The market for contract research organisations (CRO) serving the pharmaceutical industry in China was worth RMB 22 to RMB 28 billion (US$3.5 billion to US$4.5 billion) in 2011, a new report says.

A relative late starter compared with the CRO markets in the US and Europe, the Chinese sector accounted for only around 7-10% of global contract research output in 2011, notes the report by Research and Markets.

Nonetheless, China is expected to benefit from rising demand for its CRO services, as biopharmaceutical companies look for continuing cost efficiencies in research and development.

Dash to invest

The market has already seen a dash to invest from abroad, as multinationals take advantage of China’s low costs, strong talent pool and broad spectrum of diseases.

This has meant a good deal of merger and acquisition activity, with high-profile CROs such as Quintiles, Covance, PPD, CRL and ICON all putting money into the emerging market.  

The trend goes both ways as well. In January 2013, for example, China-based preclinical CRO JOINN Laboratories acquired a US research, development and manufacturing site in Richmond, San Francisco that previously belonged to Bayer.

JOINN plans to invest US$100 million in an Innovation Park at the site, “in an attempt to provide business incubator, technical support, international co-operation and other services for small-and medium-sized biomedical innovative enterprises in Silicon Valley and China”, Research and Markets points out.

Homegrown CROs

Homegrown companies account for 14% of overall revenue in China’s CRO market, says the new report.

The leading domestic CROs market are WuXi AppTec Co Ltd, ShangPharma Corporation and Hangzhou Tigermed Consulting, with revenues of US$374 million, US$94.5 million and US$29.84 million respectively.

Local CROs have also been strengthening their hand by forming alliances among themselves.

The report cites ABO, which in 2005 brought together nine research institutes, including the Academy of Military Medical Sciences, the National Institutes for Food and Drug Control and the National Centre for Biomedical Analysis, as well as three national engineering centres and seven national engineering technology centres.

By 2012 ABO had 38 corporate members, among them JOINN Laboratories, Sino Biological Inc. and Pharmaron, while combined revenues were up by 28.6% year-on-year to more than RMB1.8 billion.