By Hepeng Jia/Beijing, China

A new package of encouraging policies for China's biotech field has received a lukewarm response from the industry, but signs of progress are beginning to appear.

On 5 June, the State Council, China's cabinet, released policies to quicken the development of the biotech sector, vowing to devote more resources and capital to the sector, coordinate basic research and industries, and cultivate several multinational biotech giants.

The policies include measures to encourage companies to increase their research input and enhance research infrastructure. The guidance also urges firms to increase support for the industrialisation of research for which the Chinese hold intellectual property rights.

The policies allow companies to add 50 per cent of their research spending to corporate costs so that they can pay less income tax. Because of relatively low manufacturing costs and previous policies neglecting research and development expenditure, China's biotech and other high-tech companies often found they have to pay more tax because of the perceived higher profits. 

Bai Jingyu, chief of the life science section under the National Development and Reform Commission (NDRC), says that the policies are a combination of previous and new stipulations and were released to increase industry confidence amidst economic woes. 

Ren Keyong, general manager of Beijing-based clinical research consultant Accelovance, says while totally new stipulations are lacking among the newly released policies, the encouraging tone of the State Council can be translated to greater financial support by local governments. 

According to a report released by NDRC at the 2009 International Conference of Bio-economics held in Tianjin between in June, China's biotech and pharmaceutical sector realised a total production value of 866.6 billion yuan, rising 25.23 per cent over the same period last year and with a growth rate 2.4 percentage points higher than the average rate of industrial growth.

The problem for the biotech sector has not been the lack of supportive policies, but the unfriendly environment, including a shortage of patient venture capitalists, and the slow drug review process by the State Food and Drug Administration (SFDA), Ren told Chemistry World.

The slow review process for clinical trial applications for new drugs has long been listed as the biggest headache for biotech researchers in China, but the situation has not been changed despite repeated complaints from industry.

But according to Zhang Jintao, chief executive of Shanghai-based contract research organisation (CRO) Medicilon, with several years' expansion of contract research businesses, China's capacity for new drug development has been greatly enhanced, and this will push the regulators to loosen their rules.

'We cannot expect things to change overnight, especially in the pharmaceutical sector. In fact, the process from developing generics to the mushrooming CROs has been a clear sign of progress,' Zhang told Chemistry World.