Nine Industry Leaders Discuss the Future of China's Pharmaceutical Industry: Focusing on Innovation and Commercialization
September 25–27, 2021: The 6th China Pharmaceutical Innovation and Investment Conference was held in Suzhou Industrial Park. As in previous years, the conference invited leading scientists, prominent figures in financial investment, and renowned entrepreneurs from across China to attend. The event focused in depth on industrial policies, global pharmaceutical R&D trends, and developments in financing and investment, fostering discussions on new opportunities for the global pharmaceutical industry.
VCBeat engaged in direct conversations with select attendees at the conference, and key insights shared by these guests are excerpted below:
Song Ruilin, Executive President of the China Pharmaceutical Innovation Promotion AssociationThe interview focused on the current state of pharmaceutical innovation in China: “In terms of pharmaceutical innovation, China has achieved remarkable progress both historically and in comparison with other countries. However, we are still on the path of innovation and must remain vigilant; there is no room for complacency. The primary issue is the significant shortfall in original innovation, with many weaknesses in basic research, often referred to as ‘chokepoint’ technologies. Furthermore, our capacity for translational research is relatively weak, particularly among universities and other scientific institutions. Third, while China files a large number of patents, only 7% receive international authorization under the Patent Cooperation Treaty (PCT). Revenue from patent licensing lags behind that of South Korea, indicating substantial room for improvement.”
“We still have significant room for improvement in our regulatory approval and review capabilities. A report I heard yesterday stated that the two U.S. centers responsible for approving small-molecule and large-molecule drugs employ a combined workforce of over 5,000 people. In contrast, our Center for Drug Evaluation (CDE), which handles both categories, has only slightly more than 600 staff members. Although there has been substantial progress in the competence and professionalism of our reviewers, we are still some distance away from meeting global standards for drug approval. Therefore, while the path for pharmaceutical innovation in China is now open, it is not yet smooth enough. We need to continually broaden this pathway and enhance its quality to improve efficiency and flow. There remains a great deal of work ahead.”
Clinical treatment of gliomas has long lacked effective therapeutic options. In this field, Beijing Tiantan Hospital has spearheaded numerous research initiatives, gradually transforming glioma research from a neglected area into a highly active and prominent field of study.
Li Wenbin, Vice Chairman and Secretary-General of the Professional Committee on Clinical Research of Neurological Drugs under the China Pharmaceutical Innovation Promotion Association (CPIPA), and Director of the Comprehensive Oncology Treatment Center at Beijing Tiantan Hospital, Capital Medical UniversityHe introduced to us: “Since the 2011 international NCCN guidelines, every version has emphasized clinical trials for glioblastoma. This indicates that neuro-oncology experts worldwide are not fully satisfied with existing treatments and are pinning their hopes on clinical trials. Over the past decade, although surgical techniques and radiochemotherapy have improved, patient survival rates have remained unchanged. This is why there is such intense research focus on gliomas—currently, there are no curative drugs available. Furthermore, why has there been an explosion of activity in China? Because the Chinese government strongly encourages innovation, with both large and small enterprises engaged in new drug development. Many of the clinical trials I am currently involved in involve novel drugs, many of which are first-in-class original innovations rather than mere formula adjustments or incremental improvements.”
In recent years, Qilu Pharmaceutical has had several Class 1 new drugs on the verge of approval, continuously disclosed innovative collaborations, and established a systematic and clear strategic plan and layout for its innovative drug R&D direction and pipeline. As a major Chinese pharmaceutical enterprise, Qilu Pharmaceutical’s direction for innovation-driven transformation is becoming increasingly clear.
Regarding a large pharmaceutical company's choices in innovation,Li Yan, Annual President of the China Pharmaceutical Innovation Promotion Association (CPIPA) and President of Qilu Pharmaceutical Group“It is believed that: ‘What a company chooses to do or not do is primarily based on its own DNA; secondly, it should have clear ideas regarding its positioning, mission, and responsibilities; and thirdly, it must consider expectations for the future. When all these factors are combined, external evaluations of whether a company’s choices are right or wrong, or which ones are better, may not be accurate. Therefore, I believe we should respect every company’s decisions. I am convinced that these choices are made after thorough internal rational analysis, with no absolute good or bad, right or wrong.’”
“Transformation and innovation for large pharmaceutical companies are, in fact, long-term endeavors. Over decades of development, we have undergone numerous rounds of transformation and upgrading. At that time, however, the industry did not attract as much external attention, and there was certainly no widespread discussion about ‘innovation’ as seen today. Our efforts proceeded quietly. Every company has continuously ventured into new fields. The topics currently generating heated debate may either yield remarkable achievements in the future or entail many failures; such outcomes are an inevitable part of the high-quality development journey of China’s pharmaceutical industry, and we must remain confident in its future. In particular, Big Pharma companies with strong comprehensive industrial capabilities must shoulder the mission of shaping the industry’s future and will inevitably play a core role.”
A hot topic of frequent discussion in the pharmaceutical sector recently is the “chokehold” problem facing upstream industries. In the realm of innovative drug R&D, core production resources and supplies—such as biomedical information data storage, high-end experimental equipment required for basic research, reagents and materials, and laboratory animals—are all subject to varying degrees of chokehold risk.
Li Ning, CEO of Junshi BiosciencesWe need to view these issues rationally: “First, we must clarify the root causes of the ‘chokehold’ problems. For instance, the price of experimental animals, such as monkeys, has skyrocketed. This is a case of us imposing constraints on ourselves. As more developers enter the field, demand has surged from just ten companies to hundreds or even thousands, leading to resource shortages that effectively strangle our own progress. This current reality is evident in the capital market performance of CROs (Contract Research Organizations) specializing in experimental animals. On the other hand, certain imported products, such as components for single-use bioreactors, face supply shortages due to overseas factories not yet resuming full operations post-pandemic, reduced production efficiency, or supply chain disruptions. This situation differs from other industries, as the insufficiency in supply stems primarily from supply chain and production-related issues.”
In recent years, the development of innovative biologics has accelerated rapidly, with large-molecule biopharmaceuticals gaining widespread prominence. Some even argue that the scope for innovation in the small-molecule field is increasingly limited. Nevertheless, Ascentage Pharma has remained steadfastly committed to the small-molecule domain, achieving remarkable success, particularly in the field of apoptosis.
In this regard,Yang Dajun, Chairman of the Drug R&D Special Committee of the China Pharmaceutical Innovation Promotion Association (PhIRDA), and Chairman and CEO of Ascentage PharmaHe stated, “I believe there is a common misconception on this point. First, the rigid classification of biologics based solely on whether they are large or small molecules dates back two decades to the early stages of biopharmaceutical development. In reality, any therapeutic agent that employs biological methods to address human diseases can be considered a biologic; it is not limited to large molecules alone. Second, from a clinical and practical perspective, although large-molecule drugs have developed rapidly, small-molecule drugs still constitute the largest number and are the most widely used overall, retaining their irreplaceable value. Third, from the patient’s perspective, small-molecule drugs offer greater convenience due to their oral administration. Moreover, the field of small-molecule drugs continues to witness technological innovations. A prime example is PROTAC (Proteolysis-Targeting Chimera), which has addressed the challenge of targeting many proteins previously considered ‘undruggable’ by small molecules. Thus, ongoing technological advancements in the small-molecule domain are continuously refining and enhancing its development and breakthroughs.”
In August 2021, Jacobio strategically invested in the U.S.-based cell therapy company HebeCell, with a key focus on iPSC-derived NK cell therapies.
In this regard,Wang Yinxiang, Chairman and CEO of JacobioHe introduced, “In the field of oncology treatment, technologies such as small molecules, monoclonal antibodies, and bispecific antibodies have encountered efficacy bottlenecks for certain cancer types. Future efforts must focus on exploring combination therapies based on different mechanisms of action. Certain specific indications require cell therapy. As a first-generation product, CAR-T therapy incurs high treatment costs; the approved therapies in China are priced at 1.2 million RMB, which is already lower than in the United States. Moreover, CAR-T is a personalized product that cannot be mass-produced in GMP-certified manufacturing facilities like antibodies and small-molecule drugs, thereby contributing to its high cost. If cell therapy can be developed into an off-the-shelf, universal product rather than a personalized one—similar to other pharmaceuticals—it would offer a solution to the current challenges faced by CAR-T therapy. We are particularly encouraged by this technological trend. In the future, we aim to reduce the cost of cell therapy from 1.2 million RMB to under 100,000 RMB, making it affordable for more people and patients. This is the primary objective behind our investment in this company.”
China’s biopharmaceutical industry is increasingly expanding into overseas markets. Hua Medicine is also part of this outbound wave, albeit with a distinct focus on the “Belt and Road” Initiative and Southeast Asian markets.
In this regard, he explained: “Entering the markets of Belt and Road Initiative (BRI) countries and Southeast Asia is a strategic choice we made based on the Diabetes Atlas published by the International Diabetes Federation (IDF). Over the past decade, we have observed a significant shift. Initially, Europe, the United States, and Japan paid relatively more attention to diabetes due to their higher prevalence rates. However, in recent years, we have found that the disease is spreading rapidly in Southeast Asia and BRI countries; by 2030–2040, the number of diabetes cases in these regions may double. Our subsequent research has also revealed that many reports highlight the high-sugar, high-fat diets and rapid economic development in BRI countries and regions. Furthermore, these populations share closer genetic and ethnic backgrounds with us. Therefore, I believe these countries will benefit more quickly, allowing Chinese research findings and outcomes to be translated into practice more effectively.”
Certain domestically produced orphan drugs with significant therapeutic effects may be difficult to include in the national medical insurance coverage due to their prohibitively high prices. How, then, can these high-cost orphan drugs achieve successful commercialization after entering the market in the future?
Regarding the future commercialization of rare diseases,Xue Qun, Founder, Chairman and CEO of Canbridge Pharmaceuticals Inc.He stated, “There is a certain misalignment between the current medical insurance system and innovative drugs, as it still largely operates under a framework designed for generic drugs. Incorporating high-value medications, including those for rare diseases, into the national medical insurance payment system may not be realistic. For rare disease treatments, high cost is merely superficial; what matters more is efficacy. For instance, gene therapy can provide lifelong benefits from a single treatment. Therefore, the focus should not be on the price per injection, but rather on the lifetime cost. The true value of such therapies is reflected when the cost is amortized over the duration of patient benefit to determine the annual cost. Under current circumstances, I believe there are two viable payment models: one is a state-led alternative payment system specifically designed to cover truly innovative drugs, including many rare disease medications; the other is commercial insurance, which represents an area worthy of exploration. Crucially, the key issue lies in payment structure—specifically, the proportion borne by patients. The absolute price of the drug itself is less critical; what patients care about most is affordability. Both the reimbursement ratio and the absolute out-of-pocket amount are vital factors influencing the utilization of rare disease medications.”
Capital enterprises have a certain degree of influence in the decision-making process. In previous industrial development, some investors sought faster returns on investment, risk reduction, and accelerated timelines, thereby recommending that companies develop "me-too" innovative drugs with relatively lower risks and shorter development cycles.
Managing Partner, Lilly Asia Ventures: Fei ChenExpressing a different perspective on this phenomenon: “From our standpoint, we do not encourage companies to develop low-end, me-too innovative drugs at the expense of quality. As a fund, we place greater emphasis on long-term investment. Our fund has a very long lifecycle, spanning over a decade. Within such a long timeframe, we are able to empower companies to independently determine their product pipelines, leaving these decisions primarily to the scientists and management teams. Furthermore, from an operational perspective, we influence corporate governance through board representation rather than directly intervening in day-to-day operations. Capital is not a menace; rather, its investment horizon shapes its behavior. Funds with longer horizons tend to adopt more long-term-oriented decisions and strategies. From an industry perspective, this approach fosters greater stability and contributes more significantly to industrial development.”