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Coordinated Government Policies Will Foster Biotech Innovation

By Peter Winter
BioWorld Insight Editor

There is no doubt that the biotechnology industry is truly global and that emerging markets have become extremely important for pharmaceutical companies. That is not surprising considering the fact that countries such as China, Brazil, Russia and India will represent 30 percent of the projected total global pharmaceutical sales of about $1.2 trillion in 2016, up from 20 percent of the total of $955 billion in 2011.

The data from IMS Health reinforces the fact that the business model of pharmaceutical companies is adapting in response, which, according to a recently released report, is bringing new opportunities for middle-income markets.

Commissioned by the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), the study, "Policies That Encourage Innovation in Middle-Income Countries," was conducted by Charles River Associates, and examines growing biopharmaceutical innovation sectors in Brazil, China, Colombia, India, Malaysia, Russia, South Africa and South Korea.

Since, according to IMS Health, the health systems in developed economies will experience slow growth in medicine spending over the next five years, that has created a need for pharmaceutical companies to look toward middle-income markets for additional revenue. That, in turn, translates to a greater need to conduct clinical trial activities in those markets in order to assist in marketing approval of new biopharmaceuticals, the study said.

As a result, some pharmaceutical companies are relocating their manufacturing facilities to markets where the cost of production is lower. Economics, however, is not the only consideration for choice of location – the country's scientific infrastructure is another key factor.

The study reports that the middle-income countries host 15 percent of the total global clinical trials. Of the middle-income case study countries, China and Brazil have had the highest number of clinical trials to date.

In order to be competitive in the global biotechnology economy, middle-income countries will need to focus on biopharmaceutical innovation, which will require targeted, coordinated and consistent government policies, tailored to a country's capabilities to be successful. Other enabling factors include developing strong research institutions and medical schools and creating an environment that encourages partnership between the different stakeholders.

"In recent years, the number of countries where biopharmaceutical innovation takes place has increased, and this trend is expected to continue," said Eduardo Pisani, IFPMA director general. "Middle-income countries are becoming increasingly important for innovative activities ranging from early stage research to clinical development. We commissioned this report because it is crucial for governments and industry to have a clearer understanding of what stimulates and drives innovation in these countries."

All middle-income countries covered in the report are investing in bioscience strategies at a scale of reflecting their national available resources. "The contin-uing globalization and fragmentation of the innovation process should make it much easier for middle income countries to increase their share of both public and private investment in both basic and clinical research," the report said.

The report highlighted the primary success factor as consistent long-term policy and legal frameworks. Those should be coupled with effective coordination of national industrial and health policies, encouragement of collaborations between stakeholders and adequate intellectual property protection. The report further suggests that some countries specialize in those stages of the innovation process in which they have a competitive advantage.

For example, the combination of public and private inward investments over the past decade in South Korea and China, and to a lesser degree in India and Brazil, has greatly upgraded their domestic capabilities in basic and clinical research.