Healthy Skepticism Library item: 941

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Publication type: news

Faunce T.
Cashing in on our pharmaceutical expertise
The Canberra Times 2005 Apr 11

Full text:

The Australia-China Trade and Economic Framework, signed during the recent visit of Chinese President Hu Jintao in October 2003, includes a commitment to conclude a Free Trade Agreement feasibility study by October 31 this year. It is designed to build on Australia’s commercial relations with China in a number of key sectors, including pharmaceuticals.

In this context, one important provision in a China-Australia Free Trade Agreement could be the establishment of a Medicines Working Committee. This committee would facilitate cooperation, collaborations and joint ventures between Australian and Chinese pharmaceutical regulators, clinical trial and biotechnology researchers, as well as generic manufacturers.

Such an initiative would build on previous Government efforts to spur the growth of an Australian pharmaceutical industry. In May 2001, the then Minister of Industry, Tourism and Resources announced a Pharmaceuticals Industry Action Agenda. Its objectives were to: promote increased investment in pharmaceutical goods and services (action 2); identify opportunities and facilitate growth in the export of pharmaceuticals (action 7) promote two-way movement between industry and academia (action 11); and align industry activity with the National Innovation Awareness Strategy” (action 14).

A Medicines Working Committee in the FTA would facilitate these targets.

There are many reasons why the Chinese would seek such a collaboration with Australia. First, Australia possesses significant strengths in pharmaceutical regulation and research.

These include: excellence in basic medical research; excellence in niche areas of biotechnology and pharmaceutical delivery systems; excellent clinical and medical training programs and hospital/health infrastructure, very well integrated with basic medical R&D institutes.
There is also strong continuing support by Government for medical research through the National Health and Medical Research Council.

Further, the Australian Department of Industry, Tourism and Resources has recently administered a $300 million Pharmaceutical Industry Investment Program rewarding pharmaceutical manufacturers undertaking research and development in Australia. From July 1, 2004, a Pharmaceuticals Partnerships Program provides an additional $150 million for five years.

Australia can boast world’s best practice expertise in pharmaceutical regulation through the Therapeutic Goods Administration, Pharmaceutical Benefits Advisory Committee and its economic and pricing subcommittees.
Australia also has excellent capability in critical new knowledge areas and platform technologies: genomics, bio-informatics fast screening and world’s best practice ethical supervision.

The current Australian pharmaceutical manufacturing industry is small by global standards, predominantly generic and characterized by much cross ownership and licensing arrangements with large multinationals. It would rapidly expand, however, if Australian manufacturers were accorded access to the vast Chinese market through a free trade agreement.

In 2001, the sales income of China’s (mostly generic) pharmaceutical industry totalled $US21 billion ($27.4 billion). China’s pharmaceutical market has averaged 18-20 per cent growth over the last 20 years, significantly higher than US and European growth over the same period; by 2020 it will be the world’s largest. It currently produces over 1350 medicines in 24 classes.

In recent years, China has patented only two “innovative” drugs (arteannuin and sodium dimercaptosuccinate) that have received international marketing approval. Yet China’s pharmaceutical production capacity ranks second only to the United States, and it has strong ambitions to move into “innovative” pharmaceutical production.

One of the most common models for pharmaceutical development in China involves joint ventures with local partners facilitating regulatory approval and market share. The commercial prospects for Australia pharmaceutical firms (both “generic” and “innovative”) participating in such joint ventures would be significant. The infusion of venture capital in either direction could enhance the commercialization of ideas and facilitate rapid diffusion of technology.

One particular area of interest could be the opportunity to research and develop for Western markets the unique active ingredients traditional Chinese medicines. Creation of an evidence base to inform government and industry decision-making is a crucial precondition for the establishment of an innovative pharmaceutical industry. It is also vitally important for instituting and maintaining the type of pharmaceutical reference pricing systems present in the Chinese SFDA and Australia PBS.

There, for social justice and economic reasons, governments bargain down price and public expenditure is allocated chiefly to medicines objectively demonstrating therapeutic and cost advantages over existing competitors. A specific Annex in the China- Australia FTA could establish a Medicines Working Committee facilitating regulatory harmonization, research collaborations, clustering, networking and partnership arrangements between pharmaceutical regulators, researchers and managers of the two countries.

In particular, Australian PBS and China’s medicines price regulators
(SFDA) could discuss how best to signal the marginal cost of production internationally. Focused State incentives for “innovation,” outside
profit- driven intellectual property protection, the reduction of development costs for “innovative’ drugs, global marketing strategies for generic medicines and the human rights of workers in this industry would be other particularly beneficial topics of discussion.