Biomedicine "Westernization Movement" CRO ushered in huge market potential

Business News Agency July 25 After experiencing a decade of development, China's biomedical CRO (Contract Research Organization) market has experienced a period of rapid growth. Official think tanks and CRO practitioners have almost formed a consensus: CRO is an effective shortcut for China's biomedical industry to become bigger and stronger.

They expect that by undertaking the “Westernization Movement” of international pharmaceutical research and development tasks, the innovation capability of China's biopharmaceuticals will be greatly improved, and the internationalization of Chinese biopharmaceuticals will also take this as a breakthrough.

“The core value of CRO is to attract and cultivate high-end talent teams and a set of technology and innovation systems for the integration of international advanced pharmaceutical research and development for the sustainable development and escalation of China's biomedical industry.” Shanghua Pharmaceutical R&D Services Group Xie Wei, Vice President of Finance and Investor Relations said.

She said that CRO has provided an indispensable and efficient way for China's domestic biopharmaceutical industry to interact with international trends, needs, and rules, as well as docking and integration.

The two largest CRO companies in China, WuXi PharmaTech and ShangHua Pharmaceutical, have successfully achieved overseas listings. Analysts expect that in the coming years, many CRO companies will face relatively good growth potential, and the Chinese CRO market will continue to grow at a rate of more than 20%.

"Curve" Innovation

The CRO was first established in the United States in the early 1980s. In China, it was around 2000. Although the development time is not long, the significant impact that CRO may have on the creation of new drugs in China has been concerned by the industry and related government.

“The pharmaceutical contract research has developed very rapidly in recent years,” said Wang Changlin, director of the Institute of Industrial Economics and Technology Economics at the National Development and Reform Commission. “It may be necessary to use this as an entry point and breakthrough point to actively participate in the division of international value chains and gradually increase our Creativity."

"Very far-sighted, I strongly agree." Dr. Wu Yue, chairman of the China-US Corona Scientific Technology (Beijing) Co. China-US Corona Corps is a leading CRO company in the field of oncology drug development and has just completed a $28.8 million financing this year.

Wu Yue said that due to the long development cycle of new drugs, large capital investment, and high risks, new drug development is very difficult. By cooperating with foreign pharmaceutical giants through the CRO business, it is possible to learn from parents, cultivate a large number of excellent teams, and ultimately improve domestic pharmaceutical research and innovation capabilities.

As overseas R&D costs for local new drugs continue to rise, the attractiveness of China's emerging markets has become more prominent. Talent resources have been fully met, and multinational pharmaceutical companies are accelerating the pace of their R&D missions to China.

However, there are also industry insiders who say that it is unlikely that they want to obtain core technologies through CRO business. "Because foreign companies outsourced, they are still non-core things." "But they can certainly be bigger (medical industry)." "The core value of CRO industry development for China's biopharmaceuticals does not lie in obtaining foreign core technologies." Xie Tao said, "The core value of CRO is to attract and cultivate high-end talent teams, and to integrate a set of internationally advanced pharmaceutical R&D. Technology and Innovation System."

Xie Hao believes that foreign core technology is not the only killer of the pharmaceutical industry. With talents and innovation systems, and adequate systems and environment to ensure its role, China can fully develop a core that is global and has considerable market value. technology.

At present, the business of domestic CRO companies is mainly concentrated on the preclinical R&D and clinical research of new drugs. The main customers are from the European and American markets. According to data provided by Wu Yue, global pharmaceutical research funding is about 100 billion US dollars, pre-clinical research funding accounts for about 40%, and clinical research accounts for 60%.

Among them, about 10% of preclinical studies are outsourced, and 30% of clinical studies are outsourced. In other words, the pre-clinical research CRO market is about $4 billion, while the clinical research CRO market is $18 billion.

Although the market size of clinical research is larger than preclinical research, in China, pre-clinical CRO companies have grown faster than clinical research CRO companies.

"The two companies engaged in the preclinical research business were all listed in the United States, but none of the companies doing clinical research were listed. This data is very clear," said Xie Yanbin, general manager of Beijing Kevis Medical Consulting. Kevis is the first Sino-US joint venture CRO company in China and focuses on clinical research.

Rapidly growing Chinese CRO companies have gradually gained recognition from multinational pharmaceutical companies. Xie Xie revealed that in recent years, Shanghua Pharmaceutical has increasingly received the core R&D tasks of multinational pharmaceutical companies.

Great potential

A number of CRO industry people said in an interview that the Chinese CRO market will have further development in the future.

It is clear that the growth of China’s economy means that the people’s demand for medical care and medicine has increased, and China is a more attractive market.

“The market is here. Many tasks including R&D will come to China.” Xie Yanbin said, “As many jobs are transferred to China, the prospects for CRO will be good. This is a very logical thing.”

Xie Hao believes that the current penetration of new drug R&D services is still relatively low. In the next five years, more core businesses will be outsourced from international pharmaceutical companies to CROs, especially CROs in China.

Xie Xie said that many multinational pharmaceutical companies are also becoming more and more interested in Asian-specific diseases such as hepatitis and diabetes. It can be expected that these multinational pharmaceutical companies will invest more R&D expenses for these diseases, and more R&D tasks will be transferred to Asia, especially China.

In addition, leading pharmaceutical companies in China have begun to turn to innovative drug development, which will become the expected customers of the CRO market.

"There are more foreseeable orders for R&D outsourcing services." Xie Hao predicts that the growth rate of China's CRO market will be over 20% in the next few years.

However, the Chinese CRO market also faces challenges.

“CRO is relatively new industry in China. Unlike traditional service industry, it has high technology content, high talent requirements, and high capital investment. This industry also needs a lot of different policy systems and soft environment support from traditional service industries. These aspects are still There is some lag." Xie said.

"A big challenge is that there are too many CRO companies and sometimes the market is bad." Wu Yue said.

The consolidation of the industry is a trend that has become a consensus among CRO industry professionals. Xie Tao believes that there may be three or four pre-clinical CRO companies in China that are large in size, have complete technical capabilities, and have high overall quality, occupying a dominant position in the market.

However, in the near future, many small CRO companies will continue to exist. Some small CRO owners rely on the personal resources of past multinational pharmaceutical companies to get projects and rely on personal relationships to maintain the company's operations.

Xie Yanbin believes that the integration of several small CRO companies into a large CRO is a good way from a purely economic perspective, but the process of this merger will be complicated because it involves the personal ideals of small CRO executives. Corrected, so the specific operation "requires people's wisdom, people's maturity."

CRO industry professionals also hope that the country can do more targeted research on promoting the development of the CRO industry in fiscal and taxation policies, import and export, inspection and quarantine, technological innovation policies, and talent support policies.

Wang Changlin, director of the Institute of Industrial Economics and Technology Economic Research at the National Development and Reform Commission, said that to take advantage of China's market and research and development capabilities, strengthen domestic policy support, accelerate the expansion of the industry, and then extend it upstream and downstream, and eventually put the biopharmaceutical industry. Bigger and stronger.