Over the years, Chinese CROs have focused on relatively inexpensive areas such as biology and chemistry -- including screenings of chemicals to identify combinations with potential as medicines. They have also worked on manufacturing active pharmaceutical ingredients for generic drugs.
Experts said an increasing number of CROs in China, local and foreign-based, are moving into more lucrative stages of the drug development chain. They include preclinical studies, such as toxicology and other animal research, as well as human studies.
James Foster, chief executive of Charles River, estimates toxicology demand will surge "significantly" in 2010. "We would anticipate all the businesses we do in the U.S. and Europe we will eventually do in China," Foster said in an interview. His company built a new preclinical facility in Shanghai in January and is planning to build a second site in China.
China's annual market for toxicology -- studies that typically use animals and are designed to root out serious side effects of drugs early in the game -- is worth about $20 million. But it may jump to $200 million in five to seven years, said Joe Herring, chief executive of Covance. Covance's CRO business in China should be profitable this year, with revenue doubling in 2010, he said.
With an abundant supply of primates, and less animal-rights advocacy, China has become a favorable destination for animal testing, said Frank Zhang, chief executive of GenScript, a biology CRO with operations in the United States and China.
To sell existing drugs to China, multinational drugmakers are required to conduct additional testing to obtain local approvals. Ronny Krishana, senior director of strategy and business development at Pfizer, said his company plans to collaborate with more than 500 hospitals and 2,000 doctors on at least 135 local clinical trial programs in 2010.
"Our investment in local clinical trials in China has increased dramatically in recent years," Krishana said.
Despite the growth potential, Frost & Sullivan's Gopinathan warned that concern over intellectual property, a limited number of qualified research sites and long approval processes for clinical trials would hold back China's CRO market.
Still, the CROs are moving drug development in China into a more sophisticated and possibly more lucrative stage.
"China's drug development industry can help the country build a new brand that is known for innovation and quality, so that 'made in China' will no longer be synonymous with manufacturing cheap products," said Charles Huang, an executive with Sundia MediTec Company, a Shanghai-based CRO. (Editing by Steve Orlofsky)
<IFPMA Press Review 4 September 2009>