Exciting Opportunities for Biomedical Companies in China


by Eric Castro - Date: 2007-04-26 - Word Count: 650 Share This!

While China is making taking big steps in biomedical technology and business infrastructure, it can still be an intimidating place to do business, especially from 9,600 kilometers. Despite the challenges, life science companies are recognizing the immediate benefits and potential promise and are launching R&D, clinical, manufacturing and distribution operations in China.


The potential advantages for a biomedical company that starts a business relationship or operations in China are three:



Technology: New, cutting-edge compounds and medical devices are now being developed in China, and the technology is unregulated by the U.S.'s conservative political climate.
Cost Savings: Drug development costs are 80% less than the ones in the U.S., and outsourced manufacturing of drugs and devices can be less than 1/10 the cost.
Market Size: China enormous potential market for healthcare products of 1.3 billion people is aging more rapidly than any other country, and its middle class of over 250 million is projected to double to 500 million by 2020.

China pharmaceutical market today is about $11 billion total, of which Western drugs represent $8 billion and traditional medicine from China is $3 billion. While this doesn't seem large compared to the U.S. market of over $60 billion, it is growing at 17%+ CAGR. The medical device market, currently at about $4 billion, is experiencing similar growth. Venture capitalists are also waking up to the potential in China, with over 30% saying it is a top target country for them.


There are over 2,000 China foreign joint ventures in the biomedical sector, including major players like Roche, Novartis, GSK, Pfizer, Medtronic, Becton Dickinson and Inverness Medical, just to name some. Most are significantly expanding their operations and are investing heavily in research and development to move beyond just manufacturing and distribution. China is encouraging and even subsidizing this migration, as it recognizes that to sustain its incredible historic growth rate of 9% per year, it must move its economy toward R&D.


In addition to China direct investment in R&D, there are several other factors contributing to biomedical companies looking to China to leverage their research and development activities.



China is encouraging overseas investment in the life sciences by subsidizing foreign investment organizations and deregulating venture capital
Distribution is a huge challenge given China geographic size, regional segmentation and cultural diversity.
Drug development costs are not only 80% lower than those in the U.S. they are at least 50% less than most markets. The low cost of medical supplies services and animal and primate studies contribute to this.
There is a large population of highly educated scientists trained in more than 170 medical schools and 120-biomedical research institutes in China.
China State Food and Drug Administration (SFDA) has been rapidly moving toward global GLP/GMP standards and has created drug and medical device approval processes that parallel the FDA's clinical path.
IP protection is definitely improving, with patent laws now compliant with WTO/TRIPS requirements, increased legal enforcement supported directly by the SFDA, and an IP rights team from the USPTO now located in China.

Doing business in China is an exciting adventure than can pick significant rewards for those who implement properly and respect the cultural differences. For others, it may feel like falling and falling once again while making little or no progress.


The best way to have success is to get help. Get someone who understands China rapidly changing biomedical industry and business environment and who can make trusted relationships (guanxi) with your potential partners. This will save you time and expense by quickly identifying viable business partners and establishing the initial contact on your behalf. It will also save you many 20 to 30 hour round-trip flights, as you establish your company's guanxi in China.


This article was researched and produced by Posicionarte for China Trading Company , 2007
Author Bio:


Eric Castro Mattas, is chief editor of Posicionarte researching and producing articles for China Trading Company. If you need products from China please visit www.chinatrading-company.com


Related Tags: china, china trading, china trading company, trading with china, yiwu purchasing agent, wholesale markets china, yiwu china quality control, china pro

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