Chinese Pharma in "Innovation"

Over the past decade, China's pharmaceutical industry has made drug innovation a top priority
.
Drivers include new healthcare demand, rapid market growth, and regulatory reforms
.
However, although China is currently the world's second largest pharmaceutical market, most Chinese pharmaceutical companies are still in the early stages
of innovative drug development.
Here, from the comparison of the R&D pipelines of China's top 20 pharmaceutical companies and the world's top 20 multinational pharmaceutical companies, we must be soberly aware of the gap
between China's pharmaceutical industry and the world in terms of innovation and R&D.

Let's start with approved innovative drugs, the chart below shows the number of
innovative drugs placed on the market by Chinese and multinational pharmaceutical companies over a 10-year period from 2012 to 2021.
During this period, many of the top 20 multinational pharmaceutical companies had more than 15 approved drugs, with a total of 313 placed on the market
.
By comparison, Chinese companies totaled only 31 approved drugs
during the same period.

Relatively speaking, the gap between Chinese and multinational companies in the number of clinical-stage products is small
.
Two factors have contributed to the rapid growth of
clinical-stage products in China.
First, traditional pharmaceutical companies, such as Jiangsu Hengrui and CSPC, are shifting their focus from manufacturing to investment in
innovative drug development.
It is worth noting that the number of clinical-stage products (66) of Hengrui Medicine has reached the average of
the top 20 companies in the world.
Second, leading innovative R&D-driven pharmaceutical companies, such as BeiGene, Fosun Pharma and China Biopharma, have become the backbone of China's pharmaceutical industry
.

In terms of treatment area, the top multinational pharmaceutical companies have more diverse product lines than Chinese companies, targeting a range of therapeutic areas
.
In contrast, many Chinese companies tend to focus on a single therapeutic area
.

In terms of R&D focus, oncology is a leader
in both China and multinational pharmaceutical companies.
Of the top 20 multinational companies, 12 have oncology as the largest therapeutic area in their clinical pipelines, accounting for 20-40%
of all drug candidates.
For Chinese companies, 9 of the top 20 companies have a proportion of oncology drugs exceeding 40%, with Baekje reaching the highest proportion of 83%.

Drug candidates in the fields of infectious diseases, neurology, immunology and respiratory are more common
in the pipelines of multinational companies than in Chinese companies.

From the perspective of innovative drug targets, almost all the top 20 multinational pharmaceutical companies have new MOAs
for more than 50% of the drugs in the pipeline.
In contrast, among the top 20 Chinese companies, only more than half of BeiGene and Innovent have new MOAs
in their pipelines.
For other Chinese companies, the share of new MOAs is less than 30%.

Finally, a four-quadrant two-dimensional diagram was used to assess each company's positioning
in terms of innovative R&D.
Nearly half (9) of the top 20 MNCs are in the upper right quadrant (a higher proportion of new MOAs and a higher number of clinical-stage products), while most of the top 20 companies in China are in the lower left quadrant (lower percentage of new MOAs and lower number of clinical-stage products).

The only exceptions are Baekje, Cinda and Hengrui
.

It can be seen that most of China's top pharmaceutical companies are lagging behind in investing in new targets or mechanisms, which may reflect a relatively conservative and risk-averse approach
in pursuing innovative R&D.
Nevertheless, the outlook for innovative R&D is likely to change
over time and strategic planning.

At present, there are two possible paths
for Chinese pharmaceutical companies to "innovate".
First, more companies can follow the example of biotech companies Baekje and Innovent by building on their existing R&D capabilities and strengths to expand original research
.
In the short term, this approach may not produce a large number of new product candidates, but over time it will allow companies to compete
with the global industry in terms of relative novelty of the pipeline.
Second, China's leading pharmaceutical companies, which have historically focused on generics, can leverage their ample funding and management capabilities to develop more novel drugs for less risky, more mature drug targets, thereby competing
with multinational companies in terms of the number of clinical-stage products.

While accelerating the transformation from a pharmaceutical manufacturing base to a competitive force in global pharmaceutical R&D, China's pharmaceutical industry is still in the early stages
of transformation.
This disparity in innovative R&D is likely to persist for at least the next decade, as the R&D capabilities of China's leading companies remain limited and a risk-averse R&D culture remains
.
To compete on the global stage, continuous investment, integration and structural change to improve efficiency are important potential solutions
.
In addition, on the policy side, China's drug regulatory reform emphasizes patient-centric clinical value, which should prompt companies to give more priority to the quality of
"innovation".

References:

1.
Innovation in the Chinese pharmaceutical industry.
Nat Rev Drug Discov.
2022 Oct 27