Biotech in ChinaSpecial feature on Chinas emerging biotech industryDecember 2011Chinas rising tideAs originally published in the December 2011 edition of Nature Biotechnology as an advertising feature.
ADVERTISEMENT FEATURE China’s pharmaceutical sector: the third pillar The pace of change in Chinas healthcare and pharmaceutical sector is swift. Among the changes are local operations stepping up their international roles and a growing interest in neuropharmaceuticals. I n June, Health Minister Chen Zhu boasted Multinational companies: here to stay that China had, during a short 2-year initia- At first, many skeptics thought that R&D invest- tive, put 95% of the country’s population ment in China was merely a way for MNCs to on health care and created the world’s largest adapt products and expand the Chinese market medical insurance system. Since 2009, the while doing little actual research. This might government has invested ¥850 billion (US$134 once have been true, but times have changed. billion) to implement the health reform program. Now MNCs are making Chinese R&D opera- That investment, and the extended coverage, is tions part and parcel of an international strat- proving a boon for the pharmaceutical industry. egy. As Jingwu Zang, head of GlaxoSmithKline According to an IMS Health forecast, China’s (GSK) R&D China, says: “We’re building a global pharmaceutical market will grow to US$50 bil- pipeline.” lion in 2011. Now with the world’s third-largest For some, the increased investment is an pharmaceutical market, its 2011 growth rate is attempt to create new drugs for Chinese or predicted to be a sprinting 27%. Other forecasts Asian populations. With over US$100 million confirm speedy expansion. This March, the invested in China, AstraZeneca has established: National Development and Reform Commission Innovation Center China in Shanghai which released data showing that the output value of opened in 2007 and currently has a staff of 80, China’s medical instruments and pharmaceuti- and a new China Clinical Operational Hub, also Jingwu Zang, head of GlaxoSmithKline R&D. cal industries will jump 24% to ¥1.55 trillion located in Shanghai, which opened in February GSK has made their China R&D part of their (US$2.4 billion) in 2011. Chinese and multina- this year. “We believe now is the time to further international strategy. tional corporations (MNCs), previously focused accelerate our R&D efforts in Asia, including on the prosperous coastal markets, are pushing China,” says Steve Yang, AstraZeneca’s vice and EU clinical development staff,”adds Zhao. into second- and third-tier inland cities and ramp- president and head of R&D for Asia and emerg- Indeed, many MNCs are increasingly integrat- ing up production to meet the demand. Most ing markets. “Asian and Chinese scientists will ing Chinese operations into global R&D networks expect China’s market to rank second within the help us turbocharge our discovery efforts—in and using them to make drugs for the global next five years. Asia and beyond,” adds Yang. “We want to be market. Along with the US and Europe, China With its massive population increasingly aware at the vanguard of innovation to meet patient is becoming a third pillar for drug discovery of, and desirous of, cutting-edge medicines, the needs.” pipelines for companies. Roche, for example, government has goals beyond a large national The Innovation Center China focuses on find- slashed personnel in the US and Europe last market. The government wants to make sure ing specific biomarkers and genes related to year and then announced that it would boost that the drugs being distributed are the most diseases that are more prevalent in China and staff in China by 25%. This year the com- effective available. And it wants domestic com- the rest of Asia, such as gastric and liver can- pany made a US$75 million expansion of its panies to play a part in producing them. To this cer. “At its simplest, we are aiming to answer Zhangjiang facility, which it designated its third end, the government is putting forward new fund- the question, ‘Why, on occasion and seemingly global strategic hub, after Basel, Switzerland, ing initiatives and regulatory policies that favor inexplicably, are there diseases and conditions and San Francisco. innovative drugs over generics. This is an open that are more prevalent in Asians’?” says Yang. The integration of Novo Nordisk’s Chinese door for creativity. That philosophy powered 44 clinical studies with unit happened slowly and systematically—from The dynamics of the pharmaceutical industry over 9,000 subjects at approximately 330 sites 15 people in China in 1997 to 100 now at its are changing too. Five years ago, MNCs mostly across China in 2010. Beijing-based Research and Development Center directed research from overseas using contract Bayer HealthCare, which in 2009 laid out a China. On September 13, 2010, the company research organizations (CROs) in China. But budget of €100 million (US$136 million) over announced plans to double that number, with CROs have proven themselves, and now, along the next 5 years to build a global R&D center in US$100 million in investment capital, over the with a growing number of biotechnology compa- Beijing, is likewise aligning R&D with regional next 3 years. “We took a baby-step approach. nies, they are moving into more challenging and needs. Asian patients will be involved early in We wanted our R&D center in Beijing to prove lucrative fields of discovery, increasingly sharing drug development in an attempt to “break the itself in a way that didn’t put our IP at risk. We’re risk with bigger players. tradition of US and EU first” according to a Bayer expanding in a controlled fashion, not by brute MNCs are finding that conducting research in press release. The strategic focus will be on car- force. This allows people to think out of the box,” China is more than just a good way to get into diology, stroke, diabetes, oncology, diagnostic says Thomsen. the market. With the growing number of talented imaging and women’s health care. “The mission Initially, China was just for services such as researchers and quality CROs, China is becom- of our global R&D center in Beijing is to build making growth hormones in bacteria, but it soon ing one of the best places to carry out drug a strong product pipeline and portfolio against expanded to more challenging tasks such as discovery and product development. Indeed, diseases that affect a large number of patients generating humanized mouse antibodies. “To be outside of the US and Europe, China is now in China as well as in other Asian countries,” honest, it’s become a center of excellence withinBiotech in China the place of choice to establish research and says Yuhang Zhao, head of global development Novo Nordisk. If some group wants an assay anti- development operations that are fully integrated Asia pacific at Bayer HealthCare in Beijing. body, they are the guys that we’ll go to,” says into and supporting an international pipeline. But Bayer is also integrating work in China Thomsen. “They started doing immunotechnol- “They are taking charge. They have a sense of with global R&D operations, and the Beijing unit ogy and now are doing even more creative work, ownership,” says Novo Nordisk executive vice will complement its German and US R&D cen- like managing a research project throughout the president and CSO Mads Krogsgaard Thomsen ters. “Our key focus is on talent: who we can value chain. It’s one portfolio across continents.” of the company’s R&D China unit. “China is place develop into high-quality clinical development Other companies are beefing up their Chinese to be there in the future.” leaders for our global development organization staff as they go. Merck’s strategic focus has and who can lead global teams that include US “changed from ‘in China for China’ to ‘in China B2
ADVERTISEMENT FEATUREfor China and in China for global’ due to avail- leading candidate, HMPL-004, an oral botani- not decrease amyloid, but it could be having anable talent, the many fine academic institutes cal product that acts on multiple targets in the effect,” says Zang. That information will helpfor collaboration, qualified vendors to provide pathogenesis of inflammatory bowel disease. GSK decide which drugs to move to phase 3service and an improved clinical development HMPL-004’s clinical success in a 223-patient and whether they might need to be used ininfrastructure,” says Ruiping Dong, senior vice global trial has won it various innovation awards. combination. “That will help us reduce phase 3president and head of Merck’s Emerging Markets attrition,” says Zang. In AD, too, instead of focus-R&D. Eli Lilly has been investing over US$50 mil- ing on β-amyloid, which has conventionally beenlion annually in China as it integrates its Chinese thought to cause the disease, GSK will look atunit into global operations that themselves are multiple pathways. “It’s hard to imagine a single-undergoing a transformation from a “fully inte- pathway approach would work effectively in suchgrated pharmaceutical company” to a “fully inte- a complex pathology” says Zang.grated pharmaceutical network,” described Tony The China move allowed this type of focus.Zhang, Eli Lilly’s vice president of global external “With ownership of the whole therapeutic area,R&D for Asia. Last year, Pfizer opened a global we have the opportunity to build vision and strat-R&D center for radiation biology and drug devel- egy,” says Zang.opment in Wuhan. The facility, which will comple- GSK is not alone in looking to China for neu-ment its larger R&D operation in Shanghai, plans roscience research. Eli Lilly is poised to taketo increase staff from 40 to 200 by next year. advantage of recent advances in biomarkers,And in October 2010, Xian-Janssen, the Chinese imaging and genetics to help it push forwardarm of Johnson & Johnson, announced plans to the 14 molecules in its pipeline that are beingintensify research on cancer, tuberculosis, hepa- evaluated to treat neurological diseases andtitis C virus, and cerebrovascular and urological disorders, such as schizophrenia, attentiondiseases over the next decade with an ambitious deficit disorders, depression, pain and migraine.target of putting over 20 new products into the Ruiping Dong, senior vice president and head “Neurological disease is one of the top threepipeline. of Mercks Emerging Markets R&D commented disease areas in China, and the market is grow- on the divisions change in focus from China ing rapidly,” says Lilly’s Zhang. “China’s agingSharing risk for China to China for Global population, mounting stress level from modern-This change in dynamic, with research in China ization, economic progress and growing publicplaying more of an equal part in the global strat- Ownership and vision: China’s awareness of neurological diseases indicate aegy, has been enabled by increased risk sharing edge in neuropharmaceuticals positive future for the neurological pharmaceuti-and collaborations between large pharmaceuti- With the comprehensive R&D support system cal market in China.”cal companies and CROs, biotech companies taking shape, MNCs are entrusting large seg- Greg Scott, founder of the Shanghai-basedand research institutes. ments of their pipelines to Chinese units. The consulting firm ChinaBio, agrees that neuro- Eli Lilly has been a leader in the use of risk- most notable example is GSK. In 2010, the degeneration and neuropsychiatric drugs havesharing models with a number of CRO and company designated their Shanghai center as a promising future in China. “This is a newerbiotech partners, including ChemExplorer, the global hub of neurodegeneration and neu- therapeutic area for China, as they first recog-Hutchison MediPharma and WuXi AppTec, roinflammation research, and coordinated it to nized CNS-related conditions as diseases onlyaccording to Zhang, “Local CROs have proven work with a late-stage development group based about seven to eight years ago,” says Scott.responsive to customers’ needs by making the in North Carolina’s Research Triangle Park to Scott’s 2010 data shows that CNS drug studiesnecessary investment in infrastructure as well deliver the pipeline. account for the fourth-largest number of clinicalas recruiting experienced scientists to work on The strategy worked. The Zhangjiang-based trials and the third-largest number of preclinicalLilly projects,” says Zhang. Lilly plans to expand neurology unit now has 310 employees, about trials in China.the scope of R&D collaborations from mid-stage 45% of which are returnees with extensive Domestic companies also recognize the oppor-to early stage and from small molecules to experience in academia, biotech or with a major tunity. Yangtze River Pharmaceutical Group,biotech. pharmaceutical company in the west. GSK plans based in Yangtze, has some ten products under There are gaps in the “target-to-drug” system to build a new facility in Zhangjiang. In 2010 and development for treatment of neurological, neu-in China that the CROs help to fill, explains GSK’s 2011, the China unit started four clinical trials in ropsychiatric or neurodegenerative diseases. ADZang. “You see a lot of science but not much Alzheimer’s disease (AD) and multiple sclerosis. and Parkinson’s disease medicines are currentlytranslation. This disconnect cannot be solved All clinical and preclinical compounds under cur- a small fraction of sales, says Yangtze presidentby money. But many small biotech companies rent development are potentially first in class, Jingren Xu. “But with the aging population greatlyare joining the CROs to fill gaps in an integrated according to Zang. “That’s rare. Most people increasing in China, they will become primarysystem,” says Zang. work on similar targets. Our focus on innovation diseases for the elderly and sales for drugs will One Chinese company to benefit from the risk- has paid off.” significantly increase,” Xu adds.sharing model has been Hutchison MediPharma, In multiple sclerosis studies, for example, Shenzhen-based Chipscreen Biosciences iswhich has been conducting research collabora- instead of looking at targets similar to generating compounds targeting two pathwaystions with Eli Lilly, Johnson & Johnson and Merck β-interferons, copaxone or Tysabri (all of which that may potentially be useful for neurologicalSerono since 2007. “At the time, each collabo- target inflammation), GSK is taking on myelin and neurodegenerative treatments. “This is anration was the first of its kind in China,” says repair. “Otherwise, even if you stop inflamma- emerging market opportunity where the aware-Samantha Du, founding CEO of the company. tion, myelin damage continues,” says Zang. GSK ness for neuropsychiatric and neurodegenerative Now with over 200 employees, the company China has already racked up a handful of papers diseases are clearly increasing. The sales for Biotech in Chinahas built a platform for discovery and develop- on IL-7 and leukemia inhibitory factor, and the certain multiple sclerosis treatments, includingment in cancer and autoimmune disease, and role each plays in selective immunomodulation drug and nutraceuticals, are booming in China,”it is adding clinical and translational research and myelin repair. Clinical trials are planned. says Chipscreen CEO Xian-Ping Lu.capabilities. “Over the long term the company Zang’s strategy will be to squeeze more infor- The Guangzhou Institute of Biomedicine andintends to become an R&D-based, fully inte- mation out of phase 1 and phase clinical trials, Health (GIBH) sees a huge opportunity in ADgrated pharmaceutical company, leveraging our which normally focus on safety, by measuring treatments. Compound GIBH-001, designedunique competitive advantages in China,” says “mechanistic signals”—changes in biomark- to block neuroinflammation, represents a newDu. The company now has six clinical programs— ers and imaging that might indicate whether a class of compounds and has demonstrated sig-all based on in-house discoveries—including its drug is having an effect. “The compound might nificant efficacy in several in vivo models of AD, B3
ADVERTISEMENT FEATURE Value of Contacts Number of Contacts 4000 45 39.2 38.7 40 3500 3356 3033 35 3000 2872 2921 2818 2828 30 2500 29.8 2216 2264 25 2000 20 1500 19.5 1187 16.7 15 14.8 15.5 1000 849 11.9 10 500 5 6.9 7 Jingren Xu is president of Yangtze 0 0 Pharmaceutical, a company with ten products 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 under development for neurological diseases. Table 1. Quantity and turnover of pharmaceutical technology contracts output in Beijing stroke and rheumatoid arthritis. GIBH plans to (2001‑2010). [unit: ¥100 million] file an Investigational New Drug (IND) application in 2012. “In 2008, it was estimated that more agreement allowed Shandong-based Lu Kang human specimens and devises new protocols for than US$50 billion was spent by China on health- Pharma to produce biomaterials from bacteria. directed differentiation of iPS cells into different care expenses and lost wages for AD patients In 2009, Guoqiang Chen of Tsinghua’s School cell lineages. and their caregivers,” says chief technology of Life Sciences signed a major tech transfer GIBH already has partnerships with Sigma officer Micky Tortorella. Estimates predict that agreement with a Shangdong-based Lu Kang Aldrich and GSK, and it is hungry for more. more than US$300 billion will be spent annually Pharma to produce biomaterials from bacteria. “These collaborations allow us to share the risk by 2050. “Unfortunately, there are no disease- Yongzhang Luo Yongzhang Luo of the university’s and expense associated with drug development,” modifying drugs available, and current therapies School of Life Sciences, who managed to get an says Tortorella. “In the future most of our internal only treat the symptoms of the disease. With the endostatin variant, Endostar, into the clinic to programs will be in partnership with pharmaceuti- largest aging population in the world, China has treat cancer patients, is also finding partners. cal and biotech companies.” an opportunity and duty to fund as well as lead And Qingyu Wu, Qingyu Wu also of Tsinghua’s MNCs are happy to have the opportunities to AD research and drug development.” School of Life Sciences has penned an agree- work with research institutes and universities. In the future, China is sure to claim a large ment with a company in southern China to pro- Novo Nordisk is funding a prediabetes research share of the research pie in other fields, such duce biofuel. project with the Shanghai Institute of Biological as diabetes, which has spread quickly with the Tsinghua is also getting a boost to its tech- Sciences, and it donated a half million chemi- expanding middle class. In November 2010, Lilly nology transfer activities from MNCs. In March cal compounds to the institute to do screens for announced its plans to open a diabetes research 2009, Bayer HealthCare and Tsinghua University neglected diseases. Merck has signed a deal center in Shanghai. The Lilly China Research and established the Research Center of Innovative with BGI, formerly the Beijing Genomics Institute, Development, headed by Bei Betty Zhang, will Drug Discovery with Yigong Shi as director. The to focus on the discovery and development of employ over 100 scientists and support staff, center focuses on Bayer’s core areas of oncol- biomarkers and genomic technologies. “This will the majority of whom will be hired from within ogy, diabetes, women’s health, diagnostic imag- help to create value from the massive output of China. The center is expected to open by the ing and cardiology. “We have been very active genomic information enabled by DNA sequencing beginning of 2012. Novo Nordisk will also be in forming research collaborations with Chinese and analysis,” says Merck’s Dong. He adds, “The addressing diabetes in the country. “In the first academic institutions,” Jennifer Hu, head ability to tap talent and capabilities and engage in few years, it won’t be able to [develop diabetes of Bayer’s Global Drug Discovery Innovation academic collaborations with leading universities drugs] from A to Z, but it will contribute,” says Center China in Beijing. Similarly, this year, Xian- and healthcare institutions is another advantage Thomsen. “Eventually it will be a superpower in Janssen Pharmaceutical and Tsinghua University [of being in China].” In 2009, Pfizer signed a ¥3 diabetes research.” launched the Infectious Diseases Joint Research million (US$470,000) partnership with Peking Centre which aims to accelerate the development University’s Health Science Center to develop Finding new leads and commercialization of tuberculosis and AIDS pharmacometrics, a discipline which applies The ability of China-based pharmaceutical com- drugs. mathematic techniques to drug development. panies to achieve ‘discovered in China’ block- The GIBH also sees the future in collaborations GSK is also reaching out to Chinese academia, busters could be assisted by better leads from with industry. The real challenge in doing so, says with collaborations with the Chinese Academy of universities and research institutes. But technol- Tortorella, is for universities and research insti- Sciences and a number of top universities in the ogy transfer has far to go. China does not have tutes to develop the necessary infrastructure for past three years. “China is increasingly competi- a law like the Bayh-Dole Act, which allows uni- advancing more mature drug candidates. “That tive for innovation,” says Zang. “It’s not cost that versities in the US to take control of intellectual will dramatically increase the value of the IP and brings us here.” property emanating from research performed in attract more interest,” says Tortorella.GIBH is Lilly was so confident that Chinese academics the country, and so it is not always clear who has assembling a clinical team that will coordinate and biotechs would turn up bright ideas that itBiotech in China control of the intellectual property. “Most univer- both phase 1 and 2 clinical trials in China. To established a venture capital team in Shanghai sities and institutes are still very new to this, that end, GIBH is planning the creation of a new in 2007. So far it has made 7 investments in complicating the negotiations,” says ChinaBio’s medical center in Guangzhou. IND status for two China worth a total of over ¥300 million (US$47 Scott. But Scott says some are becoming “rea- internal clinical candidates is expected in 2012. million). sonably sophisticated in their deal making.” To stimulate biotech, GIBH has already spun- Indeed, investment is streaming into China. Tsinghua University is one of the most active. off a company named GZstem. With an opera- According to ChinaBio, venture capital investment “In the school of life sciences alone, there has tional budget of around US$2 million per year, in the Chinese biomedical industry climbed 319% been activity on three fronts, says dean Yigong GZstem derives induced pluripotent stem (iPS) in 2010 to over US$1 billion, with the average Shi. In 2009, a major technology transfer cells from the tissue of normal and diseased investment nearly doubling to US$21 million. B4
ADVERTISEMENT FEATUREAnd 2010 also saw the first venture capitalinvestment over US$100 million—for AutekBio, Technology Development Technology Transfera Beijing-based biologics contract manufacturing 500organization in Beijing. 450 “The upshot of all this activity,” says Ning 224.9 188.8 400Ning, Assistant to Director-General, Manager, 286.1Technology Transfer Team of the Beijing Pharma 350and Biotech Center, “is a dramatic increase in 300 189.1 227.6deals for transferring biopharmaceutical technol- 250 184.6ogy.” In 2010, Beijing had 3,033 pharmaceuti- 169.5 260.4cal technology contracts—nearly a quadrupling 200 149.9 240.1 135.2of the 849 contracts signed in 2001—and a 150turnover of ¥3.87 billion (US$ 6.4 million), an 97.2 153.9 100increase of 29.7% over 2009. The 2010 leader 111.8 88.1 86.3 97.4in contract deals was Shanghai (¥8.34 billion, 50 83.4 85.4US$ 1.31 billion), followed by Jiangsu (¥4.12 bil- 49.5 0lion, US$6.6 million), Beijing, Guangdong (¥1.33 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010billion, US$2.1 million) and Shandong (¥1.25 bil-lion, US$2 million, see Table 1). Table 2. Trend of average transaction price of single pharmaceutical technology contracts in Beijing This overall uptick was largely a result of the (2001‑2010).huge increase in the average transaction price.After a short dip in the middle of the decade, leads in the US, and seeking partnerships with US company retains the global rights outside ofin 2010 the average biopharmaceutical tech- US pharmaceutical companies, biotechs and uni- China,” says Jiang.nology development contract in Beijing grew to versities. Yangtze also plans to build a research But there are other models. In April 2011,¥2.6 million (US$410.000), and the average institute in the US and register two traditional Jinzi Wu, a former GSK drug developer, usedtechnology transfer contract grew to ¥1.9 million Chinese medicines and other drugs in the US. US$100 million (¥633 million) in funding from a(US$300,000, see Table 2). Notably, although “In terms of innovation, our overall strategy is to Chinese real estate magnate to launch Ascletis.Chinese-invested companies accounted for 76% combine the advantages in these two countries The company, which will have one foot in Northof the transferred technology, those contracts to effectively shorten product development time Carolina’s Research Triangle Park and anotheronly accounted for 37.3% of the total value, and lower cost,” says Cheng. in Hangzhou, will develop cancer and infectiousmeaning the value of contracts to a foreign inves- Yangtze not the only Chinese company looking disease therapeutics.tor was considerably higher. abroad. “WuXi and Beijing Pharma are consis- Not all Chinese companies building bridges tently in San Diego looking for partners, and the with the US are product poor. Shenzhen-Building bridges to the US major life science parks in Beijing, Shanghai and based Chipscreen Biosciences has three pre-Although MNCs are looking to China for innova- Suzhou are looking to us for companies inter- clinical compounds and two late-stage products,tion, some Chinese pharmaceutical companies ested in establishing operations there,” says all discovered internally. One, Chidamide, a neware looking in the opposite direction. Joseph Panetta, president of BIOCOM. benzamide-type histone deacetylase inhibitor David Jiang, who advises companies on BIOCOM started an Asia initiative to connect for peripheral T cell lymphoma, has obtainedUS-China deals at San Diego–based BIOCOM members with Chinese life science partners four orphan drug designation for a clinic trial—aChina Consulting, says that over the several past years ago, but partnerships are still rare in the first of its kind in China. Whereas other Chinesemonths, he has been forced to turn down busi- early stages. “There is a continuing concern on pharmaceutical companies are shifting towardness. As Chinese companies try to move beyond the US side about intellectual property protec- discovery, Chipscreen is expanding in the othergenerics and provide best-in-class drugs for the tion. There are also concerns that funding coming direction. “Our strategy is shifting toward buildinggrowing middle class, “there’s been an opening from the Chinese side requires establishing and internal capability for late-stage development inof the floodgates,” says Jiang. “Many Chinese maintaining the company in China,” says Panetta. China, including a GMP facility,” says Lu. The GMPcompanies are product poor and cash rich. In Still, Panetta is bullish: “China is moving forward upgrade should help Chipscreen get certifiedthe US, it’s the opposite: they‘re product rich and on the healthcare delivery and drug development by other regulatory agencies, including the US,cash poor.” fronts at a speed that we can’t begin to imagine where its partner, HUYA Biosciences, is finishing Yangtze, for example, with its 8,000 employees in the US.” up a phase 1 clinical trial on Chidamide.and annual sales approaching US$4 billion, was US biotech leaders are believers. “China isgenerally known as a generics producer, but it is committed to become a leader in biologics,” says Legislating innovationhungry to move up the food chain. From 2006 to Magda Marquet, founder of San Diego–based There are, however, problems that need to be2010, the company invested more than US$500 Althea Technologies. Chinese companies have resolved before this potential can be realized.million in R&D, including a US$33 million ‘innova- expressed interest in Althea’s biologics capability With government support, much progress istive research center’ in Taizhou. From 2010 to and protein delivery technology platform. “I have being made.2015, the annual R&D budget is projected to be no doubt that five years from now, we’ll have a lot The major problem is red tape. Everyone thatover US$200 million (¥1.3 billion). The company of collaborations in China,” says Marquet. does drug development in China complains aboutnow has some 100 compounds in preclinical Marquet says the situation in China is very the same regulatory hurdle: to start a clinicalstudies and more than 20 compounds in clinical different from that in the US because there are study in China, a company has to wait for onetrials, the leads mainly coming from internal R&D many smaller companies, not a dozen leaders. year or longer to get approval. In other markets, Biotech in Chinaor Chinese research institutes, universities and Many have cash to invest, and they want to this approval is often granted within two months.biotech companies. acquire a product pipeline. “It’s a real trend, and This drives some away. A ‘green channel’ has The company is now ready to move into biolog- when the Chinese decide on a clear priority, they accelerated the process for some drugs, saysics, and last year it opened a San Francisco sub- can move very fast,” says Marquette. Hutchison’s Du. “But it is still longer than in thesidiary, Pan-Pacific Biopharma, to assist. “This is There are different ways to build bridges. “A US and other mature markets. There is also rooma new direction for Yangtze,” says Senping Cheng, common model is that a US company finds a to improve in terms of the first-in-man require-who heads Pan-Pacific Biopharma. The US unit Chinese partner to share R&D costs and risks ments,” she adds.is charged with recruiting expertise in drug dis- to co-develop a new product. The Chinese part- The government is aware of the problem. Thiscovery and development, discovering promising ner earns the China commercial rights while the March, the Center for Drug Evaluation of China’s B5
ADVERTISEMENT FEATURE Chipscreen’s Lu says it is working: “The finan- develop their careers by training with colleagues cial support for good laboratory practice and in the US or Europe. good clinical practice infrastructure is clearly creating the scale to bring sensible new treat- Five years, ten years down the line? ments from China in future.” The plan has given Progress has been made, but more can be done “renewed impetus” to the innovative biophar- if China plans to make the transition from gener- maceutical industry, says Zhao. “Not only are ics and me-too drugs to the advancement of new, academic institutes benefiting from additional first-in-class and best-in-class medicines. “The government funding but also local Chinese com- latter requires a different structure and mindset mercial enterprises are receiving support for their that is not found at most Chinese pharmaceutical R&D activities with a view to creating an industry companies,” says GIBH’s Tortorella. “The transi- that will participate in the global market.” tion will require a concerted effort from both the Local governments are also getting in on the government and private sectors.” act. The Guandong government is investing Lu is hopeful. “Although the current system of large sums in new biotech companies, including clinical research in China is far from satisfactory, a ¥85 million (US$13.4 million) grant to create we believe the situation can be improved quickly a company that uses small interfering RNAs as within the next five years through awareness of therapeutics for inflammatory diseases. And the those existing problems by all stockholders,” central and Shanghai governments combined says Lu. ¥230 million (US$36 million) for the initial con- And while the clinical resources in China remain According to Magda Marquet, founder of San struction phase of the 22,000-square-meter relatively untapped, especially for first-in–man, Diego–based Althea Technologies, in their Shanghai Center for Systems Biomedicine on proof-of-concept and pivotal trials, R&D productiv- endeavor to become a leader in biologics the Shanghai Jiao Tong University campus. The ity in the preclinical stage will put pressure on the Chinese companies have expressed interest in center supports post-genomic research and per- country’s regulatory system to transform itself, Althea’s biologics capability and protein sonalized medicine with facilities for proteomics, says Lilly’s Zhang. “Reforming requirements for delivery technology platform. bioinformatics, molecular imaging, transgenic first-in-man trials will bridge the gap between animals and tissue banking. the preclinical R&D capabilities and late-phase State Food and Drug Administration issued the Yangtze’s Xu sees great change ahead. “At international multicentered trials. A good place Principles and Procedures for Drug Technical present at all levels the Chinese government is to start might be deferring requirements that are Review and Evaluation which streamlines evalu- putting more emphasis on new drug development not critical to subject safety from investigational ation for innovative drugs. Under the new pro- and providing support for innovation and intel- new drug to the new drug application stage, so cedures, evaluators will be organized by their lectual property protection.” as to put both regulatory and R&D resources into specialty rather than therapeutic area, allowing the best use,” says Zhang. drugs to be evaluated on the basis of several Labor issues Integration into global pipelines will continue parameters at the same time. Generic drugs will A stickier problem could be labor costs. China’s and the research base will expand. “We expect still undergo a “one-office, single disciplinary healthy supply of talent has been one of its main by 2015, China will be fully incorporated into clini- review.” attractions. But, according to Scott of ChinaBio, cal development program. We also expect that “More detailed guidelines, more clear paths although there is still a cost advantage of our activities in China will significantly increase for dossier, and the green channel are certainly 30–40% or more in China over the US or other our global R&D capacity,” says Merck’s Dong. a plus to support innovation in China,” says developed countries, a yearly 10% increase in Others are similarly bullish. Scott says the influx Chipscreen’s Lu. salaries is quickly eroding that advantage. of MNCs and transition of Chinese pharmaceuti- Additional concerns, however, are new pric- “With the appreciation of the yuan, China’s cal companies to new R&D has created enough ing policies. This March, in an effort to drive labor costs are increasing,” says Lilly’s Zhang. momentum. “IMS predicted that China will be down drug prices, the National Development “Retaining experienced talent is a challenge. This the top pharmaceutical market in 2020, but I and Reform Commission lowered prices for is a major uncertainty and could impact Chinese believe this will occur several years earlier,” says 162 drugs by some 20% on average. Similarly, competiveness as an R&D destination.” Scott. AstraZeneca undertook a worldwide survey the ‘Anhui model’, which aims to decrease the “It is still a buyer’s market for entry-level focused in 2010. “Although the US was rated the prices of 307 medicines on the essential drugs laborers,” says Darren Ji, CEO and founder of most innovative country in the world today, there list, awards contracts to companies with the low- PharmaLegacy Laboratories, a leading CRO in is an expectation that both China and India will est price. But major drug companies are worried Shanghai. “But finding skilled staff is becom- overtake the US by 2020,” says Yang. that this could favor small manufacturers that ing more difficult especially in Shanghai and And the economy gives China an edge. “While lack capacity and might fail in quality control. The Beijing. This may become an issue for continued the Western world is dealing with economic chal- result could be that China becomes a less attrac- research expansion.” Chipscreen’s Lu says the lenges and lots of uncertainty, China has the tive place for R&D investment and innovation. problem is particularly severe in medical affairs, clarity, the drive and the capital to compete very clinical research and the clinical study of new significantly in drug development,” says Marquet. Funding innovation mechanisms of drug. “The medical evaluation Just how quickly will the balance of pharma- But make no mistake. The central government is system for clinic practitioners needs to be greatly ceutical power shift in China’s direction? Ji says intent on supporting drug discovery. The recently improved if China wishes to become a major it will take 10 years until “China will become the released Twelfth Five-Year Plan allocates ¥2 power in biomedical research and drug develop- focus of attention in drug development. ‘Made in trillion (US$308.5 billion) for science and tech- ment,” says Lu. China’ will start transforming into ‘discovered inBiotech in China nology, including ¥20 billion (US$3.2 billion) Still, Scott says, China’s universities are China’,” says Ji. for innovative medicine, the cultivation of new producing 150,000 scientists each year and Things are moving in that direction so fast that varieties of genetically modified organisms and 130,000 scientists, engineers and business Panetta is afraid to hazard a guess as to what the prevention of viral hepatitis. The initiatives, types returned from abroad just last year. “This the situation will look like in five years. A visit to the government says, will create one million jobs is rapidly increasing China’s ability to do sophisti- the China Medical City in Taizhou, which Panetta by 2015. According to ChinaBio, the government cated global business transactions,” says Scott. says is “being constructed literally overnight” has pumped more than US$15 billion (¥95 bil- Companies are dealing with the tight labor mar- convinced him: “Five years from now, China will lion) into programs ranging from drug discovery ket in different ways. Bayer, for example, is trying have created a foundation for drug development to commercialization. to woo employees by providing opportunities to on a scale that we can only begin to imagine.” B6