China’s attractiveness to foreign drug manufacturers also stems from the State Drug Administration (SDA) registration process itself. Unlike clinical trials in the U.S. or Europe, Chinese clinical trials are closely regulated by the government, and hence only involve the most elite, government-endorsed hospitals and physicians, many of whom chair the national boards and associations for their respective specialties. Moreover, access to the country’s best minds, facilities and – subsequently – publicity, is achieved at a fraction of the cost of second tier resources in the U.S. and Europe.

In addition, new drugs for important indications that launch first in China before other markets worldwide – and involve technology transfers as a function of moving manufacturing to local plants – often receive fast-track status from the SDA. It is as much a matter of medical necessity as it is of national pride. Serving as the global launch point for a groundbreaking cancer-killer, for instance, would enable China to advance its development on technological, economic, health care, and human rights fronts. New drugs also receive several years’ patent protection. (In the old classification system, currently being restructured subsequent to China’s entry into the World Trade Organization, new drugs launched first in China received 12 years protection. Drugs new to China, but already marketed elsewhere, received 8 years protection if manufactured locally.)

The lower costs of conducting clinical trials in China combined with an accelerated process enables a company to potentially spend approximately US$1 million over a 3-4 year process. Once approved, costs related to production, marketing and distribution are also markedly lower in China.

Consequently, the foreign company accelerates their global time-to-market, improves the visibility and probability of regulatory approval for their product in their home country, and experiences a spike in their portfolio value – while slashing costs throughout.