China’s healthcare industry has been innovating at a rapid pace, and it now has one of the largest innovative pharmaceutical industry markets in the world. Despite this success, China’s drug and medical device policies have not caught up with many of the recent global advances in healthcare. Wang Hongyu, from Smith & Nephew Shanghai Ltd, discusses the most recent actions undertaken by the central government to try and correct this issue and what the impact of this will be on the future of China’s drugs and medical device industries.
In 2015, the market size of the innovative drug industry worldwide was United States dollar (USD) 600 billion. However, according to statistics found in the blue paper Fostering a Sustainable Ecosystem for Drug Innovation in China, China only accounted for 6.2 per cent of the innovative drug industry market. For the medical devices industry, the market size in China is expected to reach Chinese yuan (CNY) 450 billion (USD 68 billion) by the end of 2017, while worldwide it is estimated to reach USD 398 billion, according to Visiongain and the China Medical Pharmaceutical Material Association. Chinese leadership understands that they need to restructure the pharmaceutical and medical device industry by encouraging innovation in drugs and medical devices. The government also realises they need to improve industrial competitiveness and meet the public’s medical needs.
Discovering, designing and developing new medicines and medical devices is extremely complex. In order
to prevail, powerful new scientific insights need to be gained, followed by rigorous testing and clinical trials.
Success ultimately depends on policies that reassure the public that new and innovative therapies and technologies are safe, effective, accessible and affordable. The four essential policy components that form the bedrock of life science innovation are:
• strong research and development (R&D) infrastructure;
• effective intellectual property protection;
• harmonisation of global standards for drug and device regulation and trade; and
• sufficient reimbursement.
Unfortunately, the China Food and Drug Administration’s (CFDA) drug and device approval policies have lagged behind. Formed in the late 1990s, China’s drug authority focused initially on establishing a simple regulatory system and improving the supply of generic drugs and ‘me-too’ devices for basic medical care. However, in the past four years the CFDA has changed both its mission and approach in order to conform to the central government’s healthcare strategy.
The government has taken steps to try and align the entire life science policy environment closer to international norms. The State Council issued the Opinions on the Reform of Evaluation and Registration Process for Drugs and Medical Devices (Opinions) in August 2015. The Opinions identified a number of issues relating to the drug and medical device registration system. Some of these problems included long registration times, a significant application backlog, poor generic drug quality assessments, low-quality or incomplete drug application clinical data and a difficult registration system for innovative drugs. In October 2017, the General Office of the Communist Party of China’s Central Committee and the General Office of the State Council jointly announced the Opinions on Deepening the Reform of the Review and Approval System and Encouraging the Innovation of Drugs and Medical Devices (2017 Opinions) to further encourage innovation in drug development and medical device innovation. This directive attempts to address a wide range of issues and seeks to: speed up the drug registration process; provide a more efficient registration system for imported drugs, innovative drugs and medical devices; establish a catalogue of rare diseases and expedite registration for their treatment; and address compliance issues in drug promotion and data integrity issues in clinical trials.
In response to the Opinions, since late 2015 the CFDA has issued a series of orders to address these concerns. Addressing these problems has meant carrying out equivalence evaluations on the quality and efficacy of generic drugs, cracking down on clinical trial data fraud, introducing a pilot market authorisation system and establishing green channels for the registration of medical devices. The CFDA has been busy publishing several draft orders in 2017, especially after the 2017 Opinions. Some draft orders and decisions are extremely important and will have a far-reaching impact on China’s drug and medical device registration system. If passed, these orders will speed up the entire innovation drug and device registration process, benefiting R&D drug and innovation device manufacturers.
New policy highlights
The most significant change since the 2017 Opinions was issued, is that qualified data obtained from overseas multi-centre clinical medical devices can now be used for innovative drug and medical device applications in China. As a result, China’s innovative drug approval time could be significantly shortened. The 2017 Opinions seeks to streamline the clinical trial process by shortening and simplifying clinical trial approval, improving the Institutional Review Board review process and encouraging social forces to invest in clinical trial institutions.
This State Council document promises fast-track approval for two kinds of drugs and medical devices: new drugs and devices that have urgent clinical need, and drugs and devices for rare diseases. These drugs and devices can be quickly approved if trial data collected in the early to mid-stages shows they have clinical value. These drugs and devices can also be fast-tracked for rare diseases if they have already been approved for marketing overseas.
Measures will be introduced to promote and protect innovation, including the creation of a catalogue for marketed drugs, building a system linking the drug approval process with their patents and increased protection of drug trial data. Drug and medical device manufacturers are encouraged to increase R&D input, strengthen R&D on new products and continue studies on marketed products to improve production quality. China’s recent life science policy announcements suggest that the best science and the strongest, most innovative companies—regardless of country of origin—can thrive in China, the second largest healthcare market in the world. However, having a successful outcome largely depends on China’s willingness to aggressively implement these emerging policy changes. Equally, success or failure for firms depends on how rapidly companies reshape their thinking, strategies and operating models to align with China’s future medical needs, scientific capabilities and policy objectives.
Wang Hongyu is Chair of the European Chamber’s Healthcare Equipment Working Group and Vice President, Regulatory & Clinical Affairs, Quality Assurance at Smith & Nephew Shanghai Ltd, a leading manufacturer of implantable medical devices, headquartered in London with 16,000 employees in more than 100 countries.