Beijing cuts red tape to speed up the approval of medicines
For decades, Chinese patients have struggled to gain access to cutting-edge medicines, thanks to bureaucratic delays that have hamstrung drug development. Now a sweeping government overhaul of drug approvals is poised to change that.
Beijing announced new rules that will speed up approvals of medicines and medical devices, easing bottlenecks in introducing new treatments. The move is a growth opportunity for international and local drug makers.
It also parallels the acceleration of approvals by the US Food and Drug Administration.
Under China’s new rules, data from overseas clinical trials can be used for drug registration in the country. That removes the need for manufacturers to conduct additional tests in China after receiving overseas approvals and is likely to cut delays in the launch of new drugs by several years.
Faster approvals could boost revenue in coming years for Pfizer, AstraZeneca, GlaxoSmithKline and other multinationals that are expanding there.
China spent $116.7bn on medicine in 2016 and the market is second only to the US in size, according to researcher QuintilesIMS.
“For multinational and leading local innovative drug makers, the anticipated acceleration of approval will improve patients’ access to new medicine and increase revenues for pharmaceutical companies,” said Jialin Zhang, the senior healthcare analyst at ICBC International Research.
Foreign manufacturers control about a quarter of the Chinese pharma market, with the rest held by local players, Zhang estimates.
The changes were made public by the State Council, China’s cabinet, just days before a key leadership gathering in Beijing next week.
On October 18, delegates will gather for the 19th national congress of the Communist Party, a twice-in-a-decade shuffling of China’s political decks.
Shares of Chinese drug makers researching new medicines jumped on expectations that they will also benefit. Jiangsu Hengrui Medicine advanced 3.4% and Shanghai Fosun Pharmaceutical Group rose 2% in Shanghai on Monday. The Shanghai composite index gained 0.8%.
Due to insufficient innovation, the pharmaceutical and medical device products marketed in China fall short of international advanced standards, according to the State Council policy statement. The reforms were aimed at promoting restructuring and innovation in order to meet the public’s clinical needs, it said.
In the short term, foreign drug makers might be the prime beneficiaries because they were already starting to see quicker approvals for their drugs and they had deep pipelines of medicines in development, Zhang said.
INNOVATION LADDER
Most local drug companies were still climbing the innovation ladder. But Chinese rivals might be bigger beneficiaries over the long term, thanks to expertise in the local market and cheaper costs, he said.
For now, most international pharmaceutical companies get only a small fraction of their global sales from China. But they still count on the country to serve as a growth driver, given its vast unmet medical needs and a burgeoning middle class.
Local and multinational drug makers have for years struggled with delayed approvals in China as a surging number of applications and a relatively small team of government reviewers resulted in a regulatory backlog. The delays led Chinese patients to buy drugs from grey markets over the internet, or from bootleggers.
SHARES OF CHINESE DRUG MAKERS RESEARCHING NEW MEDICINES JUMPED ON EXPECTATIONS THEY WILL BENEFIT