Biomedicine with Investment Frenzy
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With unlimited imagi- nation， possibility and competition， the biomedicine industry is rising fast in China， along with the increasing appeals for the investors.
According to the data from GlobalData： the Chinese prescription medicine market is going to increase at the 26% annual compound growth rate and will be up to US$315 billion by 2020. In 2012， the market value was only US$48 billion， meaning that there is a great space for improvement.
The Rising investment
The US$1-billion investment was generally considered the resort of Xi’an Janssen to counterstrike.
As one of the oldest pharmaceutical companies in China， Xi’an Janssen， a subsidiary company under Johnson& Johnson （J&J）， is thought to be the most experienced in the biomedicine. But recently it seemed to meet some trouble. In October 2013， its arm of OTC was integrated into Shanghai J&J， another subsidiary company of J&J in China. Previously， the OTC business has been the pillar of Xi’an Janssen for 30 years as it could contribute half of its revenue.
People thought lowly of Xi’an Janssen’s outlook from then on. But the new adjustment came as quickly as the change. J&J invested US$1 billion setting up a new manufacturing base in Xi’an and integrated it into Xi’an Janssen. The new base is used for the brand-new vaccine sector， one of the most investment-worthy sections in the biomedicine industry.
Before J&J， Novartis， GlaxoSmithKline， Merck and Sanofi have already stirred intense competition in that field.
In spite of the competition， the data about the growing market is more exciting.
The public data shows that the value of vaccine market in the world has been higher than US$20 billion. It is expected that the global vaccine market is going to increase at a 14% annual growth rate in the next few years. The total value of the global vaccine market
is going to reach US$35 billon in 2014.
China is witnessing the same thing too. China Investment Consultancy said in its Analysis and Outlook Report in the Biomedicine Industry of China in 2011-2015 that there are now 36 enterprises producing vaccines in China. They can produce the vaccines against 27 kinds of diseases and the total output amounts to 1 billion dosages. It is estimated that the vaccine market value of China is about 5 billion yuan and will increase to 12 billion by 2022 as long as it can keep the current 20% annual compound growth rate.
On the same day when Xi’an Janssen announced the project， Merck， one of the largest pharmaceutical companies in the world， also unveiled its investment project worth 650 million yuan in China.
“This is the biggest investment we have agreed upon in the emerging markets in recent years. The new project is going to be used for the bio generic drug and will be the second largest manufacturing base for Merck Serono， involving the drugs for diabetes， tumor and infertility，” said Edward Allan Gabor， general manager and executive director of Merck Serono China.
In addition to that， Merck Serono just signed two contracts with BeiGene Biotech Co.， Ltd （BeiGene） one week before the investment. The two parties will work together to develop two kinds of bio-drugs to cure the cancer and they are willing to share the achievements.
Even though Merck refused to tell the detailed value of the contracts， they indeed include a clause that BeiGene will be given the maximal revenue of 170 million euros or the commission accounting for at least 10% of the net sales should the two drugs get significant clinic or commercial progress in China or the other areas of the world. This could show that the value of the contracts is amazing.
“I have considered many factors. Apart from the advantages from products， we also hope to make use of the distribution and marketing advantages of BeiGene to bring the two drugs to the market as quickly as possible，” Gabor said.
A similar deal also happened between Roche and Hangzhou， Zhejiangbased Ascletis six months ago. The former is the largest tumor drug market in the world while the latter is an emerging biomedicine company in China. Ascletis will invest in and take charge of the development， registration and production of Roche’s relevant drugs in China （including Hong Kong， Taiwan and Macau）. Roche will provide Ascletis periodically with the “mileage expense”for the support of drug development and commercial spread.
Meanwhile， the cooperation also extends into the link of sales after the drug’s appearance in the market and thus Ascletis is going to have the commission from the sales of drugs.
The R&D-based Pharmaceutical Association Committee （RDPAC） under the China Association of Enterprises with Foreign Investment reported that it took 4-8 years longer to have a new drug sold in the Chinese market than in the other countries. Such a long time for market access will reduce the valid patent period of innovative compounds. When the policy is hard to be changed in a short while， foreign drug companies successively took various ways to“shorten the period” in order to gain the upper hand in the biomedicine market of China.
The Policy Guideline
“The data we know of shows that the total profits of medicine manufacturing amounted to 22.57 billion yuan in the third quarter of 2013， up 13% over one year before. Compared with other industries， the profitability is very prominent，” said Tan Sui， head of the Second Office of Emerging Industries under the National Development and Reform Commission （NDRC）.
As the key part of the emerging industries， the biomedicine is drawing an increasing amount of attention from various parts. In 2012， the Chinese government listed it as one of the emerging industries requiring special attention.
In October 2013， the State Council officially issued Several Opinions on the Promotion of Healthcare Industry， putting forward the goal of basically building a healthcare system that covers the entire living period， has abundant contents and follows a reasonable structure. The entire value of the healthcare industry amounts to 8 trillion yuan. This keeps pushing up the possibility of the development of biomedicine.
“200 new biotechnologies have just been approved， which can be related to the production of more than 900 hundred biomedical dosages. Among these drugs， there are 300 anti-tumor drugs and 170 anti-contagion drugs. The value the biomedicine creates each year reaches US$153 billion. In the U.S.， there were 45 companies going public in the NASDAQ in 2012，” said Zhao Yajun， director of the International Communications Center of China Medicine.
The data from the government shows that the NDRC and Ministry of Finance have already launched the plan for drawing investment into the biomedicine industry. By now， it has set up 141 venture investment funds with the total value of 39 billion yuan. 28 VC funds were allowed to be established in the biomedicine industry. They raised 7.36 billon yuan and have fermented a group of innovative startups.
Meanwhile， the Ministry of Finance， the Ministry of Industry and Information Technology， and the Health and Family Planning Commission developed the special project of gene pool to provide support for the international development and relevant industrial progress of key and big projects.
With the policy marching ahead， the enterprises are enthusiastic in the investment.
Shanghai Pharmacy just announced the plan of acquiring 100% stakes of Shanghai Jiaolian Pharmaceutical Company. The latter is a company specializing in the development of Antibodydrug conjugates. Its main products have good effect against the breast cancer. It is expected to be the generic drug for Herceptin， the anti-breast cancer drug developed by Roche. In 2010， Herceptin got the sale of over 800 million yuan in the Chinese market.
Local governments are excited as well. On December 11m， 2013， the Alliance of Bioengineer and New Medical Industry of the Zhongguancun National Independent Innovation Sample Area was founded. On the same day， seven co-coordinated innovation and international technology transformation platforms signed the contracts and became members of the Alliance.
According to the data， Zhongguancun National Independent Innovation Sample Area realized the total income of 24.016 billion yuan from the bioengineering and new medical industry in 2012， up 77.2%.