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A Chinese Strategy
Article From :Jinan health and medical technology co., LTD Add time:2016/06/17 PV :

A Chinese Strategy: 'If You Plan to be Around'

By Tom Wall

Staff Writer

Editor's note: BioWorld Today explores the Chinese biotech market in this second of an occasional series of articles. See BioWorld Today, May 18, 2011, for the first report.

It's not a question of whether Western biotechs should be involved with China's emerging biotech industry, but rather how fast and how much they can get involved, according to several U.S. executives just returned from China.

"If you plan to be around five or 10 years from now, you have to have a Chinese strategy," said Joshua Boger, founder and former CEO of Vertex Pharmaceuticals Inc., of Cambridge, Mass., and currently a Vertex director." If you expect to be acquired, it's not an issue."

Vertex's Chinese strategy: Shanghai SynTheAll Pharmaceuticals Co. Ltd., a manufacturing subsidiary of WuXi AppTec Co. Ltd., of Shanghai, is the manufacturing site for starting materials for Vertex's just-approved hepatitis C drug Incivek (telaprevir). (See related article, p. 1.)

Boger, who visited China earlier this month to check out Shanghai SynTheAll in advance of the Incivek PDUFA date, said that nation's biotech development will happen so quickly that Western firms not only need to act, but act fast. A combination of massive government investment, an appetite for capitalism, the return of thousands of world-class scientists and an enormous market is driving China's arrival as a major force in world biotechnology.

"It can be as simple as having partners in China, otherwise you are going to be shut out," Boger said. "You need friends in China. That's how we think about our partnership [with WuXi AppTec]. If you say, 'I'll wait until I get big enough to sail in and build a facility,' that's last century. You'd better start it by becoming important to companies in China. You help them, they help you.

"Companies shouldn't use the excuse that they're not big enough to do anything," Boger added. "If a company has to bias some decisions to get a partner in China, it is that important."

But a company's size can be a limiting factor – even if the company understands the importance of involvement in China and wants to go in that direction – according toRon Cohen, founder, president and CEO of Acorda Therapeutics Inc., of Hawthorne, N.Y.

Cohen, a member of the executive committee of the board of the Biotechnology Industry Organization (BIO) and chairman of BIO's emerging company section, was one of several U.S. biotech execs who visited Beijing and Shanghai in late March and early April as part of a BIO delegation. The group met with Chinese food and drug, intellectual property, health, science and technology, and commerce officials as well as life science business leaders. Cohen was impressed by what the Chinese have accomplished as well as their prospects.

"We are not of a size that allows us to do much commercially outside the U.S.," Cohen said. "It takes a great deal of time, personnel and patience. As we grow we will have the wherewithal to look at China. I'm hopeful we might ultimately partner with a small company that has some common ground with us, use that as a foot in the door and see if that leads to other opportunities for us. I've asked our manufacturing group to take a close look at China and see if there are options we can use. We're trying to lay some early groundwork that allows us to get our toe in the water."

Indeed, China holds enormous opportunity for Chinese and Western companies, according to BIO president and CEO Jim Greenwood, who led the delegation as a preliminary to BIO's first China International Partnering Conference in October in Shanghai.

First and foremost, said Greenwood, there is the enormous Chinese market. China's population is about 1.2 billion, but only about 400 million in primarily urban areas have access to what is generally considered adequate health care. Either way, it is a huge market, he said. "Four hundred million people are greater than the U.S. population, and China is committed to expanding the health care system to rural areas and the government is trying to add 800 million people to the system. That tends to lead to downward pressure on prices, and profit margins per unit are going to get squeezed. But even at low margins there is a lot of profit to be made."

Next – for the time being, at least – there are lower manufacturing and research costs. Greenwood and others noted that while labor costs are about 40 percent of those in the West, they are increasing. However, the Chinese are earning a reputation for efficiency that offsets some of the cost increases.

There's also a growing opportunity for clinical trial work among vast populations who are treatment naïve, said Greenwood. And increasingly, he said, there will be "money on the table" as the Chinese government provides financial incentives for companies to locate facilities in China, hire Chinese employees and bring innovative and scientific skills that can be shared. The Chinese government is pursuing a "strategic economic restructuring" by investing a reported $1.5 trillion during the next five years to transition from cheap manufacturing to biotechnology and other high-value industries. The target is for the value-added output of the strategic industries to account for 8 percent of the country's gross domestic product by 2015 and 15 percent of the country's GDP by 2020.

"For all of those reasons, China holds a great deal of attraction," Greenwood said. "And for all of those reasons BIO decided to begin an annual partnering meeting. During the past several years a number of companies, small to large, have demonstrated interest in China."

Cohen views the trip this spring and the fall conference as critical efforts "to establish the BIO brand" in China. BIO will be in a position to advise the Chinese government and businesses, as well as observe and monitor what going on in China and prepare the way to more collaboration, he said.

Added Greenwood, BIO also hopes to "have some influence on policy. When we have these events and bring officials there, there is an opportunity for dialogue and to have some influence."

Among the things Greenwood and BIO would like to influence: Chinese government regulations that encourage timely product reviews, ensure safety and efficacy, and expedite new therapies; a reimbursement system that delivers timely and consistent coverage; and, incentives for private companies to develop and commercialize new products.

But protection of intellectual property (IP) is at the top of the list. Investors and innovators will do business where they have confidence that their IP will be protected, said Greenwood, and that is true not just for Western biotechs interested getting involved in China, but for Chinese scientists and entrepreneurs as well.

"I would be cautious about IP, but the Chinese understand that," Boger said. "It is in their own best interests to have strong IP. I think they are moving pretty fast."

IP protection is a very serious issue, Cohen added. "It is not close to world standards," he said. "As their own industry becomes more sophisticated, there will be clamoring internally to bring IP up to world standards. That will come in time."

Expected to push the issue are thousands of Chinese scientists who were educated in the west and have years of experience with Western biotech companies – and Western IP standards.

Jinan KangHe Pharmaceutical Technology Co., Ltd All Rights Reserved  No. 2766 Ying Xiu Road, Jinan High-tech industries development zone, Shandong province,P.R. China