HONG KONG – New draft regulations in China for the registration of drugs could make it harder for companies that don’t have innovation capabilities.

The Chinese drug regulatory authority recently issued a revised version of the Measures for the Administration of Drug Registration for public consultation. The revision of the framework, which has not been updated since 2007, is part of the government’s efforts to upgrade China’s pharmaceutical industry.

“The draft includes many changes in many different areas, which shows the strength of the ongoing reform,” said Xu Chao, international business director and managing director of the European branch at Osmunda, a global medical technology intelligence provider.

The new version outlines situations in which the authority would turn down a drug registration application. For the industry, a particular area of focus in that regard is on innovative and improved drugs and generics.

According to the draft, a new drug that only changes the dosage, acid radical, alkali base or the administrative route of an existing brand-name drug without proving innovation or higher clinical value cannot be registered.

What’s more, companies will not be able to register drugs that cannot be proved to have significantly better clinical value than biopharmaceutical products already marketed in China.

“Defining innovative drugs with their clinical value is a big step forward,” said Xu. “It largely cracks down on those so-called innovative drugs or improved drugs. Some of them just slightly change the formula of drugs that have already been used and do not make any progress in terms of clinical value.”

The registration framework also emphasized that generics should take the brand-name drug as the reference to ensure quality and efficacy consistent with the originator drug.

The standard of Chinese generics products has been under the spotlight for a long time, as experts believe it is too low. The CFDA has issued several announcements regarding quality and efficacy requirements for generics in the past couple of months.

“The generics industry expanded rapidly a couple of decades ago as part of an expansion of the health care industry. Part of their appeal was the speed to which generics could get to market,” said Shi Lichen, director of Dingchen Pharmaceutical Management Consulting Center, a Beijing-based industry intelligence provider.

There are now more than 4,800 pharmaceutical companies in China and 95 percent of the 105,000 chemical medicines that have been approved are generics. Strictly speaking, there is no brand-name drug developed by Chinese companies, according to Shi.

“Some generic drugs are based on other generic drugs, rather than on brand-name drugs,” he added, which leads to lower quality drugs flooding the market.

China now is one of the largest markets for generics in the world. Its neighboring country India is another. Statistics from Guosen Securities Co. Ltd. show that the market capitalization of listed generics makers in China has reached ¥500 billion (US$76.2 billion).

“Once the draft gets finalized and is being implemented, generic drugs whose quality and efficacy are not on a par with branded drugs will not get registration approval,” said Xu. “This, together with the tighter criteria for innovative and improved drugs, can largely ease the pressure on the CFDA with [a] long-standing backlog of drug registration applications.”

Upgrading the sector

The government’s dedication to upgrading its pharmaceutical sector could also be observed through the change of active pharmaceutical ingredients (APIs) management in the latest draft.

Under the new framework, APIs cannot get marketing approval independently but can only apply for marketing alongside a related pharmaceutical preparation.

“This gives the APIs makers two options, either providing their APIs directly to other pharmaceutical firms or restructuring their business to make drug preparations as a whole package.” said Osmunda’s Xu. “This will force many low-end bulk drug producers to shift to a high-value-added business.”

The draft also marks the first time that both an informal communication channel with the CFDA and an expert consulting mechanism is put in an official regulatory document.

“Those informal communications, for example preclinical meetings, can benefit both the pharmaceutical companies and the authority. It could speed up the approval process as the two sides have deeper mutual understanding. Currently we have seen such meetings and negotiations in China, but companies still find that officials usually [use] diplomatic-[speak], which is quite vague,” said Xu.

Echoing the newly launched Marketing Authorization Holder (MAH) system pilot program, the updated drug registration regulation also revises the definition of a marketing approval application. (See BioWorld Today, June 9, 2016.)

Domestic drug manufacturers, R&D institutions and individual researchers of Chinese nationality can obtain regulatory approvals to commercialize pharmaceuticals, and completely outsource the actual manufacturing to contract manufacturing organizations (CMOs). That is designed to give R&D pharmaceutical companies and researchers incentive.

In November 2015, the National People’s Congress first issued a decision to carry out the pilot MAH program.

“There has been talk about how China’s pharmaceutical sector could evolve during the past nine years, and this document gives the direction,” said Xu. “We will see detailed guidelines followed to give instructions on how all these changes could be implemented.”