Location of links in the pharmaceutical value chain in Сhina: the role of contract research organizations

Cross-border pharmaceutical value chains are expanding their presence in international production, including in the highly profitable R&D link. Leading pharmaceutical companies, known as Big Pharma, are establishing contract relationships with research organizations in many countries around the world, including emerging economies where China plays a very significant role. The purpose of this study is to assess the placement and location of Chinese contract research organizations in the R&D links of the international pharmaceutical chain. As a result of the study, the authors came to the following conclusions. The development of the Chinese market can be dated to the beginning of the 2000s, when outsourcing firms for large international pharmaceutical companies began to be created. The Chinese market for contract research organizations has developed at a faster rate compared to the world market. As the key explanations for the rapid development of the Chinese market, the authors highlight the strong state support of the Chinese government, the improvement in the quality of research services provided by Chinese companies, as well as the lower price of these services compared to competitors. Market development relies primarily on the close ties of Chinese contract research organizations with Big Pharma companies. Demand from local Chinese pharmaceutical companies and from foreign affiliates of small and medium-sized of pharmaceutical companies located in China plays an increasing role in stimulating the market for contract research organizations. The rapid development of the Chinese market for contract research organizations has been accompanied by its consolidation and concentration, as well as monopolization in some market subsectors. Market consolidation was also supported by the accelerated pace of M&A in pharmaceutical R&D amid the pandemic.