Magazine Article | July 31, 2014

The Next Hotspots For CMO/CRO Growth In China

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By David Friesen, managing editor, China-Britain Business FOCUS, and copy editor, LittleStar Magazine

A number of forward-thinking development zones (i.e., regions) in China are now investing more into creating and fostering CROs and CMOs. This makes sense considering these types of organizations are usually associated with innovation, and China already has an environment fit for innovation with its large population and corresponding ability to test and enhance new ideas. In addition, through the “Healthy China 2020” program, the country is making biomanufacturing a major priority.

Overall, China’s share of the CRO and CMO market globally is predicted to grow from its present 7 to 10 percent to near 20 percent in the next three to four years, according to a report by the Chemical Pharmaceutical Generic Association (CPA), an organization representing manufacturers of generic APIs in Italy. Much of that growth is likely to come from China’s top industrial zones where innovation and R&D are key areas of emphasis.

The proximity of firms and advanced infrastructure at such zones allows companies to collaborate and develop research much more effectively than on their own. One example is the Tianjin Economic-Technological Development Area (TEDA), which has been ranked China’s top development park by the Ministry of Commerce for every consecutive year since 1998. The Tianhe- BGI Bioinformatics and Computing Joint Laboratory, launched in the Binhai New Area in 2012, is another success story. This cross-disciplinary joint venture uses the Tianhe-1A, the world’s second-fastest supercomputer, to research biological sciences, completing human genomics association studies in 3 hours as compared to the previous time of more than 300 days.

Fostering The Value Of Partnering/Collaboration
To further CRO and CMO growth in China, it’s imperative to foster synergy between firms in industrial clusters. That’s why TEDA continues to evolve, creating specific areas for CRO, biologics, plant medicine, generics, and medical equipment. This clustering strategy also creates a more integrated approach to the local market, which is a trend that Accenture notes is becoming more popular. “An approach focused around clusters helps a company develop a more targeted, therefore more customer-centric, strategy,” says Anne O’Riordan, global industry managing director for Accenture’s Life Sciences practice.

Developing such links isn’t always easy, however, which is where industrial zones such as TEDA come in by helping to forge closer ties between firms and provide the infrastructure for CROs and CMOs to thrive. For example, thanks to TEDA’s brokerage, CRO and CMO firm AsymChem successfully got $47 million (US) in loans from the China Development Bank. This helps to trigger a radiating effect in the area, attracting more businesses and further increasing links.

According to Li Hongliang, deputy general manager of TEDA Science and Technology Development Group, “What is important for pharma companies to survive and thrive not only consists of top-level ‘hardware facilities’, but more importantly, a holistic approach in support programs.” He further elaborates that the TEDA administrator provides “all-cycle” support to the pharma tenants, with services such as licensing, financing, talent support, marketing and business development, legal, and environmental policy compliance.

Big Growth Expected
TEDA’s ecological-circle strategy has allowed for some of the most innovative links and drug research collaboration between foreign and domestic firms anywhere in China. For example, in May 2012, TEDA tenant company CanSino started to collaborate with Maryland-based Aeras on the development of CanSino’s tuberculosis vaccine candidate Ad5Ag85A. With TEDA’s support, these novel vaccines are now beginning to near clinical development, showing how far China’s contract pharma industry has come in the last few years through the help of forward-thinking industrial parks.

In 2013 alone, more than 10 new drug discovery projects at TEDA were selected as nationally significant R&D projects, and another 10+ ventures obtained clinical trial approvals. By 2015, TEDA’s biomedical industry output will reach an average annual growth of 25 percent. There are expected to be more than 20 firms with annual output value of $79 million (US) or above, 30 R&D institutions, and over 150 new- and high-tech biopharma companies. And with R&D expected to account for more than 10 percent of total revenue, further collaborations and innovations are surely on the way.

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