Pharma Companies Looking to the East for CRO Prospects



Pharma IQ
03/16/2010

The emerging trend for pharmaceutical companies to increase their efforts to outsource research and development to Asia-based Clinical Research Organisations looks set to put China amongst the top CRO destinations within the coming decade.

Moves by the country’s State Food and Drug Administration to protect pharmaceutical IP rights has made China an attractive investment prospect for many domestic and global firms. Before revisions of the law, patent application was only available for the method of drug production, but has since been extended to drug compositions. The strategy to outsource R&D and clinical trials to China is intended to cut costs and boost the quality of products amid this uncertain economic climate, whilst also benefitting from this safeguard.

Penalties for patent infringement has risen to 400 percent of the illegal profit, with an inclusion of an RMB 200,000 damages fee, even if no profit has been made.

Dr. Samantha Du, CEO of Hutchison MediPharma Limited states that the integrated approach of companies can produce more efficient and productive techniques: "China's abundant human capital, lower business costs, and experienced returnees are allowing entrepreneurs to build Chinese biotech firms that are far more integrated–with significant capabilities in disciplines ranging from discovery research through clinical development–than their counterparts in the West.”

Dr. Fintan Walton Chief Executive and Founder of PharmaVentures in the UK added: “Options for funding in the region are becoming increasingly diverse against a backdrop of a global biotech funding downturn."

It is estimated that R&D spending by the world's major pharmaceutical firms in the next five years will see an annual growth of 3 to 4 percent, while R&D outsource spending will grow by 6 to 8 percent during this same period.

Meanwhile, the Chinese CRO market has reportedly experienced 18 percent growth, with the global CRO market seeing a 14 percent rise. Within this year, the global CRO market is expected to reach $36 billion, according to global research consultancy Frost & Sullivan.