The gap between the Chinese and global pharmaceutical sectors has widened in recent years, according to a new report by the National Research Center for Science and Technology for Development. The study, titled Can China’s Biopharmaceutical Industry Catch Up with Industrialized Countries?, attributes the Chinese lag to incomplete government incentives, a lack of collaboration between domestic research institutes and drug companies, and the absence of effective intellectual property rights.

The report points out that while government subsidies to fuel pharmaceutical development in China have remained strong, the country has not yet created tax incentives or an incentive environment for approving new drugs and managing drug pricing, all of which provide a platform for local pharmaceutical companies to nurture high technologies. Moreover, China’s pharmaceutical industry still lacks independent and efficient research and development capabilities, with poor corporate support for new drug research. The sector is also challenged by a lack of intellectual property rights to effectively protect domestic innovation, contributing to destructive competition in the field.

To regain competitiveness with the United States, Europe, and other markets, Chinese corporations must develop indigenous patents, according to the report. Of the more than 200 pharmaceutical firms in China, most produce generic drugs, such as interferon or insulin. So far these companies produce just 20 different kinds of drugs and hold only three independent drug patents, reports Xinhua News.

In February, the Ministry of Commerce announced plans to build 100 export-oriented “innovation bases” for the pharmaceutical sector by 2010. By offering financial and technical support and facilitating the entry of Chinese firms into international markets, the strategy aims to bolster Chinese exports of high-tech products while fostering domestic innovation in the pharmaceutical industry.