China Is Increasing Its Share of Global Drug Development
- China’s biopharma industry is playing an increasingly important role in the development of innovative drug candidates for cancer and other diseases.
- International drug companies recognize the increased pace of innovation, and China has accounted for half of global licensing deals this year by dollar value.
- China is becoming an innovator in more complex treatments.
- Some 46% of all new drug molecules that began human trials in the first half of this year originated in Chinese biopharma companies.
Chinese biopharmaceutical companies are increasingly prominent in the development of new therapies, and they are capturing a growing share of global drug licensing deals, according to Goldman Sachs Research.
In the past, many pharmaceuticals developed by Chinese companies have been seen as “cost-effective fast followers” in the drug development pipeline, but that view is becoming outdated. Chinese biopharma firms are now furthering research across a range of drug development technology categories and developing novel treatments, write Ziyi Chen, who leads the China healthcare research team, and Salveen Richter, who leads the US healthcare research team. “Global pharma companies increasingly see China as a source of innovation,” they write.
About a quarter of innovative drug candidates now under active development originate from China. What’s more, 46% of new drug molecules that entered into human trials in the first half of this year are from Chinese companies, an increase from about 17% a decade ago. There has been a surge in licensing, with China accounting for about half of all global licensing deals, measured by dollar value, or 26% if measured by deal volume.
Chinese drug companies are focused on cancer, among other areas
Cancer therapies are a key area of focus for China’s biopharma companies, with 54 oncology-focused licensing deals completed year-to-date (as of early November), according to Goldman Sachs Research. In some areas, Chinese companies are particularly dominant. Over the past two and a half years, Chinese biopharma is responsible for about 70% of the global development of antibody drug conjugates (ADCs), used in targeted cancer therapies, and about 60% of bispecific antibodies, another important area in cancer drug development.
“China has emerged as an ADC hub,” Chen and Richter write. In addition to tracking companies that are developing ADCs and multi-specific antibodies, they are monitoring companies working on RNA interference, which is a way of silencing specific genes before they produce harmful proteins, and cell therapy treatments.
Our analysts also note that China’s biopharma industry is increasingly active in areas such as inflammation and immunology, and in metabolism and obesity, including in the development of GLP-1 drugs for diabetes and weight loss.
The growth of China’s pharma sector
The pivot of China’s biopharmaceutical industry from generics to innovative treatments has been helped by government regulatory reforms and other developments over the past decade.
The government changed rules so that small biopharma companies could innovate without owning manufacturing plants, and it streamlined reviews and approvals. Notably, in 2017, China joined the International Council for Harmonisation, which maintains globally accepted guidelines for drug development.
Over the same timeframe, China’s healthcare system has shifted spending away from generic drugs and toward innovative therapies, Chen and Richter write. Changes to listing rules for the Hong Kong Stock Exchange also made financing easier for early-stage biotechnology companies.
In areas where molecular engineering capabilities are crucial, China’s biopharma companies may find a particular advantage, the researchers indicate. “We believe engineering expertise will continue to accumulate for China players, given cost-effective early-stage research and development and the extensive exploration of drug component combinations,” they write.
While, to date, the US Food and Drug Administration has only granted limited approvals for innovative drugs from China, several of them have changed treatments for specific diseases. For example, a drug developed in China is considered best-in-class for patients with relapsed or refractory chronic lymphocytic leukemia.
Chen and Richter also cite factors such as streamlined decision-making and a culture of strong fundamental research. Another important factor is a highly concentrated ecosystem, in which, for example, one local research park might boast 700 contract research organizations and biotech collaborators.
On a recent visit to a number of China’s biopharma companies, our analysts observed how quickly they could move through the drug development process, as a result of all these regulatory advances. “Chinese biotech companies have demonstrated a remarkably rapid development pace,” they write.
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