By LORETTA CHAO
BEIJING—A number of Chinese pharmaceutical companies, long known for being manufacturers of generic versions of Western medicines, are investing in the development of new drugs. One of them is a finalist in this year's Asian Innovation Awards.Hutchison Medipharma Ltd. says it has developed an oral drug using an herb calledAndrographis paniculata for the treatment of two debilitating inflammatory bowel diseases, ulcerative colitis and Crohn's disease. According to the company, the herb is traditionally used as a Chinese folklore remedy for a wide spectrum of ailments such as upper respiratory infections and common cold. The company is a Shanghai-based research lab that is 60%-owned by Hutchison China Meditech Ltd., a subsidiary of Hong Kong billionaire Li Ka-shing's Hutchison Whampoa Ltd.
Hutchison estimates that the bowel diseases, which cause a range of symptoms from abdominal pain to fever and fatigue to unintentional weight loss and ulcers, affect one million patients in the U.S. It also says existing treatments include drugs that are not recommended for long-term use because of serious side effects such as acne and puffiness of the face. Some treatments are extremely expensive, ranging from $20,000 to $30,000 per year, the company says.
Hutchison is one of a number of Chinese pharmaceutical companies investing in new patents and in "carrying out their own innovation" in a market where high research and development costs and failure rates have discouraged many from trying to innovate on their own, said Jiang Jiandong, director of the Institute of Materia Medica at the Chinese Academy of Medical Sciences.
"Most Chinese pharmaceutical companies invest 1%, or at most 2%, of their revenue in research and development," said Ren Jinsheng, the chairman of Nanjing-based, New York Stock Exchange-listed Simcere Pharmaceutical Group, which created a medicine called Endo, used to treat non-small cell lung cancer, the most common type of lung cancer.
Endo, which was developed with original research by Simcere's development team but doesn't contain herbs used in traditional Chinese medicine, earned about $33.8 million in sales last year, said Mr. Ren, who added that his company invests 6% to 7% of its revenue.
But Mr. Jiang said companies like Simcere are few in China, making the nation far from being recognized as a global innovator in the pharmaceutical industry because inventions are largely limited to modifications to existing medicines.
"The R&D for new medicine involves the dedication of many researchers" and is "a very long-term process," Mr. Jiang said. "What's more, it's hard to control the quality of newly developed medicines, and this is a high-risk investment, so the chances of failure are quite high. Very few Chinese companies have incentive to create their own medicine from scratch, so they are more inclined to buy patents from research institutes at home and abroad," then make improvements on those medicines.
"We fully realize the high uncertainty in the process of innovating new medicines, and we are prepared for the high risks ahead in our innovation process," Mr. Ren said. But without innovation, "there is no future for us," he said. Simcere expects to increase its research and development team to 1,000 in the next three to four years, up from about 300 now in the hopes of becoming a global pharmaceutical company known for innovative and high-quality products, he added.
Hutchison, meanwhile, was started with similar intentions. Samantha Du, who founded the company in 2002 hoping to become one of the few Chinese pharmaceutical research and development labs to create new, innovative medicines, believes the new drug, called HMPL-004, is "one of the first innovative, patented, world-class pharmaceutical" therapies to be "discovered and developed in China for use around the world."
A number of drugs using materials from Chinese herbs are already sold outside China, including in Southeast Asia, Russia and the Middle East. But Hutchison says HMPL-004 breaks new ground because it is the first major development of traditional Chinese medicine into a Western oral prescription pharmaceutical, and that clinical trials in 2009 showed that the drug's effects are comparable to "extremely expensive biological pharmaceuticals" by large Western companies "without requiring an injection and without the related side effects."
"This will be the first global herbal botanical oral product treating a serious disease," Ms. Du said, adding that Hutchison has already been awarded a patent in the U.S., and is awaiting a decision on its Chinese patent application, filed last year.
Initial trials of HMPL-004 have had positive reviews. Stephan Targan, director of the Inflammatory Bowel Disease Center and the Division of Gastroenterology at Cedars-Sinai Medical Center in Los Angeles, said that "as a natural oral product, it offers a promising treatment."
Ms. Du hopes the drug will pass U.S. Food and Drug Administration standards so it can be offered commercially as soon as in the next three years. It "will have a lot of historical meaning," she said.
—Sue Feng in Beijing contributed to this article.