The new generation of drugs that may relieve sufferers and supplant Glucobay has already begun its march into China.

Merck’s Januvia went on sale last year, and Novo’s Victoza became available in October. Lilly and Amylin Pharmaceuticals Inc. (AMLN)’s Byetta won approval in 2009. All three work in different ways to prompt the pancreas to make insulin, the hormone that diabetics need to break down the sugar that builds up in their blood stream.

By 2016, newer classes of drugs will be the fastest-growing diabetes medicines in China, estimates Vineet Kashyap, an analyst for IMARC Group in New Delhi. Medicines such as Januvia, Victoza and Byetta are likely to hold 17 percent of the market by then, approaching the one-quarter share estimated for drugs in Glucobay’s class of starch blockers, Kashyap said.

Eventually, new drugs may come from within China. At the diabetes institute of Shanghai Jiao Tong University Affiliated 6th People’s Hospital, dozens of journal publications hang on the wall next to the office of director Weiping Jia, who led the Shanghai portion of the diabetes study published in the New England Journal of Medicine.

See also: China’s Annual $26 Billion Diabetes Bill to Skyrocket via CDT.

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The public security bureau in the city of Kaifeng said in a statement that it discovered the network with the help of clues found from a theft case in which a woman used fake medicine to replace genuine medicine while pretending to make a purchase at a drug store in April.

After a four-month investigation, authorities in Kaifeng stormed 117 counterfeit drug production and sales sites and arrested 114 members of the network, which was based in the city of Anyang.

 Although the government is trying to crack down on the illegal drugs, China is still one of the biggest producers of counterfeit drugs. This poses a risk to pharmaceutical companies that have invested heavily in the Chinese market. The Wall Street Journal adds:

China’s government frequently demonstrates its dedication to social issues by proclaiming seizures and arrests. This announcement came after a legal change in May that extended the criminal definition of counterfeit drugs to include all fake medications, not merely those that harm humans.

Counterfeit sales within China represent a risk to the numerous pharmaceutical companies, such as Roche Holding AG and Pfizer Inc., that have invested heavily over the past few years in the Chinese market and rely on it for growth. Sales of pharmaceuticals in China are expected to hit $50 billion in 2011, up from $42 billion a year earlier, according to data from market researcher IMS Health.

Last week, Chinese police announced the seizure of more than 300 kilograms of illegal drugs and arrested more than 12,000 people involved in production and trafficking through a network of online video applications and chat rooms.

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The gold-encrusted hallways, marble foyers, and imposing granite frontage are not from Versailles, or the Vatican, or even Caesar’s Palace in Las Vegas. They are from the newly completed corporate headquarters of state-owned Harbin Pharmaceutical, in northeast China. No word on exactly how much the literally palatial offices cost to construct, but the mind boggles. One prominent journalist from Chinese state TV severely criticized the company for its garish use of funds, explicitly comparing it to the Palace of Versailles, but some netizens posting online defended the monument as a natural expression of China’s prosperity:

What happened…? This is very normal. What’s the big deal? This is what the healthy development of a business looks like. So Chinese state-owned enterprises aren’t allowed to do this? I support Harbin Pharmaceuticals… Hope there will be even more enterprises like Harbin Pharmaceuticals…

For the last several months, I’ve been just waiting for the moment when somebody rolls up a big wad of 100 Renminbi notes into a cigar, sticks it in their mouth, and lights up. In the meantime, I’m going to have to settle for this as the next best thing.

Business Insider (via Stan Abrams) finds a less gloomy timeline on which to place these stories: an HSBC luxury market research report suggests that China is simply passing through a normal “Show Off” phase of “luxury evolution”:

According to HSBC:

The urge to splurge, China at the ‘show-off’ stage

In Chinese and Russian communist societies, individual property was not allowed and private wealth was traditionally suspicious. With the liberalization of the economy, a new class system was created where your place on the ladder may depend on how much money one earns, and owning luxury goods can help display the level of one’s wealth.

The report cites a book that details the five stages of luxury evolution in Asian countries from “subjugation” to “way of life,” and China is smack dab in the middle at “show-off.” (In comparison, India is still moving out of “subjugation,” where people are deprived and start to build a desire for luxury brands. Japan has totally evolved to “way of life.”)

Uncertainty still surrounds the photos, which have been variously described as showing offices, an employee recreation centre and, according to an anonymous source at the company itself, an art museum. From the AFP:

The Beijing Business Today newspaper quoted an unnamed spokesperson for the company as confirming the pictures were genuine, but said they were of an art museum located in the same building as the firm’s offices.

“The design and decoration of the office’s section are very simple. But we hoped the design of the museum would have some sense of art,” the spokesperson was quoted as saying.

However, photos of the museum posted on the company’s website showed an area of white-painted walls and brown wooden floors, and did not look anything like the opulence seen in the pictures released online.

Sources:

Après Nous, Le Déluge – Patrick Chovanec
China Has Entered The “Show-Off” Stage Of Luxury Evolution – Business Insider
China state firm’s sumptuous office causes outrage – AFP

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Mao [Mengjia], 26, tripled his income after quitting his job at a hospital in northeastern China to work as a medical sales representative in 2009. As many as 14,000 physicians like Mao will join foreign pharmaceutical companies over the next five years, according to Aon Corp. (AON)’s Shanghai-based human resources advisory firm ….

“The pay for new doctors is low, which makes it hard to survive,” said Mao, who was one of 30 to graduate in 2005 from the medical college he attended in Dalian, 460 kilometers (286 miles) east of Beijing. Nine of his classmates have jobs in pharmaceutical sales, he said ….

“There is a great lack of doctors at the most primary levels like county and small-city hospitals, and that’s also where it’s hardest to find them,” said Shi Yingkang, dean of the West China Medical School at Sichuan University in Chengdu, and vice president of the Chinese Medical Doctor Association.

After graduation, half of his students spurn local hospitals for better-paying jobs overseas or in drug sales, Shi said. Pay for local rookie doctors starts at 2,000 yuan a month, while medical representatives may get two to three times more, he said.

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On Thursday, in their first day of trade on the Shenzhen stock exchange, the heparin supplier’s shares soared 18.3 percent, valuing the company at about 70 billion renminbi, or $10 billion. The initial value and the sharp rise Thursday recalled the heady days of the world before Lehman Brothers collapsed, and the gains bucked another weak session for Asian stock markets.

The listing has most likely catapulted Li Li and his wife, Tan Li, to the top of China’s rich list: the two hold about 288 million shares of the company they founded in 1998, according to the state-run news agency Xinhua. At a closing price of 175.2 renminbi, their stake is worth about 50.4 billion renminbi, or $7.4 billion.

This easily tops the estimated fortune of Wang Chuanfu, the owner of the car and battery manufacturer BYD. He had been China’s wealthiest man, with an estimated fortune of $5.1 billion, according to data compiled by Hurun Report, a research and publishing house based in Shanghai.

See also “Drug maker debut lands China’s new richest man” from Reuters.

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As growth in the U.S. and European markets remains sluggish, many giant pharmaceutical companies are expanding their sales forces, distribution channels and research operations in China to tap into the country’s robust drug market — expected to expand at about 22 percent annually over the next five years, said Mandy Chui, senior principal of IMS Health Inc.

Chui is the China expert at IMS Health, which provides market data on the pharmaceutical and healthcare industries.

“We see companies continuing to invest in China because the other markets are not growing,” Chui said in an interview. “For companies, (China’s growth) is certainly a good story to tell to the Street, right?”

With a huge and aging population, rapid urbanization and adoption of Western lifestyles that give rise to hypertension, obesity and other diseases, China is poised to become the world’s third biggest pharmaceutical market by 2013, up from its current No. 5 spot, said Chui.

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The matter came to light after The Times of India reported that Nigeria’s Drug Regulatory Authority has seized a large consignment of fake anti-malaria drugs that were made in China but stamped ‘Made in India’ to escape blame. The TOI report resulted in the Indian government lodging a protest with China. 

“We are highly concerned about the case and are sending investigating officials to the Chinese provinces involved, including Guangdong,” SFDA spokesperson Yan Jiangying told a press conference. 

The statement shows that SFDA headquarters is Beijing does not fully trust its provincial units to carry out monitoring and investigation into the concerned company. It came soon after the SFDA hit out against a report in a British daily saying that fake Chinese drugs are flooding the United Kingdom. 

See also past posts on counterfeit medicine.

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…Indian and Chinese scientists are rapidly developing the ability to innovate and create their own intellectual property as a result of Western companies shifting their research and development operations to the two countries. In fact, several non-Indian firms with business units in India and China are performing advanced discovery and have begun to move into the “highest-value segments of the pharmaceutical global value chain,” according to the study.

“Globalization is happening faster than people think. Having India and China conduct such sophisticated research and participate in drug discovery was unimaginable even five years ago,” report author Vivek Wadhwa, an executive in residence and adjunct professor Duke University’s Pratt School of Engineering, and a fellow at the Labor and Worklife Program of Harvard Law School, said in a statement. “The challenge is for America to understand this trend and realize the potential of globalization”…But, it is too early to tell if India and China will eventually rival the United States as important sources of novel drugs, and not just as the world’s top producers of generic medications. Whereas high-tech sectors such as software development and electronics manufacturing have experienced tremendous growth in Asia – the former in India and the latter in China – in the pharmaceutical industry, new products take years to emerge from the research and development stage and then must still clear regulatory hurdles. According to Wadhwa, most of the new risk-sharing agreements between Western and Asian drugmakers are relatively new, dating to 2005, so it could be another decade before they produce concrete results.

See also past CDT posts on pharmaceuticals.

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Beijing is taking Draconian measures to clean up for the Olympic Games which start next month. In the past week, 300,000 high-emission or yellow-labeled vehicles, mainly freight trucks, have been banned from the city until Sept. 20 to ensure a “green” Olympics.

Du Shaozhong, deputy director of the Beijing municipal environmental protection bureau, announced the auto restrictions in an attempt to ensure acceptable air quality for the Olympic athletes. Beijing residents are familiar with such bans–during conferences and for periodic “blue sky” days–but how they will cope with such a long-term ban is difficult to imagine.

Another concern of the clean-up was revealed two weeks ago when the Chinese authorities revoked licenses for three pharmaceutical manufacturers, punishing 125 other companies (mainly retail pharmacies) for making, selling or distributing performance-enhancing drugs.

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Chinese officials said Wednesday that licenses had been revoked for three drugmakers, including one that sent human growth hormone to the United States, and that they had punished 125 other companies, mostly pharmacies, for making, selling or distributing performance-enhancing drugs.

The move was heralded as evidence that China was determined to live up to its promise to host a clean Olympics.

Officials also challenged claims by the United States that China accounted for 99 percent of the illicit performance-enhancing drugs in the largest drug-enforcement action in United States history, known as Operation Raw Deal, last year. The United States had asked China to investigate 37 drug manufacturers.

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