China's pharmaceutical market is expected to be worth over US$160 billion by 2023, which is around 30 per cent of the total global market - according to market research firm Daxue.
Pharmaceutical companies seeking to develop, manufacture and sell new pharmaceuticals in China should benefit from new regulations that came into effect on 1 July 2020.
Streamlined approvals - including for urgently needed drugs - may benefit Australian companies looking to expand into China. Faster turnaround times for clinical trial applications are likely to expand opportunities to conduct pharmaceutical research and development (R&D) in China.
Four new channels for drugs approval
Following several years of public consultation, two new sets of regulations have been adopted under the newly amended Drug Administration Law. The two areas that have been substantively amended are the Drug Registration Regulation, and the Drug Manufacturing Supervision Regulation.
One of the highlights of the new regulations is to make new treatments more readily available by introducing four fast-track channels for drug approval and listing. These four approval channels are: 'breakthrough therapy approval'; 'conditional approval'; 'priority review and approval'; and 'special review and approval'.
On 8 July 2020, the National Medical Products Administration (NMPA) announced how these updated approval channels would work. Overseas companies can utilise these new channels to licence and sell drugs that treat life-threatening conditions. In addition, companies can also use the new approval channels for drugs that meet an urgent public health need. They also apply to drugs that are urgently needed to treat communicable diseases or paediatric diseases, or vaccines that can help respond to a public health emergency.
Faster turnaround times
One of the practical effects of the new regulations will be faster approval turnaround times.
- The application review time for drugs submitted for priority review and approval is shortened to within 130 days.
- The approval period for overseas drugs that meet urgent clinical needs and target rare diseases through the priority review and approval channel has been shortened to within 70 days.
Approval processes have become more rapid and streamlined in recent years. The number of pending drug registration applications dropped from nearly 22,000 at the peak of September 2015 to 3,440 by the end of 2018. A significant proportion of newly-approved drugs in recent years have been produced by overseas companies.
The updated Drug Registration Regulation consolidates recent regulatory changes allowing for greater acceptance of scientific data gathered outside of China as part of a drug approval submission. It should be noted, however, that overseas applicants should appoint a business entity in China for drug registration.
Expedited clinical trial applications
Laws governing clinical trials have also been amended. The period for reviewing applications for clinical trials has been shortened from 12-18 months to within 60 days. Once the NMPA accepts an application for a clinical trial, the application is deemed to have been approved if no negative comments are received within the 60-day period.
China was becoming increasingly popular as a clinical trials venue before the new rules were promulgated. In 2015 - when the regulatory consultation was announced - just 70 applications for clinical trials were submitted. This increased to 211 in 2019.
Ability to outsource production
In-country manufacturing is also becoming easier. The new Marketing Authorisation Holder system (MAH) - in force since in December 2019 - allows overseas companies to outsource pharmaceutical production to a Chinese contract manufacturing organisation. Previously, only the manufacturer could receive approval for a new medicine.
Changes to reimbursement
Lastly, the regulatory changes should also make it easier for overseas companies to compete in the Chinese pharmaceutical market.
In April 2019, China's National Healthcare Security Administration advised that the National Reimbursement Drug List (NRDL) will be updated each year as opposed to every five years. This should have the effect of increasing the number of innovative, or 'novel' drugs available to patients in China, while significantly reducing the financial burden on patients.
Increased opportunities for Australian biotech and drug companies in China
The new rules should significantly ease entry requirements for overseas pharmaceutical companies wishing to sell treatments in China. The new regulations may also ease regulatory burdens on Australian biotech companies that want to explore opportunities to conduct simultaneous R&D projects in China.
One option is for Australian pharmaceutical and biotechnology companies to form a commercialisation partnership with a suitable partner. Australian companies involved in clinical trials services may also consider running clinical trials in China in conjunction with trials in Australia.
