AstraZeneca Deepens Commitment to Traditional Chinese Medicine with Chengdu Innovation Base

AstraZeneca Boosts Investment in Traditional Chinese Medicine

Recently, at the Boao Forum for Asia Annual Conference 2022, Chengdu held an online signing ceremony with AstraZeneca for the establishment of AstraZeneca's Traditional Chinese Medicine Innovation Base, marking the official settlement of AstraZeneca's innovation base dedicated to the field of traditional Chinese medicine in Chengdu.

This is another significant attempt by AstraZeneca in the traditional Chinese medicine industry after reaching a promotion cooperation agreement with GreenLeaf Group for Lipid Health.

On April 27, AstraZeneca China stated that the cooperation with Chengdu High-tech Zone to jointly build a traditional Chinese medicine innovation industry base will help AstraZeneca focus on the modernization and innovative development of traditional Chinese medicine and promote international experience exchange.

Public information shows that the base will feature modernized traditional Chinese medicine (TCM) industry, relying on the guidance of academician experts in scientific research transformation and industrial development. It aims to create a one-stop TCM incubation industry empowerment platform in Western China, including new R&D institutions centered on academician experts, a modern innovative TCM industry service platform, a one-stop TCM clinical R&D transformation platform, and a modernized TCM commercial platform.

AstraZeneca China stated that Guangzhou Haibotuo Company, a Traditional Chinese Medicine CRO led by Tigermed, is the strategic cooperation partner of the park. AstraZeneca and Haibotuo will collaborate to create a full-chain, one-stop service including clinical research, evidence-based medicine and real-world study top-level design, and clinical project operations, with a focus on building the first benchmark case for modernizing Traditional Chinese Medicine through real-world research.

In 2019, AstraZeneca announced an agreement with Luye Pharma Group, officially acquiring the exclusive promotion rights for the lipid-lowering drug Lipidcare Capsules in mainland China. This marks the first time a large multinational pharmaceutical company has gained the rights to promote an innovative traditional Chinese prescription medicine自主研发的创新中成处方药 developed by a Chinese pharmaceutical company in China.

This participation in the construction of the Traditional Chinese Medicine (TCM) innovation industry base shows that AstraZeneca is no longer satisfied with merely being involved in the promotion of proprietary Chinese medicines, but is further penetrating into the research and development process of such medicines.

However, AstraZeneca China stated that at the same time, its commercial platform will continue to seek the next traditional Chinese medicine product for comprehensive commercial agency cooperation, further expanding the incubation of key varieties in traditional Chinese medicine. AstraZeneca plans to introduce more high-quality proprietary Chinese medicines in therapeutic areas it has long focused on, such as heart failure, stroke, and chronic kidney disease.

Multinational pharmaceutical companies are increasingly investing in the traditional Chinese medicine industry

In fact, AstraZeneca is not the first multinational pharmaceutical company to enter the traditional Chinese medicine industry. According to reports, GSK, Sanofi, and Boehringer Ingelheim have also ventured into the traditional Chinese medicine sector.

As early as 2010, Boehringer Ingelheim had publicly stated that it might enter the traditional Chinese medicine field through mergers and acquisitions.

In 2014, Boehringer Ingelheim partnered with Guangzhou Pharmaceutical Holdings to promote the latter's pediatric Qixing Tea Syrup; In 2015, Boehringer Ingelheim announced the official launch of its first OTC traditional Chinese medicine product, Leketong.

Industry insiders believe that multinational pharmaceutical companies are entering the Traditional Chinese Medicine (TCM) sector mainly to seek breakthroughs in revenue growth, amid the approaching patent cliffs and increasing performance pressure from bulk procurement.

In addition, Shen Yong, chairman of Beijing Shengshi Kanglai Chinese Medicine Marketing Planning Company, said that in fact, multinational pharmaceutical companies and the Chinese medicine industry have long had intricate connections. For example, Ginkgo biloba leaf products like Germany's Ginaton were first promoted by foreign pharmaceutical companies with the concept of "improving microcirculation." This led to a situation where "the flower blooms inside the wall but its fragrance is enjoyed outside," resulting in high-quality Ginkgo biloba-based traditional Chinese medicine products such as Kangenbei’s and Yangtze River Pharmaceutical’s Ginkgo biloba leaf capsules and Shuxuening. The market capacity for these products has also continued to expand.

From a realistic perspective, in recent years, China has been increasingly supportive of the traditional Chinese medicine (TCM) industry. Especially after the promulgation of the "Traditional Chinese Medicine Law" in 2017, proprietary Chinese medicines have enjoyed certain policy benefits in market competition. The market potential for proprietary Chinese medicines is significant, which itself holds a certain level of attraction for multinational pharmaceutical companies.

On December 30, 2021, the National Healthcare Security Administration and the National Administration of Traditional Chinese Medicine issued the "Guiding Opinions on Medical Insurance Support for the Inheritance and Innovative Development of Traditional Chinese Medicine"; On March 29 this year, the General Office of the State Council issued the "14th Five-Year Plan" for the development of traditional Chinese medicine, which clearly defined the development goals, tasks, and key measures for traditional Chinese medicine during the "14th Five-Year Plan" period, continuing to support traditional Chinese medicine as always.

From the results, multinational pharmaceutical companies have certain advantages in developing the traditional Chinese medicine industry and have achieved corresponding results.

Data shows that since AstraZeneca China gained exclusive promotional rights for Lipidokang in 2019, by the end of 2021, Lipidokang achieved nearly 120% growth. Its market share in the overall statin and lipid-lowering traditional Chinese medicine sector rose from 1.3% to 5.6%, making it the third-largest lipid-lowering brand.

Shen Yong pointed out that multinational pharmaceutical companies have several advantages in entering the traditional Chinese medicine industry. First, they possess financial strength, as they are generally more well-funded compared to local pharmaceutical companies. Second, they benefit from strong brand recognition, with their product quality typically enjoying higher acceptance. Third, they hold a sales advantage due to their large sales teams. Lastly, multinational companies have access to expert resources. Having operated in China's pharmaceutical market for many years, foreign companies demonstrate strong academic promotion capabilities and enjoy high recognition among experts at China’s top-tier tertiary hospitals, which facilitates relatively higher acceptance when promoting their products.

Product Selection is Key

Traditional Chinese medicine (TCM) has long been controversial due to the lack of sufficient clinical data to confirm the efficacy and safety of most medicines, which has hindered market development. After multinational pharmaceutical companies enter the TCM industry, it is expected to further promote the modernization of TCM, and also facilitate TCM going global and developing internationally.

However, multinational pharmaceutical companies developing the Traditional Chinese Medicine (TCM) industry still need to face competition from local TCM enterprises in China, and choosing the right products is crucial.

AstraZeneca stated that it has multiple requirements for its partners and investment projects, one of which is that the therapeutic areas must be relevant and complementary to AstraZeneca.

Shen Yong pointed out that multinational pharmaceutical companies may first lean towards mature products when choosing TCM-related investment projects, such as the Liuwei Dihuang Pills market, Wuji Baifeng Pills, etc. Although the markets for these well-known products are already relatively mature and highly competitive, the public's recognition and acceptance of these products are also relatively high, providing a solid market foundation.

Another product that is likely to be favored by foreign enterprises is one with high technological content, such as the mulberry twig total alkaloid tablet approved for marketing last year. The scientific research foundation of this product is very comprehensive, and it is a new traditional Chinese medicine (TCM) drug newly approved by China in 2021. The mulberry twig total alkaloid tablet has excellent blood sugar-lowering effects, and the market capacity for the product is also substantial. Similar products may become another choice for foreign companies entering the TCM market.

In addition to focusing on product selection, when foreign enterprises enter the field of Chinese patent medicines, their promotion models must also differ from previous chemical drug promotion methods.

First, the lifecycle curve of traditional Chinese medicine (TCM) products is different from that of chemical drugs. Due to their clear composition and well-defined mechanisms, chemical drugs often experience rapid sales growth at the beginning but have a relatively short lifecycle, rarely exceeding 10 years, with very few lasting over 20 years. Statistics show that there are currently no more than five chemical drugs that have been sold for over 100 years.

However, Chinese patent medicines are different. During the initial stage of product promotion, sales growth may be relatively slow, but their life cycle is very long. Some medicines can be sold for 30, 50, or even 100 to 200 years. For instance, products like Wuji Baifeng Pills and Angong Niuhuang Pills have been popular for hundreds of years and are still recognized by the market today.

Secondly, in terms of product promotion, chemical drugs and traditional Chinese medicine (TCM) also have different characteristics. The "three unclears" related to TCM—composition, mechanism of action, and traditional Chinese medical theory—have long existed, making it more difficult for Western medicine doctors to accept.

Therefore, foreign-funded enterprises that want to promote Chinese medicine well must systematically train their existing teams and build a marketing team that "knows how to promote Chinese patent medicines," even if they have substantial financial resources and team advantages. Only then can they be considered truly successful.

Editor: Qijin

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