Advancing Production Capabilities to Boost China’s Pharmaceutical Market

The path forward is paved with Industry 4.0 and brand security solutions alongside regulatory change and new infrastructure

Jerry Martin, Pharmaceutical and Life Sciences Consultant PMMI The Association for Packaging and Processing Technologies

According to 2017\'s report by the U.S. Chamber of Commerce on the ‘Made in China 2025’ industrial plan, an innovation gap leaves the country dependent on foreign companies for patented pharmaceutical drugs. As China aims to close that gap, companies must advance packaging operations to scale production with Industry 4.0 and sophisticated and sophisticated brand security.

China is the second largest pharmaceutical market in the world, according to a 2016 Top Markets Report on the country’s pharmaceutical industry by the International Trade Administration1. The same report also forecast the country to grow from US$108 billion in 2015 to US$167 billion by 2020. However, despite the market’s sheer size, several hurdles line the path in moving China’s pharmaceutical, biomedicine and medical device sectors to the front of the pack in innovation—challenges which the industry hopes to resolve with the ‘Made in China 2025’ industrial plan. In fact, last year’s report by the U.S. Chamber of Commerce pointed to statements made by President Xi Jinping regarding the ‘S&T [science and technology] bottleneck and wide innovation gap compared to advanced countries.’ These gaps fall into three designations: lacking self-sufficiency in critical high-end materials, relying mainly on imports for highend medical devices, and, importantly, depending on foreign companies for the vast majority of patented pharmaceutical drugs2.

As China carves a path to becoming a key producer of finished pharmaceuticals, two challenges underscore the innovation gaps mentioned above. The first is that much of today’s pharmaceutical manufacturing in China is dedicated to the processing of Active Pharmaceutical Ingredients (APIs) and intermediates (chemicals that convert to APIs). While these products can be filled into finished drugs, many Chinese manufacturers of intermediates and APIs export to western countries for finishing. These dynamics amount to the domination of lowertake and lower margin operations and they must change for China to advance its pharmaceutical and medical device sectors.

Another challenge is the implementation of critical manufacturing equipment and practices, such as Industry 4.0 systems and advanced brand security measures. In addition to making China’s pharmaceutical manufacturing capabilities more competitive by elevating productivity, efficiency and innovation, these solutions would also go far to alleviate both domestic and international concerns among consumers surrounding drug quality and counterfeiting. However, technological change won’t occur overnight or in a silo. China’s pharmaceutical manufacturers will have to navigate their own projections and needs as well as regulatory and infrastructure changes in order to sustainably advance.

Solutions to Pave the Way Forward

Industry 4.0 and brand security technologies are critical tools to advance the pharmaceutical and biomedicine sectors not just in China, but also around the world. The regulations coming into play over the next year or two on serialisation and track-and-trace capabilities to guard against counterfeiting and theft are global. As China’s companies move further into the manufacturing of higher-value finished drugs, they will need to adopt these technologies. Eventually—over the next five years—these standards will also apply to the export of APIs and intermediates. Even more importantly, these companies must continuously anticipate the bar for automation and brand security to keep rising. As it does, so will the need to strategically build and update the technologies that ensure product quality, safety and security.

Today, pharmaceutical companies are exploring solutions beyond the current track-and-trace technologies. Blockchain technology not only offers the potential to change the way we purchase, sell and make transactions for goods and services, it also combines ease of use and the security of cryptography to allow the supply chain community to verify and monitor various intervals and exchanges throughout the product lifecycle. This is because blockchain allows each transaction to be recorded and later viewed in a permanent decentralised repository, reducing potential delays, added costs and human error. Because the technology enables companies doing business with each other to record transactions indelibly and hold many more documents and data than traditional database storage, it allows for the sharing of more insights and analysis and provides a robust platform for drug brand security.

Other important considerations for Chinese pharmaceutical manufacturers include the use of more highly automated pick-and-place equipment to support greater hygienic standards and minimise the risk of human error on redundant tasks on the plant floor. Additionally, temperature-monitoring packaging can indicate to shippers, pharmacists, hospital workers or patients whether the product has been outside of its designated temperature range, thus preventing patient receipt of drugs that have been compromised. Implementation of single-use equipment for aqueous fluid mixing, storage, formulation and filling can eliminate on-site sterilisation and cleaning operations that are often the subject of adverse regulatory observations.

Understanding and Clearing the Hurdles

For China’s pharmaceutical sector, the popularisation of blockchain, advanced automation and sensor-enhanced packaging may not occur instantly or without the use of international suppliers. Achieving, maintaining and advancing innovation in pharmaceutical manufacturing is a constantly moving target. Today’s complex global supply chain and the threats that come with the territory—makes it difficult for even the most reputable and well-resourced companies to maintain the lead. To secure solutions that foster growth both today and tomorrow, these companies can look to resources such as Healthcare Packaging EXPO3, co-located with PACK EXPO International 20184, (Oct. 14-17, 2018; McCormick Place, Chicago). Owned and produced by PMMI, The Association for Packaging and Processing Technologies, the show can provide access to a wide range of pharmaceutical and packaging technologies and insights.

In addition to identifying the right technologies to scale production amid their own growth, goals and international regulatory challenges, China’s pharmaceutical manufacturers must also juggle (and in some cases advocate for) changes to regulations and infrastructure that will facilitate their success. Before these companies can take the lead and minimise the country’s dependency on imported pharmaceuticals, several more measures must fall into place. These include policies to:

• Simplify current clinical development requirements;
• Build capabilities in contract manufacturing;
• Establish a clear and agile pathway for China’s returning industry experts to start companies and develop drugs in China;
• Provide much greater protections to both native and foreign intellectual property;
• And strengthen IT, communications and transportation infrastructures to foster faster learning and business development.

Navigating Resting and Clinical Trials

To date, Chinese companies looking to introduce a drug into the domestic market must run clinical trials there, but cannot do so without passing at least two clinical trials elsewhere in the world. In comparison, first-in-human (Phase One) and dose assessment (Phase Two) trials are commonly initiated in the U.S. and Europe. The limited presence of academic centres and minimal incentives for hospitals to forgo the treatment of patients with existing medicines in favour of clinical trials can create additional hurdles. As a result, China does not nurture the development of many experimental drugs. This creates an inevitable reliance on the importation of drugs from other countries and joint venture manufacturing operations. For the country to exit this “me-too” cycle of processing and packaging intermediates, actives and generics, the government must re-consider these restrictions. Without doing so, current and pending measures to encourage the use of domestically made equipment and products will fail to bring about a sustainable path for continuous innovation and the country’s manufacturers will continually find themselves behind the curve.

Advancing Contract Manufacturing

Amid China’s lower-take and lower margin operations, domestic manufacturers also tend to focus on the contract manufacturing of small molecule generics. As with the joint ventures between lower-tech Chinese pharmaceutical manufacturers and multi-nationals for the finishing of some drugs, the partnerships of these generics manufacturers tend to lie with western drug brands. Until recently, drugs that didn’t fall under joint venture agreements could not be sold there. This is another factor that can slow Chinese drug innovation. Allowing contract manufacturing, but for export only, contributes to the country’s challenges in creating public confidence and familiarity with domestically manufactured drugs. As the government evolves these rules, more western countries may more easily be able to set up contract manufacturing operations and train more Chinese developers, operators and other personnel in state-of-the-art manufacturing.

Fostering a Culture of Innovation

In past decades, many Chinese seeking educational and workforce opportunities in these sectors left the country. China’s new initiatives, however, are attracting those minds back. The recent influx of internationally educated and trained professionals bringing their expertise to the country’s bioprocess manufacturing sector can provide a new backbone for a rejuvenated and innovative workforce. Hailing from Ivy League institutions and pharma’s top brands, they are ready to lead innovative companies in China. They are not here to oversee ‘me-too’ generic development. Loosened regulations on testing to incentivise more new drug development can keep them engaged and fostering domestic breakthroughs.

Greater flexibility in allowing companies to substantiate projects is also necessary. This means shaking loose the monolithic vision for ‘the best way’ in order to allow a greater variety of options that will continue to evolve and improve. Additionally, China must also provide clear channels and resources for this new generation of innovators to bring new products to market, and importantly, protecting the intellectual property once they are out there.

Overcome Counterfeiting and Improve IP Protections

Counterfeiting is a global problem. The World Health Organization (WHO) estimates that about one million people die from taking counterfeit drugs each year. As a result, pharmaceutical manufacturers, pharmacies and healthcare agencies around the world are taking whatever measures they can to minimise the risks. This includes making investments in counterfeit drug detection equipment. A recent study from Research and Markets ‘Global Counterfeit Drug Detection Devices Market Assessment & Forecast: 2017—2021’ valued the global counterfeit drug detection devices market at US$904.5 million in 2016 and projects it to reach US$1,368.5 million by 2021, for a CAGR of 8.5 percent.

However, China’s current challenges in combatting counterfeiters and, more generally, in asserting protections to Intellectual Property (IP) infringement, are threats to the nation’s plans for growing and innovating its pharmaceutical sector. Many counterfeit drugs are made in China, posing serious concerns around quality issues, Good Manufacturing Practice (GMP) adherence, documentation, quality systems and most importantly, dangers to public health. Notably, the government has taken action to reduce the usage of such shortcuts and minimise their impact.

As a result of ‘Made in China 2025,’ the international community expects to see better policing of proprietary technology. Part of this effort requires better resourcing local inspection authorities. China’s FDA has made significant strides over two decades, becoming more powerful and improving the capabilities of inspection agencies to track down all unregistered operations. Beginning June 30, 2004, all pharmaceutical companies in China were required to obtain GMP certificates from China’s FDA in order to be licensed to sell their drug products in China.

Building the Necessary Infrastructures

The factor that often seems like the highest mountain to climb is the synchronising of infrastructures. Reliable internet access, extensive transportation networks and evolved communications platforms are bedrocks of creating, nurturing, maintaining and evolving pharmaceutical and medical device businesses—especially as the world moves toward more highly automated solutions up and down the lines as well as an increasingly digitised model for operating, analysing and improving efficiencies, run-times and brand security.

These infrastructures are also critical to continuous workforce training. As China moves from manual to automated operations in keeping up with today’s leaders in pharmaceutical manufacturing, the country will be met with the same challenges in retraining operators and retaining talent. Some companies are already setting up web-based training to educate current operators on new and higher standards. By updating the country’s IT, transportation and communications infrastructures, the country will accelerate paths for workforce development and lay the foundation for widespread use of other industry-shaping technology.

Look Outward, not Just Inward

As China’s pharmaceutical manufacturers make their contributions to realising the goals laid out in the ‘Made in China 2025’ plan, it is critical to keep in mind the interconnectivity of these goals and implement changes that will ensure sustainable progress both today and tomorrow. The implementation of the technological updates necessary to enhance innovation, brand security and quality will not happen instantaneously. It will require incremental, but steady progress as well as a continued focus on regulatory and technological change that will foster a habitat for innovation as well as consumer and industry confidence. But even amid plans to strengthen a country’s own industries, the answers often lie in looking outward, not inward. China’s regulatory decision makers and company leaders must more than ever anticipate tomorrow’s challenges in an increasingly intertwined and complex marketplace as they look to strengthen their domestic pharmaceutical production operations.

In addition to housing a wide range of packaging solutions, including industry 4.0 and brand security technologies, the co-located Healthcare Packaging EXPO and PACK EXPO International will feature insights and solutions in track-and-trace, automation and continuous processing, advanced automation, sensor-enhanced packaging, blockchain technology and more. To register, visit https://www.hcpechicago.com/

References:

1. https://www.trade.gov/topmarkets/pdf/Pharmaceuticals_China.pdf
2. https://www.uschamber.com/sites/default/files/final_made_in_china_2025_report_full.pdf
3. https://www.hcpechicago.com/
4. https://www.packexpointernational.com/

--Issue 31--

Author Bio

Jerry Martin

Jerry Martin, Pharmaceutical and Life Sciences Consultant, PMMI, The Association for Packaging and Processing Technologies also serves as a consultant to bio-pharmaceutical manufacturers and equipment suppliers in technology and business development. He previously was Sr. V.P. Global Marketing and Scientific Affairs for Pall Life Sciences (retired 2015) and served 3 terms as Chairman of the BPSA trade association for single-use bioprocess equipment suppliers and users.

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