(Health Korea News / Lee Chang-yong) China’s biopharmaceutical industry, which enjoys low production costs and solid government support, is expected to continue its rapid growth despite the US’s push for legislation to regulate Chinese companies. This is a promising development for the US, which is speeding up the enactment of biosecurity laws to protect its domestic industry.
The Korea Biotechnology Industry Organization (KBIO) released a report titled “China’s Pharmaceutical CDMO Industry Trends Report” on the 26th, predicting that the Chinese biopharmaceutical market will grow by an average of 9.4% annually and reach $66.3622 billion (KRW 88.1489 trillion) by 2030.
According to the report, China established the “Fourth Five-Year Plan” in 2020, designated biotechnology as one of nine strategic emerging industries, and is working on building bioindustry infrastructure and industrial advancement. This plan became clearer in the “Five-Year Plan for Bioeconomy Development” announced two years later in 2022. The goals of increasing the added value of the bioeconomy and technological innovation through R&D investment were outlined.
In 2015, China shifted its policy focus from the existing generic drug-centered growth strategy to the intensive development of advanced biotechnology through Made in China 2025. This policy is a 30-year long-term plan to help China emerge as a manufacturing powerhouse.
Thanks to full government support, China’s biopharmaceutical industry is significantly narrowing the technology gap with the global biopharmaceutical industry. At the same time, it is also strengthening its own capabilities to demonstrate to the world the innovative power of biopharmaceutical companies.
The current Chinese biopharmaceutical market is considered to be in line with many international standards, with a strong manufacturing base. This is thanks to the Chinese government, which increasingly attaches importance to innovative biopharmaceuticals, improving numerous relevant regulations and implementing policies.
In addition to pharmaceuticals, many Chinese companies are integrating AI technology with biotechnology. As China emerges as a powerhouse in digital innovation for biopharmaceutical companies, multinational pharmaceutical companies with operations in China are also expanding their investments in digital technology.
As the cell and gene therapy market grows rapidly, Chinese innovative biotech companies with cell and gene therapy products are considering ways to increase cell and gene therapy production while ensuring quality.
Low production costs are the biggest strength of China’s bio industry. Compared to products made in the United States, products made in China are 5% cheaper. If the same product is manufactured or assembled in Europe, it is 10% to 20% more expensive.
This is because China’s labor costs are considerably lower than those in Europe, the United States, etc. These factors are driving the growth of China’s CDMO market.
The Chinese CDMO market is largely divided into chemical pharmaceutical and biopharmaceutical sectors. In the past five years, the growth rate of the biopharmaceutical market in the global and Chinese CDMO markets has been higher than that of the chemical pharmaceutical CDMO market.
The global biopharmaceutical CDMO market is expected to grow at a compound annual growth rate of 17.3%, reaching USD 21.1 billion (KRW 28.777 trillion) in 2021. Among them, China is showing the steepest growth rate, reaching USD 2.5 billion (KRW 3.3267 trillion) in 2021.
China’s small molecule CDMO market is expected to reach USD 46 billion (KRW 61.134 trillion) by 2030, growing at a CAGR of 19.4% from 2023 to 2030. China’s outsourcing services, low cost, many China-based CDMOs providing end-to-end services, and the rapidly growing aging population are fueling the expansion of China’s CDMO market.
China’s CDMO industry is less affected by the medical reform policy, making it an attractive industry for investors. In November 2023, WuXi XDC, a subsidiary of Wuxi Biologics, an ADC and other biopharmaceutical CDMO service company, went public and raised about $471 million (KRW 626.8539 billion).
Wuxi Biologics also secured a total of $301 million in initial investment from seven initial investors, including Invesco, General Atlantic, and the Qatar Investment Authority.
The path to the Chinese biopharmaceutical market has not been smooth. On the 10th, the U.S. House of Representatives passed a biosecurity bill that significantly limits activities in cooperation with Chinese companies.
The Biosecurity Act is a bill designed to protect domestic industries by prohibiting the use of federal funds to purchase equipment or contract services from Chinese companies such as WuXi AppTec and WuXi Biologics.
According to Bloomberg, shares of Wuxi AppTech and its sister company Wuxi Biologics, both of which were included in the biosecurity bill in February, lost about $17 billion on investor concerns about the potential U.S. legislation.
More than three-quarters of U.S. biotech companies outsource preclinical and clinical services to Chinese companies, and 30% of those involved rely on Chinese companies to manufacture approved drugs, and the biosecurity law is reducing their dependence on China for many biotechs.
Amid these concerns about working with Chinese manufacturers, Wuxi Biologics appears to be steadily signing new contracts. This is because the Chinese bio market, including Wuxi Biologics, is still viewed positively.
Wuxi Biologics added 61 new projects in the first half of 2024, up from 46 new projects added during the same period in 2023.
China’s pharmaceutical and biotechnology industry is at a turning point, demonstrating corporate resilience even in a dynamic geopolitical environment. Companies are continuously working to overcome obstacles such as global competition, intellectual property protection concerns, and quality issues. This is why there are encouraging prospects for double-digit growth over the next five years on the global stage.
The report said of China’s biopharmaceutical industry, “The emphasis on low-cost production is likely to reshape access to medicines in emerging markets,” and “Chinese biopharmaceutical companies will position themselves as potential leaders through cutting-edge technological advancements.”
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Source: www.hkn24.com
