The Chinese biopharmaceutical industry is embracing new opportunities in segmented production. After the launch of pilot projects in 2024, companies such as Shengdya and Novo Nordisk have improved efficiency through models like group integration and cross-border self-construction. PricewaterhouseCoopers (PwC) recommends that enterprises focus on six major strategies including supply chain planning and intellectual property protection to seize the dividends of localized development.

In recent years, the Chinese biopharmaceutical industry has developed vigorously, with continuous improvements in technological innovation and supply chain flexibility, making the demand for segmented production in the industry increasingly prominent. As the Marketing Authorization Holder (MAH) system continues to improve, drug marketing and production licenses have gradually been unbundled, and the policy on contract manufacturing has been gradually relaxed, bringing unprecedented development opportunities to the biopharmaceutical industry. In October 2024, the release of the Pilot Work Plan for Segmented Production of Biological Products marked the official launch of the pilot project for segmented production of biological products in China. This will not only improve production efficiency and optimize industrial division of labor, but also push enterprises' international cooperation to a new height.

I. Practical Modes and Case Analysis of Segmented Production

Since the National Medical Products Administration (NMPA) issued the pilot work plan for biological products in October 2024, many provinces have actively participated in the pilot projects, among which Shanghai, Beijing, Guangdong and Jiangsu have taken the lead in promoting the pilot work. According to PwC's observation, there are three main types of approved segmented production modes:

Mode 1: Domestic Segmented Production - Group Resource Integration and Capacity Optimization

Take Suzhou Shengdya Biopharmaceutical Co., Ltd. as an example. The company's application for the segmented production pilot of recombinant trastuzumab for injection was approved by the NMPA, becoming the first pilot biological product for segmented production in Jiangsu Province² and has now been approved for marketing. The product uses the group's internal production facilities for segmented production. Shengdya's Suzhou Antibody-Drug Conjugates (ADC) production line and Hengrui Medicine's Lianyungang small-molecule production line jointly undertake the segmented production. This model not only realizes the professional division of internal production capacity resources, but also maximizes the use of existing resources and improves production efficiency.

Mode 2: Cross-border Self-built Segmented Production - Localized Layout of Multinational Pharmaceutical Companies

Some multinational pharmaceutical companies began to build their own production capacity in China years ago to meet the formulation production needs of their core biopharmaceutical products. For example, Novo Nordisk's Tianjin factory is one of the early cases of transnational segmented production. Its drug substance (DS) is produced in overseas production bases, and the subsequent DS dry powder is transported to the Tianjin factory to be made into small-volume injections³. In addition, Eli Lilly's insulin lispro injection adopts a similar model, with DS produced overseas and formulations produced in the Suzhou factory⁴. This model not only reduces some production costs, but also protects intellectual property to the greatest extent.

Mode 3: Contracted Segmented Production - A Flexible Choice for Innovative Pharmaceutical Companies

In May 2025, Johnson & Johnson Pharmaceutical Co., Ltd.'s cross-border segmented production pilot of nicakalimab injection was approved by the NMPA⁵. The DS of this product is produced domestically, and the formulation and packaging are completed overseas, making it the first imported biological product in China to carry out the domestic segmented production pilot of DS. In addition, Beihai Kangcheng (Shanghai) Biotechnology Co., Ltd.'s velaglucerase alfa for injection is the first domestic biological product segmented production pilot project in China. As the marketing authorization holder, Beihai Kangcheng entrusts Shanghai Wuxi Biologics Co., Ltd. to produce the DS and Wuxi Biologics (Wuxi) Co., Ltd. to produce the formulation⁶. At present, this product has been successfully launched.

II. Enterprise Strategy Suggestions: Key Considerations for Seizing Opportunities

Based on its rich industry experience, PwC suggests that enterprises should focus on the following factors when planning segmented production and localized production strategies for biological products:

Global Production Supply Chain Planning and Strategic Layout in the Chinese Market

China is the world's largest producer of active pharmaceutical ingredients and generic drugs, and its overall strength in pharmaceutical innovation ranks among the top in the world. China's pharmaceutical industry ecosystem has a complete and stable supply chain, significant scale advantages, continuous technological innovation capabilities, and an efficient and collaborative industrial ecosystem, which have consolidated China's strategic position in the global pharmaceutical industry chain. By establishing localized production bases in China, multinational enterprises can form supply chain advantages from raw materials to products, so as to better meet the needs of the Chinese market and enhance market competitiveness.

Product Launch Commercial Strategy, Including Commercialization Timeline, Product Access and Pricing

Enterprises need to formulate targeted launch timelines and differentiated pricing strategies in combination with the approval requirements of the Chinese market. At the same time, they should consider entering the market quickly through localized cooperation and actively participate in national medical insurance negotiations to increase product market share.

Core Technology Transfer and Intellectual Property Protection

Enterprises need to verify the stability of localized production of original research processes and take measures such as legal means or technical confidentiality agreements to ensure effective protection of their own intellectual property rights.

Continuity of Production in Clinical Development and Trial Stages

In the process of clinical development, enterprises need to ensure that the production address and process of drugs used in Phase I/II/III trials remain consistent, avoid batch differences affecting data consistency, ensure the application continuity of Investigational New Drug (IND) and New Drug Application (NDA), and the rapid conversion of production capacity after approval.

Investment and Business Return Analysis of Self-built Capacity Construction

Enterprises should conduct in-depth analysis of investment costs and return cycles, evaluate whether capacity utilization can bring scale effects, and consider policy support such as tax incentives that may be brought by localized production.

Evaluation of Technical Platform Capabilities of CDMO/CMO Partners

Enterprises need to establish multi-dimensional evaluation criteria for Contract Development and Manufacturing Organization (CDMO) and Contract Manufacture Organization (CMO) partners, covering core dimensions such as production capacity, qualifications, supply chain management capabilities and business relations, to ensure that partners have sufficient technical strength and production guarantee capabilities.

III. PwC's Comprehensive Map of Pharmaceutical Localized Production Service Capabilities

With its profound experience in the pharmaceutical industry, PwC has provided consulting services related to Contract Development and Manufacturing Organizations (CDMO/CMO) for many enterprises, gained an in-depth understanding of industry trends, and maintained long-term good communication with external regulatory authorities, enabling it to foresee policy directions in advance and have the ability to communicate smoothly with regulatory authorities. PwC also has experience and information foundation in localized production planning projects, which can help clients identify potential risks in cooperation. We can provide you with the following services:

Localized Production Feasibility Study

Conduct a comprehensive analysis from the aspects of supply chain stability, cost savings, resource strategic matching, and operation control.

Operation Mode Design

Design localized production cooperation modes and provide site selection suggestions in combination with local policies.

Budget Preparation

Formulate scientific and reasonable budgets through bottom-up and benchmarking analysis methods.

CDMO/CMO Cooperation Strategy

Screen long and short lists of suppliers and conduct due diligence on suppliers to ensure the reliability of partners.

Project Management Related to Localized Production Technology Transfer

Establish management mechanisms, formulate key milestones, roadmaps and cross-departmental collaboration processes, monitor project progress, and ensure the smooth implementation of production technology transfer.

Capacity Building Planning

Assist enterprises in high-level capacity planning based on existing matching resources, form headquarters resource support plans and other internal preparations, such as registration certificate transfer, technology transfer and potential investment.