SHANGHAI - While China's most influential meeting - the eleventh National People's Congress of China - prepares to open its third session in Beijng March 5, pharma R&D leaders gathered in Shanghai to discuss the future of the pharmaceutical industry.

Pharmaceutical sales in hospitals within China reached $35.6 billion with a 27 percent growth rate in 2009, Brian Mi, IMS Health's Principal of China, told attendees at the Asia Pharma R&D Leaders conference March 4.

China was the largest contributor to global pharmaceutical market growth in 2009, second only to the U.S., said Mi. The country has kept a rapid growth during the last five years with an average growth rate of 22.8 percent, and it will become the third-largest pharmaceutical market as early as next year, he said.

Although emerging markets are growing rapidly, Big Pharma still faces a shortage of drugs in the future.

"The NCEs that hit the market were in niche categories or crowded markets, and did little to energize flagging pharmaceutical sales," Gregory Wiederrecht, Merck's VP and head external scientific affairs said.

He predicted that the big players will be reduced to seven in 2017 as more mergers and acquisitions occur. China and India will be among the top five global pharma markets in 2020.

"By 2020, emerging markets will contribute more than 50 percent to global pharma market growth, up from an expected 33 percent in 2011," Wiederrecht said.

After merging with Schering Plough, Merck's annual R&D budget is around $7-8 billion, according to Wiederrecht, and Merck is conducting 25 external preclinical research projects worldwide.

Merck's Licensing and External Research Director Jennifer Hu shared the company's partnering and licensing strategy in China with PharmAsia News in an earlier interview (Also see "Merck's Licensing & External Research Director Jennifer Hu On Choosing Partners In China: An Interview With PharmAsia News" - Scrip, 1 July, 2009.).

Unlike other pharmas that are diversifying, Roche will keep its focus on developing drugs and diagnostics, according to Hans-Joachim Bohm, Roche's head of global chemistry.

He noted that small molecules are still the backbone of the pharma industry and accounted for 99 percent of prescription drugs in 2008 and 85 percent of FDA approvals.

Although, Roche's acquisition of Genentech was the biggest biopharma deal of 2009 (Also see "2009 Biopharma Deals Of The Year: Roche/Genentech, Movetis' IPO, Elan/J&J" - Pink Sheet, 5 January, 2010.), 65 percent of Roche's R&D work still comes from small molecules, while protein therapeutics increased to 30 percent and RNAi accounted for 5 percent in 2008, according to Bohm.

"Lead identification is still a major challenge," he said.

At Roche, the ratio of internal research versus external chemistry research is 2 to 1, and companies are "moving forward with integrated projects to outsource."

And while Big Pharmas continues to outsource R&D to China, local pharma leader Simcere is also seeking external research partnerships.

"Over 50 percent of the research work of Simcere is from external [sources]," Wang Peng, Simcere's CSO, said during the conference.

Simcere established R&D centers in Beijing and Nanjing, and its third R&D center in Shanghai "is under construction and will open in the fall of this year," according to Wang.

The firm continues to invest heavily in biologics since it launched its recombinant human endostatin injection Endu in China in 2006. In 2009, Simcere acquired a 35-percent stake in biotech company Shanghai Celgen and a 51-percent stake in vaccine firm Yanshen (Also see "Novartis To Pay $125 Million To Acquire Chinese Vaccine Maker" - Scrip, 6 November, 2009.).

After Wang joined Simcere from Wuxi Apptec last May, the company has been aggressively exploring a new model of co-developing innovative compounds with Western pharmaceutical companies such as in-licensing OSI anti-cancer candidate OSI-930 (Also see "China's Simcere Signs Novel Licensing Agreement Covering U.S.-based OSI Pharmaceutical's Cancer Drug" - Scrip, 27 October, 2009.).

The company also just received China State FDA approval to manufacture and market GSK's antiviral Relenza in China (Also see "China State FDA Grants Simcere Record Fast-track Approval To Market Generic Relenza" - Scrip, 25 February, 2010.).

-Dai Jialing (j.dai@elsevier.com)

China Leads Pharmaceutical Growth In 2009: Asia Pharma R&D Leaders

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