PharmAsia News Notable Notes: China’s Outsourcing Costs Vs. Growth Potential
This article was originally published in PharmAsia News
Executive Summary
Analysts' views on the costs associated with outsourcing research to China remains mixed, but concerns regarding fluctuations in costs are minimized by opportunity for growth in China, according to Baird analyst Eric Coldwell
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Analysts' views on the costs associated with outsourcing research to China remains mixed, but concerns regarding fluctuations in costs are minimized by opportunity for growth in China, according to Baird analyst Eric Coldwell. "We don't see China as a cost equation, but more of a growth opportunity. On the clinical side, China brings a phenomenal population of treatment-naïve patients, and the country is widely considered to be positioned for economic expansion for decades to come," Coldwell said in a March 24 note. To successfully market drugs in China, the most promising emerging market, companies must develop products in-country, Coldwell advised. "We're already hearing of situations where pharmas pay a premium to conduct clinical studies in China, in fields like oncology, as time-to market is substantially more important than trial costs," Coldwell said. Pfizer recently established a business unit devoted to oncology to build research investment on cancers common in Asia. Pfizer expects to expand commercial operations in China from 110 cities to more than 650 cities (Also see "Pfizer Looking To Tap Into Asia’s Emerging Oncology Market" - Scrip, 6 Mar, 2008.). Coldwell cautioned that heavy investment may outpace short-term demand, which could lead to pricing pressures. But the analyst expects "access to capacity, staff, animal models and the goodwill created by working in-country will overwhelm the need to provide lower cost solutions," as the non-clinical market matures. Coldwell expects quality concerns to improve as Western-trained and experienced Chinese are returning to China as multinational companies and contract research organizations build resources in China. Similarly, the number of facilities accredited with good laboratory practices and good manufacturing practices is expected to grow in the next few years. Charles River Laboratories recently announced plans to expand its operations in China with Western-standard discovery GLP services to enable it to conduct studies suitable to submit to Western regulators and China (Also see "Charles River Labs To Provide Western-Standard GLP Services in China" - Scrip, 25 Feb, 2008.). - Daniel Poppy ([email protected]) |