Chinese Government's Policies Promote Successful Licensing Transactions
Licensing transactions are a shortcut to the internationalization of small, innovative biotechnology companies. Moreover, it is becoming increasingly common for Chinese pharmaceutical companies to license innovative, international drugs. By cooperating with Chinese pharmaceutical companies, who have outstanding research and development (R&D) capabilities through pipeline licensing and risk sharing, overseas innovative pharmaceutical companies can expand into the Chinese market more quickly, achieve sales goals more efficiently, and reduce investment risk.

The regulatory policies of the medical system in China are complex. For instance, many aspects of development in the pharmaceutical industry are subject to stricter regulations, including R&D, review, distribution, and use. Thanks to the implementation of the licensor system of the drug market, the Chinese drug priority review system, and the medical insurance negotiation system, the overseas licensing transactions of Chinese pharmaceutical companies have become more active and successful.

With the licensor system of drug marketing, biotech licensing does not need to spend a lot of capital to invest in heavy assets, and the integration of existing production resources can be localized. This allows the input of non-production entities to obtain the return that only the production entities could obtain. The implementation has pushed more and more R&D institutions to adopt the model of IP+ CRO + VC to get new pipelines. The implementation of Chinese drug priority review system, especially the acceptance of clinical data on imported drugs, allows companies to license-in and complete phase II clinical trial or earlier projects and participate in multi-center randomized phase III clinical trials. What’s more, international new drugs can be launched in China faster than ever before. Partial adoption of overseas clinical data on rare diseases can be launched in China first, and this increases the enthusiasm of domestic pharmaceutical companies for licensing new medicines. The medical insurance negotiation system allows innovative drugs to enter the medical insurance quickly after being listed, thereby guaranteeing the sales performance and solving the worries of licensing transactions. In addition, the incremental market for innovative drugs will be much more active.
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