Unclear Intellectual Property Rights Baffle Foreign Pharmaceutical R&D Projecting to strike Gold in Chinese market

With the constant burden of the current financial crisis, the US government and large pharmaceutical companies have decided to tighten spending practices and ease up on biopharmaceutical investments. In the first half of 2010, leaders of the pharmaceutical industry announced intentions to cut employment down to about 35,000. This past May, we saw that the pharmaceutical industries total staff reduction is about 5% when compared to May two years ago. For this reason foreign pharmaceutical and bio-pharmaceutical R&D staffs are setting their sights on the blossoming China market where they hope to hit gold.

 

According to The Chinese medical center for science and technology achievement lead technology industry consulting director, Zhang Haibo, the number of foreign institutions bringing projects to China has increased 20% from the same period last year. This is the second year in a row with over 20% growth and now the number of projects has increased to 20 a year.

 

However, as tantalizing the Chinese market appears, the industry is wary of the lack of intellectual property rights, which threatens the feasibility and potential benefit that exists within the rapidly emerging Chinese market.

 

Rui Guozhong, from China’s medical technology transformation centre, recently shed light on the complicated issue of the ever increasing need for innovation by large pharmaceutical companies in these stagnant economic times. He notes that about 99% of all innovation originates from universities and research institutes. This is a monumental issue for the United States, where capital investment has been stuck in the Bio-pharmaceutical industry due to the financial crisis. However, China has begun to look for funds, and they believe they have found a new more successful method.

 

According to data from the Chinese medical science and technology achievement information center, China’s annual biomedical technology market is somewhere from 80-100 billion dollars. In areas of Beijings technology exchange, Biomedical and pharmaceutical contracts sales were up to 1.59 Billion Dollars, up 29.8 for the year and almost 100% since 2005. Another notable increase is the Chinese pharmaceutical industry, which by the end of 2009 has sales of 37.44 billion Yuan, up 21.06 percent from last year. IMS health forecasts that by 2011, China will have the third largest pharmaceutical market in the world, when in 2003 it was only the eighth.

 

Rui Guozhong commented on the Chinese method for developing the biotechnology and medicine industries by constantly improving regulations and incessantly increasing product quality. He said “With international standards of technology research and development being very high, good laboratories along with increasing intellectual property rights, and the unique low cost in comparison to foreign R&D has made China very attractive to foreign capital and technology transfer projects.

 

Since many Chinese pharmaceutical companies have been successful, domestically and overseas, in solving funding issues, the next problem to be solved lies in the transfer of biomedicine and pharmaceutical innovation.

 

Presently, many Chinese companies are to spending nearly 100 million Yuan to get expensive, long awaited drugs that even though profitable come with many risks. Rui Guozhong addressed this issue by saying  “We must take into account the risks. Technology transfer is not just a transformation of scientific research activities, but is also a very complex business transaction that affects all areas of the business model and will naturally bring on the existence of many obstacles.