British investment in China outpaces rest of Europe

Significant change is taking place within the Chinese pharmaceuticals market, in spite of its dependence on traditional, local medicines, according to a new report by Marks & Clerk, one of Europe's leading firms of patent and trade mark attorneys.

The Marks & Clerk China Report found that China's recent patent filings were neck-and-neck with the volumes filed by the West for more innovative pharmaceutical drugs. These drugs cover areas such as gene therapy, antigens, antibodies, peptides and new chemical entities. In the period 1999-2003, the proportion of China's filings relating to traditional Chinese medicines fell by over a fifth (22%), as China instead looked to develop more modern pharmaceutical drugs.

The maturing role of China's home-grown pharmaceutical players is further confirmed by the report's analysis of the top patent filers for the region. In 1998, only the Chinese Academy of Sciences appeared in the top 10 filers for that year. By 2003, seven of the top 10 positions were occupied by Chinese institutions - including all of the top five.

Nonetheless, the report found that the West continues to dominate China's pharmaceuticals industry in the key drug areas. Overall, in the 1998-2003 period, the multinationals account for seven of the top 10 patent filers in the region. The West also marginally increased its percentage share of the market between 1998 and 2003, gaining a further 4% share in patent filings. Of all foreign patent filings in the region, the US leads the way with 17% market share, Europe with 11% and Japan with 5%.

However, the growth in activity across the Western regions has been dramatically different. While the US firms may dominate, they have barely increased their market share in patent filings between 2000 and 2006, despite the development of China's markets. In contrast, Europe has seen a growth in patent filings of almost a fifth (17%), while Japan has increased its patent filing activity by more than half (51%). Within Europe, UK-originating filings lead the way, at almost double those of its nearest rival, Germany. The UK stands at 2,219 patents, to Germany's 1,323 filings.

'Chinese companies still have a long way to go in the pharmaceuticals sector to challenge Western dominance,' said Tim Andrews, partner at Marks & Clerk. Most of China's top patent filers are academic institutions. It is these same academic bodies that account for most of China's filing abroad although it has done very little internationally.

'This suggests much more domestic innovation is needed to commercialise China's progress and for it to compete on an international level. But considering China's reliance on traditional medicines, it seems astonishing that the West is not doing more to dominate the market, particularly when China is striving to make headway in embracing more modern pharmaceutical products - and with some success.'