China is currently the second largest pharmaceutical market in the world and was estimated in 2017 to be worth $122.6 billion. It was also the biggest emerging market for pharmaceuticals, with growth tipped to reach between $145 billion and $175 billion by 2022.
Due to its high potential for growth, China has also become one of the most important regions for global drug development, but historically the regulatory environment in China was considered highly challenging for the following reasons:
- The Chinese drug registration process differs from that in many other countries, in that new drug applications (NDAs) for all imported drugs, whether marketed overseas or not, are required to include data from local clinical trials;
- Major differences exist between international standards and some local products and manufacturers as far as quality is concerned;
- The time frame for review and approval of new drugs is longer than for most major countries;
- A lack of capacity in the regulatory body has resulted in a backlog of applications.
In August 2015, the China State Council released “Opinions on Reforming the Review and Approval System for Drugs and Medical Devices.” The intention of this reform was to promote a structural change and upgrade of the pharmaceutical industry and bring products already marketed in China up to international standards in terms of efficacy, safety and quality. These reforms have aimed to:
- Eliminate the existing backlog of registration applications
- Establish an environment for maximising the quality of generic drugs
- Create a framework in China that encourages research and development of new drugs in line with global development
- Improve the quality and increase the transparency of the review and approval process
China has a large pharmaceutical industry; it is estimated that there are between 4,500 and 6,000 manufacturers,2 with businesses based on generics, active pharmaceutical ingredients or traditional Chinese medicine. Most of the manufacturers are small- or medium-sized enterprises. There are, however, many manufacturing sites in China that meet global Good Manufacturing Practice (GMP) standards. Previous regulations meant that the Marketing Authorisation Holder (MAH) also had to be the owner of the manufacturing site. The reform has seen the separation of the activities of the MAH and the manufacturer; thus, the environment is now more flexible, allowing research companies to hold the Marketing Authorisation (MA) while contracting out the product’s manufacture to a third party.
Generic drugs available in China tend to have several approved manufacturers, and there is a sparsity of official guidance for the generics industry. The China Food and Drug Administration (CFDA)* has published “restricted” and “promoted” categories of generic drugs, suggesting that a more sound control and guidance of the generics industry is expected.
As there has traditionally been stiff competition in the generics arena, local Chinese companies have not been interested in developing innovative new drugs, and their current capacity for such development is low. In the recent past, these companies have relied on bioequivalence (BE) trials for generic drug registration, but with CFDA’s new requirements, they will need to start focusing on generic quality and efficacy. As such, any data considered inaccurate or incomplete will not be accepted, creating the potential for existing licenses to be withdrawn.