Aside from the huge raw market potential, the levels of innovation from both local companies and multinationals bolster China's pharmaceutical market. This is possible because of the role of development zones and the preferential services they offer to companies looking to engage in pioneering research. Development zones allow companies to take advantage of expert advice, public facilities, financing, academic exchange and much more. In this way, companies have the support they need to push forward with innovations.

China's market also offers multinationals the opportunity to collaborate with local companies. For example, pharmaceutical giant GlaxoSmithKline has formed a drug discovery unit to work with Traditional Chinese Medicine experts in an attempt to develop new and novel products that combine clinical trial methodology and modern drug discovery with TCM products and traditions.

Such innovation is possible in China because of the reduced barriers to clinical trial that are available in China. Whereas clinical trials in China used to be an extremely difficult and lengthy process when compared to US or European procedures, this has changed in recent years as the industry and government have responded to the increasing demands and growth of the market.

Dr Martina Bielefeld Sevigny, VP and GM, PerkinElmer Life Sciences Technology, China, says, "Clinical trials in China are significantly less expensive, require smaller test groups, and are often conducted in shorter time periods in preparation for regulatory approval. As clinical trials represent a major part of costs to develop a new drug, companies can conduct several clinical trials simultaneously, with different candidates or for various indications when working in China."

This doesn't just benefit multinationals though, as local companies are now able to innovate more readily. "Some of the results of this shift are evident in the strategic decisions of regional pharmaceutical operations that are moving from producing generics to conducting drug discovery R&D in China," says Dr Daniel R Marshak, SVP and chief scientific officer, PerkinElmer.