Health & Beauty

China has become a "new force" in the global pharmaceutical research and development landscape, and local pharmaceutical companies are moving from "sail sailing" to "hunting for success". A few days ago, a report put forward suggestions on how to avoid risks for pharmaceutical companies "going overseas".

This time, KPMG and GBI released the "White Paper for Chinese Pharmaceutical Enterprises Going Overseas". Yu Zilong, managing partner of life sciences at KPMG China, said that for China's biomedical field, a new era is accelerating. On the other hand, pharmaceutical companies need to have a comprehensive and in-depth understanding of the target country market registration regulation, business and competition, investment and tax environment.

According to this report, China's contribution to global pharmaceutical R&D rose to 4%-8% in 2018; in 2020, a total of 271 cross-border transactions between Chinese domestic pharmaceutical companies and overseas pharmaceutical companies were recorded, an increase of 300% in five years.

Qiu Xuan, a partner of KPMG China transaction consulting, further analyzed that there are multiple driving factors behind the "going overseas" of local pharmaceutical companies. For example, the R&D capabilities of local pharmaceutical companies are becoming more and more mature, and some regions provide "fertile ground" for the budding of innovative drugs.

The report noted that the choice of overseas layout is a comprehensive consideration, and the European and American markets have become the place for most "going overseas" pharmaceutical companies to compete. From the local new drugs that have been successfully approved for marketing in foreign markets, they are not all targeting a single market.

As for how to "go overseas", the report summarizes various modes such as independent "going overseas", patent authorization, and joint development between Chinese pharmaceutical companies and overseas pharmaceutical companies. The report believes that for different models, enterprises should comply with market rules and establish a foothold in overseas markets. First, you must be familiar with talent introduction and team building in overseas markets; second, you must adhere to a "value"-oriented registration, access and promotion model, understand the appeals of local special interests, and achieve a win-win situation for all parties.

Statistics from GBI show that “going overseas” pharmaceutical companies not only need to face a series of common problems such as the establishment of overseas branches, the establishment of holding structures, direct foreign investment or shareholder loans, but also around the process of clinical development and product commercialization. tax planning and management challenges.

Chi Cheng, a partner of KPMG tax consulting, suggested that pharmaceutical companies "going overseas" should fully understand the tax policies and practices of various countries in light of their business reality and future development, and make in-depth, forward-looking, meticulous and flexible tax planning. "Protect the escort and generate value for the enterprise.

The report believes that for enterprises in the early stage (pre-clinical project establishment), it is necessary to do research and preparation in terms of products, target markets, teams, partners, competing products, and policies. In the face of challenges and surprises, strategies should be adjusted at multiple levels to increase value while stopping losses in a timely manner.

For companies that have entered the clinical trial stage, the first step is to add local clinical trials, but this requires understanding the approximate cost of the program and the direct and indirect impacts on the company. Secondly, it can open up new indications for declaration in combination with the indication market access rules and pricing system of the target country. It is also possible to abandon the target and switch to listing in other countries and regions.