Chinese Pharma: A Global Health Game Changer?
Friday, April 3, 2015
The twenty-first century shift in geoeconomic power toward Asia has also spurred a rebalancing in global pharmaceutical research and development (R&D) investment toward emerging economies. China is currently the world’s second-highest investor in R&D and is poised to overtake the United States in R&D spending by 2023. Determined to become a world leader in the pharmaceutical sector, China spent $1.17 billion on promoting life and medical sciences in 2012—nearly ten times its 2004 level of investment. With U.S. funding for medical research on the decline, the surge in Chinese funding has prompted many policymakers to ask if the country’s pharmaceutical industry could be the next game changer for global public health and access to medicine (ATM).
China’s Pharmaceutical Boom
During the Mao era (1949–76), China’s weak R&D capacity and decades of autarky thwarted its pharmaceutical sector from making any direct and substantial contribution to global health. For example, even though Chinese scientists discovered artemisinin-based therapies (the most effective antimalarial drug) in the 1970s, it wasn’t until the 1990s that the drugs were marketed in other parts of the world through multinational pharmaceuticals such as Novartis and Sanofi.
Economic reforms, starting in the late 1970s, presented new opportunities for the pharmaceutical sector. With its tremendous revenue-generating potential, the government actively fostered the industry in pursuit of economic growth. Between 1980 and 1999, the number of pharmaceutical firms increased almost tenfold, from 680 to 6,357. By the 1990s, China had built a relatively robust pharmaceutical sector. As pharmaceutical firms began to proliferate, the state made serious attempts to regulate and weed out unqualified manufacturers. By May 2005, nearly four thousand pharmaceutical makers, or 78 percent of firms, had been certified as implementing good manufacturing practice (GMP). Meanwhile, at the urging of the state, major Chinese pharmaceutical firms began setting up subsidiaries and local distribution channels overseas, while playing an active role in China’s health-related development assistance to other countries.
In 2011, China started to pursue an explicit policy mandate to develop its domestic life sciences and pharmaceutical industries. Between 2011 and 2015, the state invested a total of $1.1 billion in new drug development. China’s ambition to become a global player in the pharmaceutical industry was buttressed by a growing number of overseas returnees who had received training in health and life sciences outside of China. Of the overseas returnees that the Beijing municipality attracted between 2009 and 2012, for example, 40 percent had expertise in biomedical science.
Implications for Global Health
China’s advancement in the pharmaceutical sector has profound implications for global health, especially in its potential to open up access to affordable life-saving drugs. With an annual output of 800,000 tons of pharmaceutical ingredients, China became the world’s leader in global active pharmaceutical ingredient (API) manufacturing and exports in 2012. Its ability to produce and supply APIs is of critical importance to the global generic drug market, as well as to formulators in emerging economies (e.g., India) and the developed world. APIs from China have also been essential in the fight against major infectious diseases such as malaria and avian flu. Until recently, China had been the primary supplier of shikimic acid, the base ingredient in the antiviral drug Tamiflu (a flu medication recommended by public health organizations to combat a possible flu pandemic).
Chinese pharmaceutical leaders, however, are not just content to be API suppliers. Tapping into China’s low-cost, skilled labor, contract research organizations (CROs) providing research support to the pharmaceutical, biotech, and medical device industries have also proliferated. Currently, there are about three hundred CROs in China providing preclinical and clinical research services to multinational pharmaceuticals. These CROs signal China’s innovation potential in pharmaceutical research and development. Among the most well-known is WuXi PharmaTech, which has more chemists than any other CRO in the world.
Source: Council on Foreign Relations (link opens in a new window)
- Education, Health Care