While China is making great strides in biomedical technology and business infrastructure, it can still be a daunting place to do business, especially from 6,000 miles away. Despite the challenges, life science companies are recognizing the immediate benefits and potential promise and are launching R&D, clinical, manufacturing and distribution operations in China.

The potential advantages for a biomedical company that establishes a business relationship or operations in China are three-fold:

Technology: New, cutting-edge compounds and medical devices are now being developed there, and the technology is unfettered by the U.S.'s conservative political climate;

Cost Savings: Drug development costs are 80% less than those in the U.S., and outsourced manufacturing of drugs and devices can be less than 1/10 the cost; and

Market Size: China's huge potential market for healthcare products of 1.3 billion people is aging more rapidly than any other country, and its middle class of over 250 million is projected to double to 500 million by 2020. The China pharmaceutical market today is about $11 billion total, of which Western drugs represent $8 billion and traditional Chinese medicine is $3 billion. While this doesn't seem large compared to the U.S. market of over $60 billion, it is growing at 17%+ CAGR. The medical device market, currently at about $4 billion, is experiencing similar growth.

Venture capitalists are also waking up to the potential in China, with over 30% saying it is a top target country for them. There are over 2,000 Chinese-foreign joint ventures in the biomedical sector, including major players like Roche , Novartis, GSK, Pfizer, Medtronic, Becton Dickinson and Inverness Medical, just to name a few. Most are significantly expanding their operations and are investing heavily in research and development to move beyond just manufacturing and distribution. China is encouraging and even subsidizing this migration, as it recognizes that to sustain its incredible historic growth rate of 9% per year, it must move its economy toward R&D.

In addition to China's direct investment in R&D, there are several other factors contributing to biomedical companies looking to China to leverage their research and development activities.

China is encouraging foreign investment in the life sciences by subsidizing foreign investment organizations and deregulating venture capital. (On a recent trip to Shanghai, I saw over 20 foreign-based VCs and investment groups housed in a single office building.)

Distribution is a huge challenge given China's geographic size (3.7 million square miles), regional segmentation and cultural diversity.

Drug development costs are not only 80% lower than those in the U.S., they are at least 50% less than most other OUS markets. The low cost of medical supplies services and animal and primate studies contribute to this.

There is a large population of highly-educated scientists trained at the more than 170 medical schools and 120 biomedical research institutes in China available at 1/10 the equivalent U.S. salaries.

China's State Food and Drug Administration [SFDA] has been rapidly moving toward global GLP/GMP standards and has created drug and medical device approval processes that parallel the FDA's clinical path.

IP protection is definitely improving, with patent laws now compliant with WTO/TRIPS requirements, increased legal enforcement supported directly by the SFDA, and an IP rights team from the USPTO now located in China.

Source:未知