China's New Drug Creation Helps Strong, Doesn't Help Weak, Accelerates Industry Reshuffling
Although Chinese pharmaceutical companies face challenges in basic research and compound diversity, there remains significant potential for innovation. This includes opportunities in generic drug development, compound drug formulation, and advancements in traditional Chinese medicine. To support this growth, the state must provide assistance in areas such as funding, land, policies, and tax incentives. Moreover, cultivating a sufficient number of skilled professionals is essential to drive progress.
On December 26, 2007, the State Council approved three major national science and technology projects, including the "Major New Drug Creation" initiative. This project aims to address key health challenges by developing innovative drugs with independent intellectual property rights, ensuring affordable, safe, and effective treatments for the public.
Ye Zuguang, general manager of Beijing Zhongyan Tongrentang Pharmaceutical Research Co., Ltd. and executive deputy director of the National Engineering Center for New Drug Development of Traditional Chinese Medicine Compound, emphasized that the goal of the new drug creation project is to enhance the innovation capabilities of Chinese pharmaceutical companies. Despite the current limitations in basic research and innovation, he believes that the government should offer financial support, policy guidance, and expedite the approval process for new drugs.
The initiative also focuses on building corporate innovation capabilities. Developing new drugs is a long-term, costly, and risky endeavor. With over 1,500 to 2,000 pharmaceutical companies in China, most small and medium enterprises lack strong R&D infrastructure and rely on external research institutions. The country still struggles to compete internationally, as many companies are not yet capable of matching global pharmaceutical giants.
"The purpose of the major new drug creation project is to help companies build their own R&D bases," Ye said. Additionally, it supports the development of large-scale drug varieties with strong market potential. Although some drugs have annual sales reaching 1 billion yuan, few companies can scale up to 2 or 3 billion yuan. The project hopes that after five years of support, China will produce drugs with 10 billion yuan in annual sales and create companies that can compete globally.
For enterprises, the project is about strengthening rather than supporting weak players. Ye believes it will lead to industry reshuffling, where only those with strong innovation capabilities will thrive, while others may be acquired or phased out. Chen Yongle, chief scientist at Livzon Pharmaceutical Group, noted that the program is not about poverty alleviation but about providing limited financial support to accelerate R&D. While the funds are modest, the project serves as a catalyst for change.
Despite the challenges, China's pharmaceutical industry has vast room for innovation. Chen Yongle pointed out that although basic research is limited and compound diversity is low, there is still potential for local innovation without infringing on existing patents. For example, modifying a known compound slightly can lead to a new drug, or altering molecular structures can result in novel therapeutic options. Understanding drug metabolites and improving solubility or bioavailability are other paths for innovation.
In traditional Chinese medicine, companies have an advantage. While phytochemistry has identified many plant compounds, the exact diseases they treat remain unclear—this is where Chinese firms can contribute. With thousands of years of use, traditional medicine has effectively undergone human testing, though its chemical mechanisms are still being explored. Recent government initiatives highlight the growing importance of traditional medicine.
Finally, the success of the new drug creation project requires more than just financial support. Companies need policy backing, faster regulatory approvals, and better access to talent. Talent shortages remain a critical issue, as many returning overseas experts struggle to adapt to the domestic environment. Livzon actively recruits and trains professionals from academic and research institutions, helping them gain market experience and become more aligned with company needs. With the right strategies and support, China’s pharmaceutical sector can continue to grow and innovate.
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