Market Overview of Cancer therapies

1.1 Cancer Incidence, Mortality & Prevalence
Worldwide, more than 10 million people are diagnosed with cancer every year. According to World Health Organization (WHO), it is estimated that there will be 15 million new cases every year by 2020. Cancer brings about 6 million deaths every year - or 12% of deaths worldwide (Source: World Health Organization http://www.who.int/cancer/en/)

Cancer is now the second leading cause of death (next to heart diseases) in the US. The American Cancer Society estimates that half of all men and one third of all women in the US will have the probability of developing cancer during their lifetimes. (Source: Cancer Statistics 2004, A Presentation By American Cancer Society).

* Refers to combining the annual number of new cases and the corresponding probability of survival by time. For example, one-year prevalence at a fixed point in mid-2000 was estimated from the number of new cases in 2000 multiplied by the probability of surviving at least six months. The most basic measure of patient survival is the observed survival rate calculated after a given period of follow-up, commonly five years. The 5-year observed survival rate gives the percentage of patients alive after five years of follow-up from the date of diagnosis.
　　　　　　　　　　　
1.2 Causes of Cancer Diseases & Cancer Deaths
The worldwide cancer incidence has a phenomenon of regional specific on the type of cancer disease. For example, stomach cancer is especially frequent in Japan, colon cancer is prominent in the US, liver cancer stands out China and skin cancer is common in Australia. The reason for the high rates of specific kinds of cancer in certain countries is apparently mainly related to cultural and environmental factors predominant in one location and not in others. Heredity is rather not a major cause of cancer since studies had found that the difference of rate between colon cancer and stomach cancer in Japan gradually disappeared in Japanese families that had moved to the US. (Source: National Cancer Institute, Understanding Cancer; http://www.cancer.gov).

Chemicals and radiation that are capable of triggering the development of cancer are called "carcinogens" There could be a lag time of 20 to 30 years between exposure to carcinogens (e.g., cigarettes smoking) and developing cancer. Other better-known causes of cancer include low-strength radiation (e.g., overdose of ultraviolet radiation from the sun) and high-strength radiation (e.g., X-rays or radiation emitted from radioisotopes).

Lung cancer is world's number one causes of deaths accounting for 17.8% of all cancer deaths (around 1.1 million per year), and cigarette smoking is the main factor for causing such cancer disease and contributes to many other kinds of cancer as well (including cancer of the mouth, larynx, esophagus, stomach, pancreas, kidney and bladder). Passive smoking and other forms of tobacco use can also cause cancer. Current estimates suggest that smoking cigarettes is responsible for at least one out of every three cancer deaths, making it the largest single cause of death from cancer.

Apart from lung cancer, stomach cancer, liver cancer, colon/rectum cancer and breast cancer are the top most common types of cancer in the world. These five types of cancer represent 46% of all cancer cases (4.6 million cases) and 51% of all cancer deaths (3.6 million deaths). Lung cancer, stomach cancer and liver cancer are also the three toughest diseases to cure, since the ratios of cancer deaths relative to cancer incidence are significantly high, at a combined ratio of 85%.
Globally, stomach cancer has become the second leading type of cancer deaths, representing 10.4% of total deaths (approximately 650,000 per year), while liver cancer is the number three cause of cancer deaths, corresponding to 8.8% of overall deaths (around 550,000 per year). Colon/rectum and breast are relatively more likely to be cured, at a combined ratio of 43%. Breast cancer has the highest possibility of cure among the top five cancer diseases, with a ratio of 35% in the world and around 25% for both the US and China.

1.3 Development & Sales of Cancer Drugs
The total sale of the worldwide cancer therapeutics market is around US$15.4 billion. Sales of the top 10 cancer drugs account for 60% of the world market, with the top 20 representing 82%. Lung cancer therapeutics market becomes the largest segment of cancer treatment industry that is expected to reach US$2.53 billion by 2007 in the world. While the market as a whole will experience a 5.1% compound annual growth rate (CAGR), a great deal of share shifting will occur, according to Front Line's New Strategic Market Report - Lung Cancer Therapeutics, Emerging Trends and Opportunities.

Currently companies in the US account for just under half of global drug development. The US accounted for well over half of all internationally accepted drugs invented between 1970 and 1992. The bulk of the remaining drug development activities took place in the European Union, with Japan a distant third. (Source: Overview of the Global Pharmaceutical Industry).
Over the past 15 years the rapid development of biotechnology has created a market space for smaller pharmaceutical firms, generally pursuing the development of one drug. Large pharmaceutical companies have had limited success in innovation of this new area of technology, possibly because it continues to change at a rapid pace (source: Overview of the Global Pharmaceutical Industry). However, the cost of bringing a new drug to market runs into hundreds of millions of dollars (for example, the R&D spending on new drug was approximately US$800 million on the average during 1990 to 1994 according to FDA June 2003).
However, the innovation of new drugs seems to be disappointing since virtually no growth in the rate of inventiveness for the most innovative class of drugs, despite an increasing rate of new chemical entities (NCE) approvals. In the five years between 1989 and 1994, the FDA approved 350 new drugs. In the following five years between 1995 and 1999, 569 new drugs were approved. However, only 7 of the 219 additional new drugs can be considered truly innovative in that they provide a substantial medical improvement over existing therapies (Source: Overview of the Global Pharmaceutical Industry).

1.4 Peculiarities of P.R.C. Market

According to WHO's report released on April 3,2003, in the developing countries including China, 80% of cancer patients were detected with cancer diseases in the late stage of cancer. Like other developing countries, China has a relatively higher ratio of cancer deaths to cancer incidence (69%) as compared with the world (51%) and developed countries such as US (52%).

In China, nearly 80% of all cancer deaths are caused by top-five cancer disease - lung cancer, stomach cancer, liver cancer, oesophagus cancer and colon/rectum cancer. Liver cancer is the first most killing cancer type in PRC causing around 300,000 deaths per year, lung cancer comes as the second most amounting to around 280,000 deaths per year, while stomach cancer kills around 240,000 lives per year and about 160,000 people die each year because of oesophagus cancer (see table above).

Liver cancer, which is the largest type of cancer in PRC, has also the highest death ratio of 98%, which indicates a minimal possibility of curing it. Stomach cancer has also a relatively high death ratio of 74% in PRC. The incidence of liver cancer is believed to be related to infection with hepatitis-B virus (HBV) and hepatitis-C virus. In China, 120 million people or around 10% of total population are HBV carriers (while evidence of hepatitis-B virus infection is also found in nearly one fourth of Americans with liver cancer). Researchers also found that people with certain other liver diseases have a higher-than-average chance of developing primary liver cancer. Other researches suggest that lifestyle factors such as alcohol consumption and malnutrition also cause liver cancer. As liver cancer is mostly found in southeastern coastal areas of China such as Jiangsu, Fujian, Guangdong, Jiangxi, where contamination of water is common and certain fermenting agent (Flavacin) is often included in daily diet, environmental and dietary factors are believed to be highly predominant in causing liver cancer.

Liver cancer, oesophagus cancer are the most life-threatening diseases among all cancer types with very low 5-year prevalence cases. According to IARC (International Agency for Research on Cancer), it was estimated that in year 2000 liver cancer was the most common cause of cancer-related deaths for male in the PRC, and the second most common type of cancer incidence for male in the PRC (after lung cancer). It ranked third among all causes of cancer-related deaths for female in the PRC (after lung cancer and stomach cancer), and fourth most common type of cancer incidence for female in the PRC (after stomach cancer, breast cancer and lung cancer).

The total expenditure on health in PRC in terms of GDP in 2001 was 5.5%, as compared with 2.6% in 1998 (data to be updated and verified). Per capita expenditure in PRC on health in 2001 was USD49. PRC government funding support on health has represented 37.2% of the total expenditure on health, and about 10.2% of total general government expenditure. (Source: World Health Organization, Core Health Indicators).