceutical regulatory agencies. In 2020, the State Drug Administration reviewed, and the center conducted a series of medical approvals for innovative drugs. The review system reform covers a wide range of areas, from clinical, review, to listing prices and expenses. As the reform measures are gradually implemented, the impact on innovative drugs will become greater and greater.
| Policy | Reform theme |
|---|---|
| 'Guiding Principles for Real-World Evidence Supporting Drug Development and Approval' | Review system |
| Measures for the Supervision and Administration of Drug Production | Production management |
| Opinions on Deepening the Reform of the Medical Security System | Health insurance system |
| Measures for the Administration of Drug Registration | Review system |
| Specification for quality management of drug clinical trials | Clinical trial |
| Medical Security Diagnosis Related Groups (CHS-DRG) Sub-grouping Scheme (Version 1.0) | Price Fee |
| Procedures for the review and approval of applications for conditional approval of drugs for listing | Review system |
| Breakthrough treatment drug review process | Review system |
| Procedures for Priority Review and Approval of Drug Listing License | Review system |
| Circular of the Office of the National Healthcare Security Administration on the issuance of the regional point method total budget and the pilot work plan of payment by disease score | Price Fee |
| Technical guidelines for conditional approval of drugs for listing | Review system |
The following are several policies that have a greater impact on the development of biomedical innovation
Revision of the Measures for the Administration of Drug Registration
The Measures for the Administration of Drug Registration were first promulgated in 2007. As time goes by, the original measures can no longer meet the needs of the pharmaceutical market in China, where science is rapidly developing and developing rapidly. For this reason, the State Drug Administration revised and the State Administration for Market Regulation was deliberated and adopted on March 30, 2020, and the new revised version will be implemented on July 1, 2020.
The purpose of this revision is to strengthen the supervision system of the whole process and the whole chain from the development and listing of drugs, post-marketing management to the cancellation of drug registration certificates by strengthening the management of the whole life cycle of drugs and innovating the management methods of drug registration. In addition, in the new edition of the Measures for the Administration of Drug Registration, a new chapter on “Accelerating the Listing and Registration Procedures for Drugs” has been added, and four approval and review acceleration channels have been set up for new drugs with breakthrough therapeutic drugs, conditional approval, priority review and approval, and special approval respectively.
Three documents, including the Working Procedures for the Review of Breakthrough Therapeutics
On July 8, 2020, the State Drug Administration officially issued the “Procedures for Review and Approval of Breakthrough Therapeutic Drugs (Trial) “, “Procedures for Review and Approval of Applications for Conditional Approval of Drug Listing (Trial) ” and “Procedures for Priority Review and Approval of Drug Listing License (Trial) “, and abolished the “Opinions on Encouraging Drug Innovation to Implement Priority Review and Approval”. With the deepening of the reform of the new drug review system in recent years, the Food and Drug Administration has continuously explored how to speed up the listing review of innovative drugs. The three documents this time clearly defines three blurred boundaries that have long been controversial:
1. The scope of identification of breakthrough therapeutic drugs;
2. The applicable conditions for conditional approval of listing;
3. The scope of application of priority review；
Further improving the accelerated path of approval review of the system.
Special approval is mainly for drugs needed for emergency response to public health emergencies; special approval is for innovative drugs and new drugs for difficult and critical diseases; priority approval review emphasizes the need to meet still unmet clinical needs and have obvious clinical advantages on the basis of encouraging innovation. Therefore, the Food and Drug Administration has refined the previous approval and review policies, from encouraging common innovation in the past to focusing on leading drugs with high clinical value and that can actually meet clinical needs.
Applicable conditions for conditional approval of listing
Treatment of diseases that are serious life-threatening and have no effective treatment, means and drugs urgently needed in public health, drug clinical trials have data showing the curative effect and can predict its clinical value.
Vaccines urgently needed to deal with major public health emergencies or other vaccines urgently needed as determined by the National Health Commission have been assessed to benefit more than risk.
Applicable conditions for drug review of breakthrough treatment
Used for preventing and treating diseases that seriously endanger life or seriously affect the quality of life.
For no effective means of prevention and control, the drug can provide effective means of prevention and control, or compared with the existing treatment, treatment, the drug has significant clinical advantages, i.e., single or in combination with one or more other drugs, in one or more clinically significant improvement in the endpoint.
Applicable conditions for priority review
• Innovative and improved drugs for clinically urgent, major infectious and rare diseases
• New varieties, dosage forms and specifications of pharmaceutical products for children that meet the physiological characteristics of children
• Urgently needed vaccines and innovative vaccines for disease prevention and control
• Medicines incorporated into breakthrough therapeutic drug programs
• Medicines subject to conditional approval
Based on the above changes, the impact of policy changes in medical reform on innovative biological drugs is mainly reflected in：
• The time from clinical to approved marketing of drugs with breakthrough efficacy will be greatly shortened. The earliest time can be in Phase I. After the clinical trial is completed, an application for listing will be submitted, which is expected to save at least 5 years, highlighting the FDA’s support for innovative drugs with high clinical value and increasing;
At the same time, under the background of frequent volume purchase implementation, the market for generic drugs and biosimilar drugs is rapidly shrinking, the previous high-profit market no longer exists, and innovation and transformation are imperative;
Therefore, under the market trend of accelerating the evaluation of innovative drugs and paying attention to innovative products, more local pharmaceutical companies with high-quality innovation capability can be expected to rise in the future.
Innovation and Transformation of Enterprise R&D Mode: International Cooperation of Chinese Biomedical Enterprises
There have always been two major barriers in the biomedical industry: capital barriers and technical barriers. With the vigorous development of China’s economy, many local pharmaceutical companies have accumulated abundant capital, but the development of science and technology is still lagging behind, and many local pharmaceutical companies are more than capable of developing innovative biological drugs. Therefore, in recent years, when innovative drugs dominate the development, more and more local pharmaceutical companies have chosen to enrich their product pipeline portfolio through the way of license-in.
License-in cooperation is the mainstream
Influenced by COVID-19 Epidemic in 2020, the disease area with the most license-in programs is cancer (47%), accounting for nearly half of the total; followed by infection (23%). Cancer and infectious diseases account for more than two-thirds of the total number of transactions.
For many start-up biomedical companies in China, in the absence of their own powerful pipeline products, many will choose to cooperate with overseas companies to obtain exclusive product development rights in the Chinese mainland and even in the Greater China region, so as to make up for their own innovation capabilities The lack of; at the same time, many foreign pharmaceutical companies are also willing to cooperate with local biomedical companies in exchange for admission tickets to the Chinese market, and exchange the local influence and market familiarity of local biomedical companies through cooperation. Shorten the painful period of entering the Chinese market and reduce the risk of acclimatization.
License-out’s local innovative drugs go out of the world
With the accumulation of strength and the return of overseas talents, the number of domestic biomedical enterprises, focusing on independent research and development of innovative products has gradually increased, and they are actively developing innovative products that can optimize their own product pipelines. However, many innovative biomedical enterprises have not yet established mature sales and marketing teams, and are not familiar with overseas markets, so they choose to cooperate with foreign enterprises through the form of license-out to achieve the purpose of entering overseas markets.
In 2020, the license-out project is still the largest in the oncology field, with a total of 25 products. More than half of them include both development and commercialization rights. The main reason is to avoid early clinical risks and obtain capital at the same time.
Inventory in 2020: License-in and License-out transactions of Chinese pharmaceutical companies.
Breakthrough Transformation of Listed Product Types: Universal Innovation to Leading Innovation
With the increasing emphasis on innovative biomedical drugs in recent years, the types of innovation of local biomedical companies are also constantly changing, from new drugs of the me-too/me-better type to universal innovative drugs (Best-in-class), and then to clinical high clinical value.
Since the promulgation of the Opinions of the State Council on Reforming the Review and Approval System for Medicines and Medical Devices on August 18, 2015, the number of approved innovative drugs in China has continued to grow, mainly multinational innovative chemical drugs. In 2020, due to the impact of COVID-19 Epidemic, the number of approved innovative drugs has declined, but it is also the first time that the number of approvals for local and multinational innovative drugs is close. As of March 19, 2021, the number of approved local innovative drugs has exceeded the number of approved multinational innovative drugs.
However, in terms of biological innovative drugs, it is still dominated by multinational biological innovative drugs, and the research and development investment of local innovative biological drugs still needs to be strengthened. Among the approved innovative drugs, the number of innovative biological drugs is still a small number before 2018, and China’s innovative drugs are still dominated by chemical drugs; since 2018, the number of approved biological innovative drugs has increased rapidly, and the number has remained stable until 2020, but it is still dominated by multinational biological innovative drugs, with only 13 products of local biological innovative drugs.
Innovation portfolio under the trend of investment, mergers and acquisitions
In order to catch the train of the rapid development of China’s biomedical industry, many local biomedical companies that do not yet have sufficient research and development capabilities for innovative biomedical products prefer to invest in mergers and acquisitions to achieve portfolio innovation and diversified development of their own product pipelines. In 2020, there were 42 biopharmaceutical and cell and gene therapy mergers and acquisitions in China, with a transaction value of 35.58 billion yuan. Compared with 2019, both the number and transaction value have increased, highlighting the epidemic situation. The trend of mergers and acquisitions in the biomedical field has increased instead of decreasing. The main reason is that the overall medical industry has received a sharp increase in attention after the epidemic broke out. On the other hand, China’s biopharmaceutical market has rapidly increased its position in the global biological and pharmaceutical market in recent years.
At the same time, in China’s biomedical market, many domestic bio-pharmaceutical companies with strong capital have chosen to achieve product portfolio innovation and global business development through strategic cooperation with multinational pharmaceutical companies. This shows that a few Chinese bio-pharmaceutical companies already have the ability to create original products, and their products have successfully attracted the attention of multinational companies, elevating China’s bio-medical and pharmaceutical industry to the first echelon of the world’s innovative bio-pharmaceutical industry.
