“The pessimist sees difficulty in every opportunity, the optimist sees the opportunity in every difficulty”.

Churchill, Winston

Expectations are same:

Safety

Efficicacy

GMP compliance

Profile attribute

Population GDP growth

GDP per capita

Public expenditure on health

Private expenditure on health

2003 1.293 B Bln USD 4,157.8

USD $3217

1.6% of GDP 3.0%

2009 1.341B Bln USD 10,085.7

USD $7519

2.4% of GDP 2.2%

Profile attribute

Import of goods

Import of goods and service

Export of goods

Export of goods and service

2003 Bln. US$ 412.8

27.4% of GDP

Bln. US$ 438.2

29.6%

2010 Bln. US$ 1396.0

22.3% of GDP

Bln. US$ 1577.8

26.7%

Total value 1252.3 Billion RMB

Annual increase 21.3% during 10th 5 year plan

above GDP and national average level

section value billion

chemicals 240.58

Preparations 354.69

TCM 335.91

Biological Products 131.42

Medical Products 189.62

Q2 2012 CNY 405 B. = 21.1% growth

Q1 2012 24.1% growth

2012 growth rate significantly higher than Q1 and Q2 of 2011

12m MAT (moving annual total) 19.6% growth rate

compared with 18.3% in MAT Q2 2011

Hospital (100 beds or more) sales at hospital purchasing price

Domestic Application Reception Foreign

Application Reception

Chemical

Chinese

Biologic

Supplemental

Quantity 1528 105 69 2433 599

Sum 4135 2433 599

Total 4734

category 2008 2009 2010 2011 2011 renewal approvals

Chemicals 2449 1587 1003 717 581

TCM’s 1160 1706 151 143 55

Biologicals 132 67 24 38 24

Total 3741 3360 1178 898 660

Approved Drugs in 2010

Chemical Drugs Chinese Medicines Biologics

New drug

Form changed drug

Generic drug

New drug

Form changed drug

Generic drug

New drug

Form changed drug

Generic drug

103 51 640 12 59 9 9 1 2

794 80 12

886

Type Domestic Foreign Total

Chemicals 466 255 976

TCM 33 3 36

Biological 29 50 79

Total 528 308 1091

1963: Chinese MoH planned drug regulation to manage

1979: MoH and State Pharmaceutical Admn jointly published the New Drug Management Regulation

1985: first comprehensive Drug Admn. Law

1988: rule for new importation drug registration; provisions were enacted in 1991 and revised 1999

1992: US-China MOU

1993:Provisions for Drug Administrative Protection were enacted, 7.5 years of market exclusivity for patented drugs

1999: The State Pharmaceutical Admn of China: division of Drug Admn in the MoH and the Division of TCM Admn Bureau were merged

2001: Drug Admn. Law revised; requires premarket testing and approval and prohibit drug adulteration

Amendment 1; provision for New Drug Approval;

Amendment 2; provision for new Biological Drug Approval

2001: Gained membership with WTO

2002: New Drug Registration Regulation aligned with WTO

The State Food and Drug Administration (SFDA), primarily oversees drug administration

Used to be an independent authority but in 2008 incorporated into MoH because of drug safety and internal corruption scandals

Centre for drug Evaluation (CDE)

National Institute for the control of Pharmaceutical and Biological products (NICPBP)

The State Development and Reform Commission (SDRC), responsible for the drug price administration; and

The Provincial Administration for Industry and Commerce, cooperating with the Provincial Food and Drug Administration, (PFDA) to regulate drug advertisements.

Food and drug safety

Basic healthcare system

Perfect drug supply and guarantee system

Guidelines for accelerating structure adjustment of pharmaceutical industry jointly issued by MIIT, MOH, and SFDA on Oct.9,2010

Guidelines and basic principles were provided

Incentives for 2012 GMP implementation

Standards and timeline will not change

Accelerating review and approval tech and transfers among subsidiaries and M&A deals

Higher tender price for “better” products with 2010 GMP certifications

Accelerated GMP certifications of facilities with international compliance certifications

Research program listed as “state major R&D projects” will be reviewed through green channel

Encourage short supply and orphan drugs mfg.

Multilateral cooperation: WHO, ICH, APEC, DCVRN, FHH, IRCH and PIC/S

Bilateral cooperation: signed MOU with USA, Canada, Cuba, Brazil, Australia, EU, Russia, UK, France, Denmark, Italy, Latvia, Pakistan, Singapore, South Korea, Japan and Thailand etc.

ICH Chinese focus study teams:

Formulated work specifications

Regular work meeting

Positive advancements:

Publication of the translated version of ICH guidelines

Established research achievement online disc

2010 annual report

Complete logo design of ICH Chinese team

Expanded study team size

WHO vaccine pre-authentication

System authentication

Signed negotiation cooperation mechanism with EC’s DG Enterprise and Industry in Oct.2007

First annual high level working group meeting between SFDA and EU was in Bejing in April 2009

Commissioner Mr. John Dalli visited China and both parties renewed MOU in Oct.2010

In August 2007, US FDA Commissioner visited SFDA

In Dec.2007 signed safety agreement of Pharmaceuticals and Medical Devices with DHHS of USA

In Dec.2010 annual Sino-USA pharmaceutical regulatory meeting was organized and discussed mutual points of interest and collaboration

FDA exchanges

Generic Drug Forum

Annual meeting and conferences (BIO Chinese and JCCT framework)

New Drug Application

Drug standardized by the State (ANDA/ANDS)

Import Drug Application

Supplementary Application

“New Drug” never been marketed in China

Old regulation; produced in China for the first time

Chinese manufacturer who produce imported drugs on

Chinese market should submit the application accordingly to

the requirements for “the drug standardized by the State”

Class 1: NCE’s are true NCE that have not been marketed in the world

Class 2: NCE’s marketed abroad but not part of foreign pharmacopoeia and have not been imported to China

Class 3: new combinations of already approved drugs

Class 4: NCE’s listed in foreign pharmacopoeia or previously imported into China; new dosage forms of approved drugs; new route of administration of approved drugs

Class 5: New indications for approved NCE’s

China accounts for 20% of world’s population and only 1.5% of global drug market

World’s third largest prescription drug market and likely to grow for sometime

Basic health insurance is not available for all therefore low cost and ability to cost effectively follow innovations

Currently has about 4000 drug companies and most focused on generic business

2010 SFDA approved 886 applications and 651 were generics (73%)

No “branded drug” concept like in USA

Amended regulation for drug registration uses “new” drugs that has not been previously marketed in China. “Generic” drugs has an existing national drug standard and was previously approved by SFDA

Generic chemical drugs need BE studies to be conducted on 18-24 subjects

Generic drugs based on TCM or natural drug injections CT on not less than 100 pairs of cases are required

Biosimilars subject to full phase III CT

Establish Regulations: measures for drug research supervision and management

Establish Systems: scientific registration management system with technical review, audit, inspection etc.

Establish the teams: internationalized professional inspector teams

Establish the mechanisms: uniform, coordinated, flexible efficient dynamic audit and inspection mechanisms

Establish the institution: grading and classification management institution for drug R&D units, CT, contract study and registration applicants and commissioners

Article 11:

Applicant to submit documents explaining the China Patent Status and ownership rights. Assume liability of patent infringement

Article 12:

If an infringement dispute occurs after the registration parties negotiate or resolve through judicial organs to patent admn institutions

Article 13:

Under patent protection another sponsor can apply for registration within 2 years prior to expiry

Current Provision was promulgated on Oct.30, 2002

Put into force on Dec.1, 2002

More reasonable and suitable, particularly with regard to China’s entry into WTO

Qualification of the applicant has been clearly stipulated

Applicant should be a legal entity such as corporation, pharmaceutical firm, government agency and/or scientific institution

Import drug registration require branch in China or China’s authorized agency

Assigned person should have sufficient knowledge and proficient in admns of regulations

China’s membership in WTO:

Within 6 years of approval of drug with NCE the regulatory authority will not approve use of proprietary data to apply for NCE

Required to submit patent information, ownership, non-infringement and promise to assume all the infringement responsibilities

Allowed to submit within 2 years of patent deadline so as to allow to be in market immediately after patent expiry

Application to be filed with the provincial FDA (PFDA)

PFDA determines whether application dossier is in proper order

PFDA provides notification of acceptance or reasons for rejection and opportunity to reapply

Within 5 days of acceptance, the PFDA will conduct an on-site inspection and take samples of 3 consecutive batches to send to Drug Control Institute for inspection

PFDA will submit the dossier with its examination recommendation, verification report, results of inspection to the SFDA CDE within 30 days

CDE will organize pharmaceutical, medical and other technical staff to examine the application dossier and verification recommendations

May request supplemental information if necessary

Drug control institute provide the sample test report to the CDE. PFDA and the sponsor (30 days)

CDE prepares a general examination recommendation and submit to SFDA along with the related data (160 days)

SFDA makes the approval decision and issue a Drug Approval Number (if no CT needed) or Clinical Trials approval (10 days)

Applicant to submit the CT data to CDE for final approval

CDE conduct technical examination of CT report

SFDA makes approval decision based upon technical examination recommendations. (30 days)

Issue DAN and Notification of Approval Opinion (10 days)

Time to approval 205/245 working days (50 weeks) provided everything move as planned

For drugs not meeting safety requirements the Amended Regulation grants SFDA authority to suspend acceptance or approval of generic drug application

wide quality and efficiency gaps existed before 2007

BE studies for such products in next 5-10 years

Level of generic drugs to raise to international standards

Start with essential drugs and commonly used drugs

Initiatives will begin with essential drugs with large population, high consumption volume, multiple mfg.

Oral drugs first and later on injectables

BE guidelines and product selection

RLD identification

All required studies to be fully initiated by 2014

Injectable and other dosages from 2015-2020

SFDA and Guangdong provincial government joined to develop capacities on experimental basis

MOU signed in March 2012 reform exploration and trial for drug evaluation and approval system

To organize technical evaluation and approve new drugs tech transfer and drug production TT application

Decisions will be filed with SFDA and SFDA will issue drug approval numbers

Review and approve for CMO except TCM and biologicals

MAA specified in certificate of pharmaceutical product (CPP) can be holder and applicant of IDL

Fees CNY 45300+ CNY 50000 (sample testing)

Clinical trials may be required for registration and may cost to the order of US$ 4-5 millions

IDL application dossier is accepted

Centre for drug evaluation (CDE) will issue a deficiency letter within 160 working days

Applicant will have 4 months to prepare and submit the supplementary data required

CDE will send its evaluation report to the SFDA within 54 working days

The SFDA will issue the final decision within 25 working days

Total 359 days or 71 weeks

Intellectual property environment

1993:

Patent law to include API rather than process only

Invention protection term from 15 to 20 years

Joined the Patent Cooperation Treaty to allow multi-jurisdictional filing

2002:

Adopted data exclusivity for 6 years term

Added provisions on patent linkage

The system institution and legislation construction of drug registration management can not be fully adaptable to the demand of the new drug

innovative production and industrial development changes in China

The relevant management regulation in the drug R&D field (especially to CT) are still to be completed and the complete system still needs to be constructed for

technical guidance principles

The whole-process supervision and inspection system of drug registration is not complete, and there is a lack of professional and full time inspection teams, shortage of admn resources while continuous increase of supervision and

management demands

The risk control capacity in the drug R&D and registration process is insufficient capacity of communicate and supervise before, during and after study to be

improved; excessive emphasis on post hoc supervision and management does not resolve the earlier croped issues

Generic IDL applications with clinical data, CDE will need another 90 working days to evaluate the dossier

Certificate of good sales practice (CGSP) is required to distribute and sell pharmaceuticals in China

Should have an inspected warehouse (at least 500 sm), registered pharmacists and documentation system

Small agent employ the CGSP to do the business but it is prohibited by the SFDA

Generic name should be in national’s reimbursement drug list (NRLD)

Ministry of Human Resources and Social Security updates the list every 4 years

National Development and Reform Commission (NDRC) controls the retail price of drugs listed under NRDL

Exceptional retail price approval if proven that quality, safety and efficacy are better

Such sponsors have little competition and higher margin to support their promotion campaign

Agents can be blacklisted by the hospitals if they can not provide according to the signed agreement

Often use “money promotion” rather than academic detailing. Illegal step and getting legal actions

Annual pharmacovigilance report so as to re-register after 5 years