HONG KONG – Reforms to China's drug approval process are gradually changing the industry, but the reforms are not making things easier for multinational drugmakers looking to launch new medicines in the country.

The Chinese government issued a new five-year plan this week that would strengthen the pharmaceutical industry between now and 2020. The plan was issued in conjunction with another parallel plan on food safety.

The drug safety plan aims to improve the quality of drugs on the market along with the quality of medical equipment and the quality of supervision over both markets. The plans issued by the State Council, China's cabinet, calls for evaluations of the quality consistency of 289 generic drugs that make up China's catalog of basic drugs, the creation of 3,050 national standards and 500 medical equipment standards. The plan also calls for periodic updates of drug safety reports.

The plan also calls for improving regulatory standards, including a requirement that "biological standards should remain close to global standards" and the development of an online approval system for the pharmaceutical industry.

The latest initiatives, released on Feb. 21, add to a series of reforms ultimately aimed at strengthening the industry, initiatives that will have an impact, eventually, according to a new BMI Research report. For the time being, a lack of predictability in the system is often making it difficult for innovative biotech companies to plan ahead.

"China's medical landscape is changing and improving every day. People like to criticize it and say it's not mature, that you can't find good health care in China, but that isn't true. You just have to know where to find it and that is gradually becoming easier," Sigal Atzmon, president at Medix Group, told BioWorld Today. Medix is an international medical consultancy with a regional base in Hong Kong.

"China is a very big country so it will take time for reforms to be implemented," Atzmon added. And time will be needed before the new systems run seamlessly.

"Given the evolving regulatory landscape in China, greater clarity on the specific implications for multinational pharmaceutical company product launches will come in the medium term. The validation of these pathways has not been publicly announced, leaving some uncertainty regarding the timeframe," noted BMI Research in a recent report. "The China Food and Drug Administration will also need time to enhance its human resource capacity, which has been a key factor contributing to the drug application backlog."

The prioritization of innovative medicines for approval will likely be a positive development for multinational drugmakers.

The CFDA now uses a "four color light" strategy to differentiate between different drug applications. "Red light" refers to restricted chemical agents, "yellow light" generic pharmaceuticals, "green light" innovative pharmaceuticals treating pediatric conditions and other serious illnesses such as cancer, and "no light" to innovative pharmaceuticals that have not been marketed in China or overseas. "Green light" drugs are eligible for priority review.

However, the process has not yet been systemized, according to Pascal Soriot, executive director and CEO at Astrazeneca plc, whose roxadustat was assigned the "green light" category. That lack of a systemic approach makes it difficult to determine the time frame required for approval.

In 2016, a total of 202 drug approvals were issued by the CFDA. Products that received approval include Glaxosmithkline plc's Cervarix, the first human papillomavirus vaccine approved in China, and Dainippon Sumitomo Pharma Co. Ltd.'s meropenem.

The Center for Drug Evaluation also launched a priority review system, with a total of 117 products across 12 batches designated priority review in 2016, including a range of hepatitis C treatments such as Gilead Sciences Inc.'s Sovaldi (sofosbuvir) and Eli Lilly and Co's Taltz (ixekizumab).

"We see greater transparency and the growing use of priority reviews as positive developments for the sale of patented medicines in China. This will also bode well for the commercial prospects of multinational drugmakers," said BMI.

"The emphasis on provincial tendering has put downward pressure on off-patent medicines, forcing companies to rely on innovative pharmaceuticals to sustain growth."

Case in point is Novo Nordisk A/S, which returned to 12 percent local currency growth in China in 2016. The growth was driven by the performance of modern insulins, aided by a stable market share and strong growth in the insulin market. Patented pharmaceutical sales in China are set to increase from ¥169 billion (US$25 billion) in 2016 to ¥470 billion by 2026, at a compound annual growth rate of 10 percent in local currency terms and 9.3 percent in U.S. dollar terms, according to BMI.

"I think that strong competition, right discipline and right regulation is protecting the Chinese people," said Medix's Atzmon. "There are people who just want to come to China and make money on patients' backs and create a multibillion-dollar company. China is a big market. It needs to be strictly regulated; the pharmaceutical area should be more regulated, and clinical trials should be more regulated. The government is doing right in being more strict. And I think the discipline and the strictness in China is doing China very well."

STAFFING AN ISSUE

In addition to the new drug approval process, the CFDA's staffing level is also a key factor in the time required for reform.

In 2015, the CFDA had 130 staff, with only 80 specializing in drug evaluation. By contrast, drug authorities in the U.S. and Japan had 5,000 and 700 staff, respectively, while the EMA had a team of 4,500 experts.

"This has been identified as a central cause for the backlog of drug applications by both the CFDA and the industry. For example, a lack of staff, the length of the review cycle and poor communication were cited by Genor Biopharma as the main factors causing a drug approval timeframe that was 18 months longer in China than in South Korea," said BMI.

The CFDA has since hired more people, but the highly technical work of drug evaluation means that it will take time to train staff and increase capacity, as CFDA deputy director Li Jinju noted recently. The CFDA expects the shortage to be significantly reduced over the next two to three years.

The State Council's plan also called on pharmaceutical companies to strengthen drug evaluations and do more R&D and analysis associated with quality control and committed to fully implement a marketing authorization holder initiative in new products to drive R&D while prioritizing drugs for rare and major diseases.