Big Data's Big Opportunity in China

Bryan Spielman on why China is poised for a data renaissance-one that could play a pivotal role in the next wave of pharma innovation.

The potential for big data to transform healthcare in the world’s most populous country is a significant strategic option for the pharmaceutical industry. Imagine the wealth of genetic, biological, and disease-specific data that could be generated even from a fraction of China’s billion plus population.

However, that is about to change. Drug development today is a costly and risky endeavor, with costs averaging $2.6 billion and only about 7% of early-stage drugs making it to market.  Leveraging big data insights from the enormous amount of information collected in clinical research can help drug trials run more efficiently and effectively, and ultimately bring new treatments to market while lowering risk for the companies betting on them.

Stars aligned

As a result, I believe China is poised for a data revolution in healthcare. Here are some reasons why.

Significant unmet medical need. China’s healthcare market is growing at a breakneck pace. By 2020, China is expected to become the world’s second largest drug market, after only the US, and spending on pharmaceuticals is expected to reach $107 billion this year, more than quadrupling since 2007. This growth is driven by significant unmet medical need. Half of all newly diagnosed liver cancer patients and a third of all diabetes and lung cancer patients worldwide live in China. The situation is only growing more critical as China’s population ages. It is estimated there will be 223 million people over age 65 in China by 2030. In addition, patients in China are demanding newer and better treatments, driven by a growing middle class with newfound purchasing power. All this combined makes a perfect storm for leveraging big data tools to find new cures and treatments for diseases linked to genetic and environmental factors, and develop targeted therapies to treat them.

Government support and growing healthcare infrastructure. The Chinese government has implemented massive healthcare reforms over the last several years, expanding access to healthcare for people all over China, particularly in rural areas. The government recently announced plans to double the number of primary care doctors by 2020, saying it plans to leverage technologies such as mobile devices and cloud systems, and implement digital databases for electronic health records for the entire population by 2020. In addition, a steady stream of Chinese nationals working in life sciences have returned home to work, enhancing the nation’s scientific talent pool, and contributing to a renaissance period of sorts for science in China.

Capital abounds. Healthcare M&A activity has recently heated up in China, reaching a record $18.5 billion in 2014.  Investors are excited about the prospects for growth not only in large cities, but across the entire country, which could translate to increased opportunity for incorporating big data across a number of healthcare settings.

Challenges remain

However, there are also challenges to consider, many of which need to be overcome in order for the burgeoning healthcare market to grow and thrive:

Concerns about government data policies. China has implemented increasingly tight data localization policies over the last few years and is proposing further restrictions, such as requiring all Chinese data to be stored on servers in China while granting access to government authorities. These policies are making it hard for foreign companies to do business there. Critics say that, if fully implemented, these policies could cause China’s GDP to fall by 1.1%.

Low activity in cloud computing, big data in healthcare. While many other industries in China are taking advantage of cloud computing and data services, this is not the case in healthcare. Although the government recently announced it wants to incorporate these tools in the healthcare system, it was clear in my conversations with senior executives from a number of established and emerging Chinese life sciences companies that there is little experience even with basic tools for data management such as cloud computing, which may prove difficult in encouraging uptake of larger data tools. However, this may soon change, as the cloud-computing market in China is rapidly expanding in other industries and is expected to grow 45% this year.

Difficult system for approvals and reimbursement. Approvals happen on a regional level in China, making it a cumbersome and time-consuming process with different systems and requirements in each province. In addition, the government is focused on reducing healthcare costs, particularly spending on drugs, which may stifle innovation in some areas.

Catching up

As we look to the future in China, it’s clear there is a huge opportunity for big data to play a major role in driving the next wave of pharmaceutical innovation. Patients in China deserve the advances that big data in clinical research can help bring them. And although China may be behind in this sector for now, it likely won’t be for long.

Bryan Spielman is Executive Vice President of Medidata Solutions. He can be reached at bspielman@mdsol.com.