8 ways Chi­na could help trans­form the glob­al bio­phar­ma in­dus­try

Biotech Voices is a collection of exclusive opinion editorials from some of the leading voices in biopharma on the biggest industry questions today. Think you have a voice that should be heard? Reach out to Amber Tong.

The re­cent emer­gence of a thriv­ing bio­phar­ma­ceu­ti­cals in­dus­try in Chi­na is no longer just a Chi­na sto­ry. It is a glob­al one, with pro­found im­pli­ca­tions for years to come.

For the past 15 years com­pet­i­tive in­ten­si­ty in the glob­al bio­phar­ma mar­ket has in­creased marked­ly. Most re­cent­ly, Chi­na has emerged as an im­por­tant ac­tor in the glob­al bio­phar­ma ecosys­tem, adding a po­tent ad­di­tion­al source of glob­al bio­phar­ma in­no­va­tion and dis­rup­tion. What im­pact will this emer­gence of Chi­na have on the glob­al in­dus­try?

First, here are a few im­por­tant facts un­der­pin­ning the rise of Chi­na bio­phar­ma:

Chi­na bio­phar­ma has very good ac­cess to the nec­es­sary in­gre­di­ents for in­no­va­tion:

● Fund­ing – The cu­mu­la­tive mar­ket val­ue of Chi­na orig­i­nat­ing biotechs, list­ed on HKEX, STAR or NAS­DAQ, rose from $1bn in 2016 to $180bn as of May 2021. CB In­sights in­di­cates that 2 of the top 10 glob­al health­care VC funds are from Chi­na (Hill­house Cap­i­tal and Qim­ing Ven­tures – rank­ing as of Q1 2021). In­creas­ing­ly, Chi­na linked funds de­ploy cap­i­tal be­yond Chi­na, to sup­port the emer­gence of US based in­no­v­a­tive start-ups (nu­mer­ous ex­am­ples, from Lil­ly Asia Ven­tures, to Al­ly Bridge Group, or Quan Cap­i­tal). Of note, in­vest­ments in Eu­rope are more lim­it­ed to date. A new re­port by McK­in­sey “ In­no­va­tion hot-spots to stage the next Biotech act in Eu­rope” con­cludes that Chi­na ac­count­ed on­ly for 2% of ear­ly-stage fund­ing in Eu­ro­pean biotechs, over the 2018-2020 pe­ri­od. Al­so, new fund­ing mod­els are emerg­ing. For ex­am­ple, with back­ing from Or­bimed Asia part­ners, Kin­nate Bio­phar­ma, a US based bio­phar­ma, re­cent­ly raised $35mn to set up a JV in Chi­na for de­vel­op­ment and com­mer­cial­iza­tion of its lead pro­gram in greater Chi­na.

● CD­MOs and CROs – The cu­mu­la­tive mar­ket val­ue of list­ed play­ers, de­fined as fo­cused on in­no­v­a­tive drug de­vel­op­ment and list­ed on HKEX, STAR, or NAS­DAQ, rose from <$1bn in 2016 to $176bn as of May 2021. Chi­na is al­ready a lead­ing provider of ser­vices in sub-seg­ments, with a glob­al client base (e.g., in Chem­istry). CD­MO is rapid­ly scal­ing up with ex­am­ples of Chi­na/US tie-ups. For ex­am­ple, Hu­mani­gen (US based) re­cent­ly se­lect­ed Chime bi­o­log­ics (Chi­na based) for the de­vel­op­ment of its lead pipeline can­di­date, lenzilum­ab. Some Chi­na orig­i­nat­ing com­pa­nies are build­ing glob­al man­u­fac­tur­ing net­works. Wuxi Bi­o­log­ics is open­ing fa­cil­i­ties in Sin­ga­pore, Ire­land or Worces­ter, USA, while CARs­gen is in­vest­ing $157 mn to set up a North Car­oli­na based CAR-T Lab/man­u­fac­tur­ing fa­cil­i­ty. On the CRO side, the re­cent merg­er of dMed (Chi­na based) and Clin­i­pace (US based) pro­vides an il­lus­tra­tion of the in­creas­ing in­ter­de­pen­den­cy or ser­vice providers, who need to span US-Chi­na to lever­age the best ca­pa­bil­i­ties and serve glob­al clients.

Tal­ent pool – Chi­na’s role in the glob­al tal­ent mar­ket is ris­ing, with some com­pa­nies rapid­ly tran­si­tion­ing from be­ing “Chi­na based” to be­ing “glob­al­ly based”. This in­volves hir­ing key CEO-1 tal­ent who come from tra­di­tion­al big phar­ma play­ers, and play glob­al po­si­tions/roles from their home coun­try. As re­cent ex­am­ples, BeiGene hired its Se­nior VP of Glob­al Hu­man re­sources from Pfiz­er, and Zai Lab hired its Pres­i­dent, head of glob­al de­vel­op­ment for on­col­o­gy from Genen­tech. Both ex­ec­u­tives are based in the US. Al­so, sev­er­al CEOs of Chi­nese biotechs are for­mer glob­al ex­ec­u­tive of multi­na­tion­als (e.g., the CEO of Ever­est Med­i­cines spent most of his ca­reer at Eli Lil­ly, while the Chair­man and CEO of CStone came from Sanofi).

The role and im­pact of Chi­na is al­ready ev­i­dent across key el­e­ments of the val­ue chain:

Dis­cov­ery – Ini­tial­ly, lo­cal in­no­va­tion for the Chi­na mar­ket fo­cused on the im­muno-on­col­o­gy space (~110 NMEs in the clin­i­cal de­vel­op­ment as of May 2021). Ac­knowl­edg­ing this hy­per-com­pe­ti­tion, Chi­na bio­phar­ma’s in­no­va­tion fo­cus has broad­ened sig­nif­i­cant­ly in­to all ma­jor modal­i­ties and dis­ease ar­eas. Our analy­sis shows that for 9 out of 10 modal­i­ties and for 9 out of 13 dis­ease ar­eas, lo­cal com­pa­nies are now lead­ing MNCs in in­no­va­tion for the do­mes­tic Chi­na mar­ket. A re­cent pub­li­ca­tion by the IQVIA in­sti­tute (“Glob­al on­col­o­gy trends 2021: Out­look to 2025) es­ti­mates that Chi­na-head­quar­tered com­pa­nies are de­vel­op­ing 18% of all ear­ly stage on­col­o­gy drugs, up from 6% in 2015. Maybe even more strik­ing, the Chi­na share is al­ready 13% for all next-gen­er­a­tion on­col­o­gy bio­ther­a­peu­tics. 2020 marked a turn­ing point with sev­er­al ex­am­ples of in­no­v­a­tive drugs dis­cov­ered in Chi­na be­ing li­censed in by large glob­al bio­phar­mas. The deals be­tween Ab­b­Vie/I-Mab for I-Mab’s CD47 or Lil­ly/In­novent for In­novent’s PD-1 pro­gram come to mind. What’s im­por­tant to note is the speed at which new drug in­no­va­tion has pro­lif­er­at­ed in scope and scale. Chi­na bio­phar­ma is be­com­ing an ever faster fast fol­low­er. While we have yet to see much ev­i­dence of First in Class dis­cov­ery out of Chi­na – oth­er than a few green shoots – one could rea­son­ably ex­pect this to change in the mid-term.

● De­vel­op­ment – Chi­na ac­counts for a large share of de­vel­op­ment tri­als for the top 25 glob­al Bio­phar­ma com­pa­nies. On av­er­age, Chi­na is cur­rent­ly par­tic­i­pat­ing in ~21% of on­go­ing Phase 3 clin­i­cal tri­als from those com­pa­nies as of June 2021. Ac­cess to a large treat­ment naïve pa­tient pool is at­trac­tive, and a grow­ing num­ber of tri­al cen­ters are reach­ing in­ter­na­tion­al qual­i­ty stan­dards. One should note how­ev­er that while cen­ters have grown, the num­ber of cen­ters and PIs with ex­ten­sive MRCT ex­pe­ri­ence is still low and will con­tin­ue to con­strain Chi­na’s de­vel­op­ment ca­pac­i­ty. IQVIA In­sti­tute es­ti­mates that there are 1,297 tri­al ex­pe­ri­enced sites glob­al­ly for CAR-T ther­a­pies, 284 of which are in Chi­na. Mean­while, Chi­nese orig­i­nat­ed bio­phar­ma/biotechs are ramp­ing up the num­ber of tri­als con­duct­ed abroad, for ex­am­ple in Aus­tralia, the US or EU.

● Com­mer­cial/ac­cess – a few Chi­na orig­i­nat­ing com­pa­nies have start­ed to build phys­i­cal pres­ence in the US, in­clud­ing for com­mer­cial and ac­cess ac­tiv­i­ties. BeiGene and Hutch-Med are both ramp­ing up their US pres­ence, with new mol­e­cules launched/launch­ing soon. The same is start­ing to hap­pen in Eu­rope. Some US based com­pa­nies are start­ing to emerge with the idea of li­cens­ing in­no­v­a­tive mol­e­cules from Chi­na and launch­ing them in the US. EQRx for ex­am­ple has a li­cens­ing deal with Han­soh Phar­ma for au­mol­er­tinib, an EGFR TKI in­di­cat­ed for treat­ment of NSCLC. The stat­ed strat­e­gy aims at dis­rupt­ing the cur­rent price/vol­ume sta­tus quo.

Chi­na is clear­ly al­ready an im­por­tant and in­te­gral part of the glob­al bio­phar­ma in­dus­try, not a sep­a­rate ecosys­tem that co-ex­ists and in­ter­acts with the glob­al one. This is dri­ven both by the na­ture of the in­dus­try – glob­al in its po­ten­tial to im­pact pa­tients – and by the reg­u­la­to­ry re­forms un­der­tak­en the last 5 years (e.g., Chi­na join­ing ICH in 2017).

There is a clear, po­tent trend of a ris­ing Chi­na bio­phar­ma. We in­vite glob­al ex­ec­u­tives to con­sid­er a se­ries of 8 po­ten­tial im­pli­ca­tions that could play out over the next decade:

1. Im­pact of Chi­na scale and speed of in­no­va­tion on the bio­phar­ma val­ue chain: Can Chi­na lever­age its core ad­van­tages, scale and speed of in­no­va­tion, the way it has across many oth­er in­dus­tries (e.g., so­lar pan­els, high speed trains)? Could this help dri­ve down the cost of dis­cov­ery for all play­ers glob­al­ly? Could in­no­v­a­tive med­i­cines ad­vance faster from labs to clin­ics and to pa­tients, sav­ing cost and lives? Could Chi­na large scale man­u­fac­tur­ing and vol­ume po­ten­tial leads to fun­da­men­tal­ly dif­fer­ent choic­es on pric­ing of mAbs?

2. Al­ter­na­tive source of cap­i­tal: Will Chi­na – through VCs/PEs and stock ex­changes (HKEX and Shang­hai Star board) emerge as a cred­i­ble source of cap­i­tal al­ter­na­tive for EU based biotech com­pa­nies, who can ben­e­fit from ad­di­tion­al fund­ing to un­lock their strong re­search and dis­cov­ery po­ten­tial?

3. Ap­pli­ca­tion of AI to large datasets: Can Chi­na’s lead in AI trans­late in the bio­phar­ma space and fos­ter the emer­gence of new dis­cov­ery and de­liv­ery mod­els for health­care? Giv­en the very large pa­tient datasets avail­able in Chi­na, and the num­ber of com­pa­nies pop­ping up to mine the da­ta, can we ex­pect faster de­vel­op­ment in that space than in the US/EU?

4. Mat­u­ra­tion of Chi­na dis­cov­ery ca­pa­bil­i­ties: Will Chi­na’s dis­cov­ery ca­pa­bil­i­ties ma­ture rapid­ly enough to yield in­no­v­a­tive mol­e­cules, with new mech­a­nisms and a range of in­di­ca­tions broad­er than what we typ­i­cal­ly see in the West­ern world? What will then be the “new bar” for R&D pro­duc­tiv­i­ty once Chi­na bio­phar­ma in­no­va­tions have en­tered glob­al mar­kets at scale?

5. Rel­e­vance of “af­ford­able in­no­va­tion” con­cept out­side of Chi­na: Will Chi­na’s con­cept of af­ford­able in­no­va­tion (i.e., fast fol­low­ers or “me bet­ter” drugs priced at a dis­count to orig­i­na­tor), trans­late over­seas? Can Chi­na help ac­cel­er­ate the de­vel­op­ment of large­ly un­der­served in­no­va­tion re­gions, such as South East Asia or Africa?

6. Emer­gence of a new gen­er­a­tion of glob­al bio­phar­mas: Can Chi­na’s ecosys­tem give birth to a new gen­er­a­tion of glob­al bio­phar­mas, with a dif­fer­ent foot­print and ap­proach (i.e., “best of both worlds”). Fol­low­ing in the foot­steps of Japan’s lead­ers, on­ly much faster.

7. Im­pact on com­pet­i­tive lev­el of in­no­va­tion: In light of ris­ing com­pe­ti­tion from Chi­na, what is the right bal­ance in glob­al in­no­va­tion port­fo­lios be­tween modal­i­ties and dis­ease ar­eas that are com­par­a­tive­ly well un­der­stood vs. those that car­ry high­er de­grees of nov­el­ty and break­through po­ten­tial?

8. Hy­per­com­pet­i­tive sta­tus of the Chi­na mar­ket: What will it take to pre­vail as an MNC in Chi­na’s hy­per­com­pet­i­tive lo­cal mar­ket for bio­phar­ma in­no­va­tion? Are cur­rent in­no­va­tion pipelines, in­vest­ment lev­els and “meta­bol­ic rates” for Chi­na com­men­su­rate with the growth pro­jec­tions and speed of evo­lu­tion of the mar­ket?

We are at the be­gin­ning on a key in­dus­try wide trend that will be felt glob­al­ly. The 8 ques­tions list­ed above on­ly il­lus­trate the range of im­pli­ca­tions one would need to think about. I wel­come your thoughts and feed­back.

Note from Franck Le Deu: I’m a Se­nior Part­ner with McK­in­sey & Com­pa­ny, based in Chi­na since 2005 (Shang­hai, then Hong Kong). I co-lead our Bio­Phar­ma and MedTech Prac­tice in Asia Pa­cif­ic. Please reach out to con­nect or fol­low me here on LinkedIn. I’m al­so on Twit­ter@fle864.

The Fac­tors Dri­ving a Rapid Evo­lu­tion of Gene & Cell Ther­a­py and CAR-T Clin­i­cal Re­search in APAC

APAC is the fastest growing region globally for cell & gene therapy trials representing more than a third of all cell & gene studies globally, with China leading in the region. 

APAC is the leading location globally for CAR-T trials with China attracting ~60% of all CAR-T trials globally between 2015-2022. The number of CAR-T trials initiated by Western companies has rapidly increased in recent years (current CAGR of about 60%), with multiple targets being explored including CD19, CD20, CD22, BCMA, CD30, CD123, CD33, CD38, and CD138.

The End­points 11; blue­bird's $3M gene ther­a­py; Bio­gen tout new neu­ro da­ta; Harsh re­views for can­cer drugs; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

Reading about John Carroll’s pick of biotech’s most promising startups has become a treasured tradition. If you ever get curious about previous classes of the Endpoints 11, you can find all of them (plus a number of our other regular specials) here.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 150,800+ biopharma pros reading Endpoints daily — and it's free.

EMA warns of short­ages of two Boehringer heart drugs due to a spike in de­mand

The EMA is putting EU member states on alert over the shortage of two drugs that counter heart attacks due to an uptick in demand.

On Friday, the EMA sent out a warning that two Boehringer Ingelheim drugs are experiencing a shortage: Actilyse and Metalyse. The drugs are used as emergency treatments for adults experiencing acute myocardial infarction, or a heart attack, by dissolving blood clots that have formed in the blood vessels.

The End­points 11: The top pri­vate biotechs in pur­suit of new drugs. Push­ing the en­ve­lope with pow­er­ful new tech­nolo­gies

Right around the beginning of the year, we got a close-up look at what happens after a boom ripples through biotech. The crash of life sciences stocks in Q1 was heard around the world.

In the months since, we’ve seen the natural Darwinian down cycle take effect. Reverse mergers made a comeback, with more burned out shells to go public at a time IPOs and road shows are out of favor. And no doubt some of the more recent arrivals on the investing side of the business are finding greener pastures.

Endpoints Premium

Premium subscription required

Unlock this article along with other benefits by subscribing to one of our paid plans.

As­traZeneca, Mer­ck cull one Lyn­parza in­di­ca­tion in heav­i­ly pre­treat­ed ovar­i­an can­cer pa­tients

Just one day after blockbuster Lynparza got access to another indication in China, its Big Pharma owners have decided to withdraw it in certain patients after reviewing Phase III data.

The two companies that work together on Lynparza decided to recall one of the indications several weeks ago in a specific type of ovarian cancer, Lynparza’s first indication when it was first FDA-approved in 2014. Initial data showed that rates of overall survival in patients with at least three rounds of chemo before getting on the PARP inhibitor were lower than in patients with less previous chemo treatment.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 150,800+ biopharma pros reading Endpoints daily — and it's free.

Fu­ji­film con­tin­ues CD­MO ex­pan­sion, break­ing ground on $435M UK site

Fujifilm’s CDMO arm, Fujifilm Diosynth, has been on a roll this month as the company has recently broken ground on a major project in Europe and it appears to be keeping up the momentum.

Fujifilm Diosynth announced that it has kicked off an expansion project for its microbial manufacturing facility at its campus in the town of Billingham, UK, in the northeast of England.

The 20,000 square-foot, £400 million ($435 million) expansion will add clean rooms, purification suites and a packing area along with more space for the manufacturing itself.

An­oth­er Cipla site lands a Form 483 over clean­ing is­sues and QC con­trols

A Cipla drug manufacturing site in India has once again landed in the crosshairs of FDA inspectors.

The facility in question is Cipla’s drug manufacturing facility in the village of Verna, in the state of Goa in India’s southwest. In a sign that foreign inspections might ramp up again, the FDA’s visit from Aug. 16 to Aug. 22 uncovered six observations.

The 11-page report noted that environmental monitoring at the site did not properly ensure that microbial contaminants were not making any impact in the aseptic filling areas. It also found that procedures meant to stop microbial contamination were not adequately conducted in aseptic areas of the facility.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 150,800+ biopharma pros reading Endpoints daily — and it's free.

FDA ad­comm takes down Se­cu­ra Bio's leukemia drug af­ter fi­nal tri­al re­sults show po­ten­tial OS detri­ment

The FDA’s Oncologic Drugs Advisory Committee on Friday voted 8-4 against the benefit-risk profile of Secura Bio’s PI3K inhibitor Copiktra (duvelisib), which won approval in September 2018 as a third-line treatment for relapsed or refractory CLL or SLL, but updated pivotal trial results raised safety questions.

In addition to the serious and fatal toxicities of duvelisib, FDA speakers at the ODAC meeting pointed to an evolved treatment landscape for CLL and SLL, with targeted BTK or BCL2 inhibitors (front-line or second-line), and data pointing to a “potential detriment” in overall survival for duvelisib. But some ODAC members noted that the detriment was likely small and that there is some efficacy even as the data are difficult to interpret.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 150,800+ biopharma pros reading Endpoints daily — and it's free.

Solicitor General Elizabeth Prelogar

Should SCO­TUS hear Am­gen's Repatha case? So­lic­i­tor gen­er­al says no

Back in April, Amgen said it was encouraged by the solicitor general’s anticipated review of its Supreme Court petition to rehear a Repatha patent case. They’re likely much less optimistic about the outcome now.

Solicitor General Elizabeth Prelogar wrote in a recent 27-page brief that Amgen’s arguments “lack merit and further review is not warranted.”

The case traces back to a suit filed in 2014 against Sanofi and Regeneron’s Praluent, which ended up beating Amgen’s PCSK9 blockbuster Repatha to market by a month just a year later.