The Chinese word for “crisis” is composed of two characters—one for danger and one for opportunity. That analogy sums up, not only the current global situation, but the situation for biotechs in China too, according to speakers at the recent “Pacific Forum on Life Science Alliances,” sponsored by the Sino-American Biomedical and Pharmaceutical Professionals Association (SABPA).
The tainted milk scandal in 2008 is a good example, according to C.J. Wang, Ph.D., vp of business development for Vivus. Stressing that these are only his personal views, he said, “the tainted milk disaster was bad, but it was also an opportunity. In its aftermath, instrument sales surged. Firms used to have difficulty selling their expensive instruments in China. Now, orders come in large quantities,” to allow companies to perform food analyses. But, Dr. Wang emphasized, “You have to be there to really understand the market and see the opportunities.”
The need to be there is based upon the simple fact that China is changing rapidly. The prescription drug industry has grown 10 to 15% annually since 1979, with revenue projected to reach $24 million by 2010, according to Zhu Shen, Ph.D., CEO of BioForesight and vice chairman and board member for SABPA. Consolidation of Chinese biotechs is likely. “We will see some major players emerge,” Dr. Shen predicted. Within China, “leading CROs are moving inland,” she said, expanding their geographic reach and access to talent. Dr. Shen also predicted that “the West will dramatically increase its outsourcing in Asia. Those who anticipate and manage well will win.”
Companies considering outsourcing to China or developing partnerships or other ventures in that nation need to do so in a global context. “You need a global strategy that’s cost effective and can be implemented,” according to Noel Gillespie, partner, Baker & McKenzie. Firms also need to realistically assess the strengths and weaknesses inherent in such agreements and, importantly, the ramifications upon later product development, patentability, and licensing such as: where clinical trials are best conducted, where the initial patents should be filed, and reimbursement strategies. These must be well understood.
Presenters, many of whom recently were in China, noted the energy among scientists, as well as on the streets. Much of that energy is directed toward biotech. Presenters suggested that “Made in China” will, within the next five to ten years, become “Discovered in China.”
Two key factors are contributing to that sea shift. Perhaps most importantly, the Chinese government is determined to develop its expertise in biotech. The nation is committed to competing in terms of intellectual innovation, technological innovation, and high-tech industrialization, Charles Wessner, Ph.D., director of technology, innovation and entrepreneurship at the U.S. National Academies, explained. It is investing in education, infrastructure, and worker training to develop a critical mass. It also is working to get its message to the right people through such venues as this conference, as well as working with public relations representatives to promote the modern business climate in China. That said, Dr. Wessner stressed that “it’s important to distinguish between trends and what’s already there.”
Another big factor is the return of what China calls “sea turtles”—overseas Chinese who are returning to their home country to work in (and direct) high-tech endeavors. These professionals have experience with good manufacturing practices and good laboratory practices, as well as their intellectual expertise. And, they are fluent in English and have a good understanding of their Western customers.
That combination of factors is resulting in successes. BioDuro, a multinational life science outsourcing company with labs in Beijing, is a prime example. With a staff of 540, one-quarter of its scientists hold doctoral degrees. It has worked with some 40 biopharmaceutical companies, focusing on the hit-to-clinic stage, according to Yun He, Ph.D., vp of research for BioDuro.
Medicilon has codeveloped, manufactured, and tested compounds successfully and expects to implement good laboratory practices by 2009, according to Jintao Zhang, Ph.D., CEO. Wilmington Pharmatech has made 44 drug candidates, and conducts process research to optimize reactions for scale-up, reported Harry Hui-yin Li, Ph.D., CEO.
Most of the deals in China right now are in contract research, according to James Schaeffer, Ph.D., executive director of Merck & Co. Dr. Schaeffer is responsible for Merck’s scouting efforts in China; he considers external alliances a key strategic component in advancing the business. To that end, Dr. Schaeffer is looking for deals with “top-notch laboratories and companies doing basic research,” and for companies with the best organizations for taking compounds from protected targets through Phase I research.
Chinese CROs are responding to that shift of focus. Firms like Sundia Meditech, founded four years ago, built its reputation on contract research. Now, “the landscape is changing,” noted Shawn Shi, Ph.D., executive vp. “We’re trying to build a one-stop shop.”
Sundia Meditech isn’t alone. According to Dr. Shen, CROs are expanding and adding new services, including engaging in mergers and acquisitions, participating in cross-Pacific joint ventures, and forging strategic alliances. While China’s strength remains in basic research, it is expanding its focus to include the diseases that tend to affect affluent populations such as cancer and diabetes.