Biotech Product Development and Launches Encouraged in China

Chen Yang sets out how to obtain the coveted Class I status for a new product in China, a process that involves proving that your product is “new to the world.” She explains how China’s medical pilot zones can be used to generate Real World Data (RWD) to support the approval process.

Over the last six years, China has significantly reformed its drug review and approval system to encourage innovation and to satisfy the unmet clinical demands of the Chinese population. A somewhat unique product registration classification system was created in 2017. Under this classification, only “drugs and biologicals that are new to the world” — that is, Class 1 products — will be considered innovative drugs and thus eligible for a number of benefits under Chinese laws. Though still developing, these incentives include patent term extension, regulatory exclusivity, and reimbursement.

There are essentially three groups of life sciences companies seeking to develop and launch innovative pharmaceutical and biological products in China, and each of the three will need to form different product development and launch strategies for the China market.

The first group consists of China-based companies that have China-developed product candidates. These companies may soon experience the need to out-license their product candidates to multinational companies for global development and commercialization. While it should be the default position of these companies to first launch the products in China, depending on the nature of the product they may also seek to first launch the products in major jurisdictions such as the U.S.

The second group comprises China-based companies that have in-licensed product candidates from foreign licensors. These companies are licensed with development and commercialization rights in China, and their development activities in China are, to a certain extent, subject to the licensor’s global strategies. Unless they can be licensed to manufacture in China, these companies as licensees may join licensors’ early stage global trials. Or they may rely on licensors’ existing clinical data to expedite Chinese approval by conducting bridging or other abbreviated studies. The earlier they can begin the China development, the more likely it is that such companies can get the products approved as Class 1, through the so-called “global simultaneous development and filing” approach. 

The third group is multinational companies that bring in their product candidates to the China market. These multinational companies are likely to take the same global simultaneous development and filing approach for their overseas product candidates. However, Chinese approvals often lag behind regulatory approvals in other major markets, such as the U.S. and the EU. Given this situation, multinational companies tend to seek conditional approval with the China regulatory agency with the regulatory dossier from other jurisdictions. By doing so, they hope to waive the local clinical trial requirements and to seek pre-approval launch in some medical pilot zones of China. By providing the products to local patients in these pilot zones, RWD may be generated to further support the Chinese approval process. 

Importantly, only “drugs and biologicals that are new to the world” — that is, Class 1 products — will be considered innovative drugs and thus eligible for a number of benefits under Chinese laws. 

All life sciences companies prefer having their products approved in China as Class 1 products. However, they may not always succeed in obtaining this classification. They can be impeded by reasons as diverse as global development strategies, differing pace of developments outside China, and the specific therapeutic areas targeted by the product candidates.  

The views expressed in these articles are exclusively those of the authors and do not necessarily reflect those of Sidley Austin LLP and its partners. This article has been prepared for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this without seeking advice from professional advisers.
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