Research on the Adjustment Path of Chinese Pharmaceutical Industry Organizational Structure under the Evaluation & Approval System Reforming

Objective: Drug Evaluation & Approval System Reforming (EASR) is a major initiative of the State Council’s “Delegate power and optimize service” and “random inspection and information disclosure” policies in the R&D of pharmaceutical industry. The research aims to analyze the impact of drug EASR on the Chinese pharmaceutical organizational structure since 2015. Methods: Based on the relationship analysis between EASR and the organization structure of the government and pharmaceutical industry, this paper uses the Panel Data model to analyze the relevant factors affecting the R&D organizational structure. Results and Conclusion: The results show that it is significantly and positively correlated between the clinical trial behavior and the technology incubator, the domestic technology transfer and the technology macro environment. The organizational structure optimization path of the pharmaceutical industry based on the EASR includes the specialized division, big data model, international cooperation, MAH and technology finance model.


Introduction
Evaluation & Approval System Reforming (EASR) is influencing the innovative development track, the knowledge system of the pharmaceutical industry and the enhancement of core competitiveness.Based on the State Council's "Delegate power and optimize service" and "random inspection and information disclosure" policies, it was raised by the Opinions of the State Council on Reforming the Evaluation and Approval System for Drug and Medical Devices in Aug. 2015 to "improve the quality of evaluation and approval" and "encourage R&D of new drugs".In June 2017, CFDA (China Food and Drug Administration) joined ICH (International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use) and became the eighth member globally.At current stage, government institutional reform, two-invoice system and EASR are working together on organizational structure adjustment, innovation progress and performance appraisal; measures of EASR such as MAH (Marketing Authorization Holder) system, GQCE (Generic Quality Consistency Evaluation) and international multi-center clinical data recognition will surely accelerate the course of the Chinese government's functions' transformation and industry's organizational structure adjustment and optimization.

Overview of Evaluation & Approval System Change
The laws and regulations of drug marketing and registration is the core of drug evaluation and approval system.Chinese modern drug regulatory system stemmed from the Drug Administration Regulations (Trial) promulgated in 1978.And after several times' administrative reform of the institution, evaluation and approval system gradually changed from locally decentralized to centralized.New drug was redefined as "not launched home or abroad" from the previously "domestically manufactured and commercialized" in order to propel "encouraging new drug R&D, making strict the evaluation and approval, improving drug quality and promoting industrial upgrading."The narrowing of the extension of new chemical drugs will force enterprises to pay more Under the strategic c adapting to 2012 and 2 all adopted "quick app ICH rules.

Key Iss
The

Research Progress
In the neoclassical enterprise theory, corporation is regarded as a single agent, that is, enterprise is analyzed as a black box; but Coase [2] (1937) attributed the market effectiveness and the contradiction between corporations in reality to the existence of transaction cost, thus revealed the contractual nature of enterprise; the emergence and development of corporation was the result of internalization of market transactions.Williamson [3] (1985) and Klein [4] (1978) raised various organizational structures such as developing markets, corporation or bureaucrats, hybrid forms, and bureaucratic organizations.Malerba [5] (2006) systematically described and summarized the intrinsic factors that influenced industrial evolution and technological change.Domestic scholar Zhang Weiying [6] (1995) studied the institutional arrangement of corporation ownership in market economy; Yang Ruilong and Zhou Ye'an (1997) believed that the optimal governance structure of corporation should be allowing key stakeholders to jointly manage a corporation.Lin Yifu [7] (1997), Zhang Jun (1994) and Xi Youmin (2000)  conducted qualitative analysis and empirical research on corporate governance and institutional arrangement revolving around the reform of state-owned corporation.
Yang Xiaokai [8] (1997) proposed the evolution theory of division of labor and hierarchical organization when the transaction service efficiency was relatively high, that is, the specialized development will increase the number of transaction structure layers.Sanford Grossman and Oliver Hart mainly discussed the completeness of the contract and the choice of organizational structure.Yu Meng [9] (2013) believed that the adjustment and optimization of industry structure required the upgrading of industrial level and technical level; Wang Guangping [10] (2012) analyzed the adjustment road of China's pharmaceutical industry organizational structure, and proposed two adjustment options, one is differentiation and stratification, the other is merging and reorganization.Luo Cheng [11] (2002) thought that the status and changes of industry structure determined the speed and quality of economic growth, which was largely achieved by the interactive mechanism between technological innovation and industry structure changes.Based on the changes of technological innovation rules caused by EASR, the organizational structure of pharmaceutical industry will be synergistic with the adjustment and transformation of technological innovation, market rules and government organizations.That is, technological changes will inevitably lead to institutional arrangements for the corporation's organizational structure adjustment.

Model Design
Drug EASR affects the adjustment road and direction of pharmaceutical industry organizational structure.Based on the research paradigm of transaction costs in the new institutional economics, as well as EASR, technological change and innovation environment in the reality, the selection of the adjustment road of pharmaceutical industry organizational structure is closely related with the institutional stability of government's maintaining corporations' code of conduct, rules and procedures.
Science and technology service institutions, the number of incubators, the cost of introducing foreign technology into pharmaceutical industry, the cost of purchasing domestic technology and organizational structure are the main factors affecting the restructuring of medical technology.Technological innovation is the engine of technical and organizational restructuring.The organizational structure indicators related to government innovation support and marketing authorization include: science and technology service industry and the number of incubators, which reflects the level of dependence on the environment of corporations' innovation development.Indicators related to transaction costs between corporations' organizations include: the cost of introducing foreign technology into pharmaceutical industry and the cost of purchasing domestic technology, reflecting the extent of impact of the externality of pharmaceutical technology innovation on the R&D of pharmaceutical companies.The indicators of the technology transaction market environment include: the technical fee in the contracts of introducing foreign technology and the number of contracts in export-oriented technology regions, reflecting the extent of impact of regional technology transaction development on pharmaceutical R&D.
Using the number of clinical trial application (Clinic) as the dependent variable to build the Panel Data model, and using the number of science and technology service institutions (Service), the number of technology business incubators (Incubate), the cost of introducing foreign technology into pharmaceutical industry (Outdrug), the cost of purchasing domestic technology (Indrug), the number of contracts in technology transaction market (Contract), the technical fee in the contracts of introducing foreign technology (Outfee) as independent variables, and defining cross-sectional research objects in the 30 provinces or cities such as Beijing (BJ), Tianjin (TJ) and Hebei (HB), and using the 7-year Panel Data from 2010 to 2016 to establish a basic regression equation for quantitative analysis (formula is as follows); where: C is a constant term, a is a coefficient, t stands for time series, and i represents 30 provinces or cities.

Hypothesis Verification
The samples were selected in a time dimension of 7 years, and in a section dimension of 30 provinces or cities.Software EViews7.0 was used to do the analysis.In order to further analyze the correlation and influence degree of relevant factors such as innovation environment and technological change on clinical trial data, an invariant model with no individual influence was adopted.The regression results showed that the regression equation had good goodness of fit, and the adjusted R 2 was 0.5583 and the DW value was 2.06 (Table 2).The results of empirical research showed that: based on the output of pharmaceutical scientific and technological innovations under EASR, that is, from the perspective of the number of clinical trial applications, the number of technology business incubators from various provinces or cities were significantly and positively correlated with pharmaceutical innovation behavior; the number of science and technology service institutions had no correlation with pharmaceutical innovation behavior; the technical fee in introducing foreign technology and the cost of introducing foreign technology into pharmaceutical industry had no correlation with the pharmaceutical innovation behavior; the cost of purchasing domestic technology was significantly and positively correlated with pharmaceutical innovation behavior; the number of contracts in technology transaction market was significantly and positively correlated with pharmaceutical innovation behavior.

Results and Conclusion
Through the regression analysis of the relevant factors of the pharmaceutical industry's technological innovation organizational structure adjustment to the number of new drug clinical trial applications, it revealed the status quo, focus and road of China's pharmaceutical industry organizational structure adjustment under the conditions of EASR.
1) The new drug clinical trials application was significantly and positively correlated with the number of regional technology business incubators.The local support policies of "Mass Entrepreneurship and Innovation" had a positive effect on new drugs' R&D.The government adopted a him-organized behavior to provide substantial support and services to medium-sized, small-sized and micro biomedicine corporations, which would enhance the innovation performance of pharmaceutical industry.Science and technology service institutions should adapt to the development trend of biomedical innovation's specialization and transform into specialized service organizations.
2) The foreign technology introduction behavior by pharmaceutical corporations did not have the externality of technological innovation, while the purchase of domestic technology transfer had a significant and positive correlation with the corporations' application of clinical trials, that is, domestic new drug technology transfer and technology authorization will play a more active role in improving the performance of biomedical technology innovation.Therefore, the recognition of overseas data under EASR and the institutional arrangements for the globalization of R&D will exert some pressure on new drug R&D by domestic corporations.It will require specialized service institutions to increase support for medium-sized, small-sized and micro corporations and to pay attention to technology transfer and technology authorization in domestic pharmaceutical industry.
3) Good macro-environmental conditions for technology transfer and technology authorization will drive technology transfer in the pharmaceutical technology market, which will have a positive impact on new drug clinical trial application.But the introduction of foreign technical services has failed to improve the performance of new drug R&D.The recognition of overseas multi-center clinical trial data may reduce the expectation of technology transfer of overseas corporations.Therefore, provinces and cities should further increase the policy support for domestic medical technology transfer and technology authorization, and propel the evolution of corporation or social technology service institutions into medical technology transfer service platform.
Industry: Computerized Systems Used in Clinical Investigations; in Oct. 2005, the International Society of Clinical Data Management developed the Good Clinical Data Management Practices (GCDMP); both in the efforts to achieving risk monitoring in the process of drug clinical trial, production and operation data quality management, providing data support to facilitate decision-making for EASR.

Cooperation and Communication Platform among Countries
Under the dual pressure of overseas multi-center clinical trial data being recognized and CFDA becoming official member of ICH, domestic new drug evaluation and approval standards and R&D resource allocation have now been exposed in front of the world.Establishing international cooperation and communication platform nationwide or region-wide has become an irresistible trend.In Aug. 2016, the 13th Five-Year National Science and Technology Innovation Plan (Guo Fa [2016] No. 43) proposed that "optimizing the allocation of innovative resources globally, combining scientific and technological innovation with national diplomatic strategies, promoting the establishment of a broad Community of Innovation."Facing domestic GQCE project squeezing clinical resources and sudden increase in R&D cost due to "two-invoice system & camp changed to increase" policy, many domestic corporations adopted the "going out" strategy to implement international mergers and acquisitions.The national cooperation and communication platform in the field of medical innovation has gradually evolved into the self-organizing behavior of pharmaceutical companies.The cross-border mergers and acquisitions by pharmaceutical companies to form a new corporation organizational structure, and the internalization of foreign medical technology into internal behavior of Chinese corporations, are both alternative roads to introducing foreign technology and enhancing the performance of new drug R&D.

Solidified Mode by MAH
The introduction of the MAH (Marketing Authorization Holder) system separates marketing authorization from production authorization which is beneficial to the effective integration of R&D and production resources.CMO (Contract Manufacture Organization) / CDMO (Contract Development Manufacture Organization) will become more popular as a development model in the field of R&D.As an important institutional arrangement for drug regulatory administrative authorization, the MAH system is a major change in the government's asset-centered drug regulatory mode.It divides the property rights of R&D results into ownership, production rights, sales rights and so on.It confirms the rights of R&D institutions that participate in scientific research activities, as well as R&D timing and R&D rights and interests, solidifying explicit system and implicit rules in R&D field.At present, the MAH system is mainly used to solve the overcapacity problem and drug full lifecycle management in GQCE.On one hand, the MAH system has solidified the rights and interests of market organizations, and on the other hand, it has put forward more strict requirements for knowledge management under the separation of medical property rights.The MAH system will inevitably accelerate the emergence of institutions in third-party inspection, certification, evaluation, training and so on in pharmaceutical industry.

The Combination of Technology and Finance
The technology business incubator is a service organization that fosters and supports small and medium-sized high-tech corporation.The National Science and Technology Business Incubator's 13th Five-Year Development Plan proposed "incubation resources to be basic, innovative technologies to be capitalized, capital for incubation to be intensive" to "meet those start-up entrepreneurs' needs of funds".The combination of science and technology with finance will realize the adjustment, transformation and upgrading of organizational structure in pharmaceutical industry under the changes of EASR.The technology business incubators united with professional institutions will be upgraded and transformed into a specialized technology service model to enhance the performance of new drug R&D in pharmaceutical industry.At present, the shortage of domestic clinical trial resources, the increase in labor costs and the high standards of evaluation and approval have led to high R&D cost.The related resource allocation such as corresponding R&D foundation, technology platform and financial support is needed to stimulate R&D vitality of domestic pharmaceutical companies, to invigorate domestic medical technology transfer market and to improve the performance of new drug R&D.The combination of science and technology with finance will propel the innovation and entrepreneurship of the pharmaceutical industry to be more efficient and convenient.

Conclusion
EASR is playing an important role in such problems as the innovation performance of the pharmaceutical industry, the transformation of technological achievements, the management of medical knowledge and the improvement of core competitiveness.The achievements in both the adjustment and optimization of pharmaceutical industry organizational structure and institutional arrangement will propel the rationalization and marketization of corporations' innovative behaviors.Based on the important opportunity in drug EASR and the globalization of R&D activities, on one hand, the organizational structure in pharmaceutical industry could be stratified and the rules between organizations in the corporations could be solidified, and on the other hand, the market leading and stabilization role of the state-owned corporations in a him-organized form could be brought into play in EASR.

Table 1 .
The institutional arrangement of evaluation and approval system of FDA and the Chinese government

Table 2 .
Regression results of pharmaceutical industry transaction costs on pharmaceutical industry output value