Looking At China’s Drug Innovation From A Global Perspective

Where will China’s  innovative drugs  go? In late June 2022, a reporter from the Economic Observer interviewed Dr. Song Ruilin, the executive chairman of the China Pharmaceutical Innovation Promotion Association and a specially-appointed expert in the National Political Consultative Conference’s talent pool for political participation, with this question.

Looking at China's Drug Innovation from a Global Perspective

Editor’s note: China’s local pharmaceutical companies have long been focused on generic drugs, while innovative drugs are basically monopolized by foreign companies. In recent years, this phenomenon has gradually been broken, and a number of local innovative pharmaceutical companies are emerging.

With the implementation of the “Major New Drug Creation” major project in 2008, the reform of the drug regulatory system in 2015, the procurement of drugs in 2018, the Hong Kong Stock Exchange allows unprofitable biotech companies to list, and the Science and Technology Innovation Board and Growth Enterprise Market focus on supporting policies such as biopharmaceuticals. The implementation of local innovative pharmaceutical companies has ushered in more and more development opportunities.

Over the past few years, domestic innovative pharmaceutical companies have stepped onto the international stage with the support of the government and the capital market, and have gradually gained drug listings and commercialization.

At the beginning of 2020, the new crown pneumonia epidemic disrupted the traditional world order, and also highlighted the importance of the biopharmaceutical industry and the significance of medical innovation. New drug research and development, clinical trials, accessibility, and affordability, these medical terms have gradually become familiar to the public, and the valuation of local innovative pharmaceutical companies in the capital market has been refreshed again and again.

As a witness and recorder, the Economic Observer will continue to pay attention to the development and reform of China’s biopharmaceutical industry, and talk to the witnesses and witnesses of this great change.

This article is the eighth part of the [Sinopharm Restoration] series of reports, with a dialogue with Song Ruilin, executive chairman of the China Pharmaceutical Innovation Promotion Association.

Where will China’s innovative drugs go? In late June 2022, a reporter from the Economic Observer interviewed Dr. Song Ruilin, the executive chairman of the China Pharmaceutical Innovation Promotion Association and a specially-appointed expert in the National Political Consultative Conference’s talent pool for political participation, with this question.

Song Ruilin is 59 years old this year. He has been studying medical and health and drug policies since the 1980s. He has witnessed and experienced almost all major events in the industry. His answer is to be based in China and look to the world, and at the same time to be truly innovative drugs. Behind this are many topics such as R&D momentum, capital markets, regulatory reforms, payment challenges, and more.

Song Ruilin has been engaged in health and drug policy and legal research in the Legislative Affairs Office of the State Council for a long time, and is responsible for the drafting and review of laws and regulations in the field of health and medicine. Voice over and over again.

The following is excerpted from the dialogue between the Economic Observer reporter and Song Ruilin:

“The last mile”

Economic Observer: The National Medical Insurance Administration and the National Health Commission jointly launched a “dual-channel mechanism” for innovative drugs last year, but innovative drug companies also reported that the problem of entering hospitals has not really been solved.

Song Ruilin: Yes, there is no fundamental solution. Faced with the ever-changing market, relevant departments should make timely adjustments. Strictly speaking, the current “drug ratio” and “one product, two regulations” policies of the health department restrict the entry of innovative drugs into hospitals. Especially for innovative drugs, they should be used with caution based on the lack of clinical data. In fact, these are conservative and negative behaviors that need to be adjusted and changed. Most of the innovative drugs are supported by major national new drug projects due to urgent clinical needs, and are included in the medical insurance catalogue through accelerated review by drug regulatory authorities and price reduction through medical insurance negotiations. , which in itself goes against the medical laws and the original intention of the policy.

Economic Observer: Since the establishment of the National Medical Insurance Bureau, a lot of reforms have been made. Innovative drugs have the opportunity to enter the medical insurance catalog through medical insurance negotiations. On the other hand, innovative pharmaceutical companies feel that the negotiation has lowered the price too low. What do you think?

Song Ruilin: After the establishment of the National Medical Insurance Bureau, there are several bright spots. First, the adjustment of the medical insurance catalog has been truly standardized. After the establishment of the Medical Insurance Bureau, the policy has been continuously improved, and the “talk with approval” of innovative drugs has basically been realized, which is completely beneficial to innovative drugs. The problem now is how to reasonably determine the proportion of medical insurance payment, and then generate a reasonable price.

As a payer, medical insurance plays a huge role in regulating the market, and the payment policy actually reflects the supportive attitude towards innovative drugs. We suggest that the state should establish a separate payment system for innovative drugs, reform the existing fixed-rate reimbursement system in accordance with the principle of “doing your best and doing what you can”, and determine the dynamic reimbursement rate based on the ability to pay for medical insurance. The reimbursement rate can be appropriately reduced for the medicines purchased by the government; for groups with real difficulties, medical insurance can appropriately increase the reimbursement rate to reduce personal payment pressure and reflect social fairness.

Innovative drugs are high-investment and high-risk products. They are very different from generic drugs. They not only have high R&D expenses, but also have a certain scale of promotion costs. The reason why innovative drugs are called innovative drugs must be ahead of doctors. Doctors do not understand drugs at all. Enterprises need to use clinical results and guidelines to train these doctors. What kind of patients should use this drug, what is the dosage, This kind of expenditure cost is not only the demand of enterprises to expand the market, but also an important means to improve the level of doctors’ diagnosis and treatment and promote rational drug use.

I think that the value of Chinese innovative drugs should not become limited because of the limited cost of medical insurance. We must view China’s medical innovation from a global perspective, and let China’s medical innovation benefit patients and all mankind.

Capital Markets and Innovation Paths

Economic Observer : On the one hand, the payment system is not perfect enough to support the innovative ecology; on the other hand, the capital market is not optimistic, and the market value of innovative pharmaceutical companies is “halved” after listing.

Song Ruilin: In the past two years, the performance of innovative pharmaceutical companies in capital markets such as the Science and Technology Innovation Board and the Hong Kong Stock Exchange has been overvalued and undervalued. According to the relevant provisions of Article 18A of the Shanghai Stock Exchange Science and Technology Innovation Board and the Hong Kong Stock Exchange, some companies have not yet achieved income, so the valuation of the future of the company is a subjective trust or expectation. It is normal to fluctuate with market expectations. .

Finance and innovation are closely linked. To a certain extent, innovation itself is the product of cooperation between scientists and financiers. The world’s four largest zero-income listing financing platforms for biomedical innovation: NASDAQ, Hong Kong Stock Exchange, Shanghai Stock Exchange, Shenzhen Stock Exchange Therefore, there are three in China, which are powerful financial empowerment innovation platforms, which have boosted China’s new drug research and development from imitation innovation to original innovation. Therefore, the spring of China’s pharmaceutical innovation has come.

But this heat wave of innovation has bubbles, and now some bubbles have burst, and we need to be vigilant, but it is not surprising. If a good product is made, the investment will come as promised. The current market downturn tells us the fact that China’s innovative drugs are still at a relatively low level. Of course, I believe that from now on, the capital will be rational and calm, and the quality of investment will be higher and higher.

In the future, the concept of innovative drugs in China will need to be reformed. What is real innovation? At this stage in China, it should be basically synchronized with the original research. Several tinib drugs developed by Chi-Med and BeiGene are about one year behind the original drug. In my opinion, there should not be a difference of one year, even if the follow-up innovative drugs are separated by three years, their contribution to China’s social value and clinical value is still high.