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 senior editors Kyle Blankenship and 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.

Health­care Dis­par­i­ties and Sick­le Cell Dis­ease

In the complicated U.S. healthcare system, navigating a serious illness such as cancer or heart disease can be remarkably challenging for patients and caregivers. When that illness is classified as a rare disease, those challenges can become even more acute. And when that rare disease occurs in a population that experiences health disparities, such as people with sickle cell disease (SCD) who are primarily Black and Latino, challenges can become almost insurmountable.

David Meek, new Mirati CEO (Marlene Awaad/Bloomberg via Getty Images)

Fresh off Fer­Gene's melt­down, David Meek takes over at Mi­rati with lead KRAS drug rac­ing to an ap­proval

In the insular world of biotech, a spectacular failure can sometimes stay on any executive’s record for a long time. But for David Meek, the man at the helm of FerGene’s recent implosion, two questionable exits made way for what could be an excellent rebound.

Meek, most recently FerGene’s CEO and a past head at Ipsen, has become CEO at Mirati Therapeutics, taking the reins from founding CEO Charles Baum, who will step over into the role of president and head of R&D, according to a release.

Dave Lennon, former president of Novartis Gene Therapies

Zol­gens­ma patent spat brews be­tween No­var­tis and Re­genxbio as top No­var­tis gene ther­a­py ex­ec de­parts

Regenxbio, a small licensor of gene therapy viral vectors spun out from the University of Pennsylvania, is now finding itself in the middle of some major league patent fights.

In addition to a patent suit with Sarepta Therapeutics from last September, Novartis, is now trying to push its smaller partner out of the way. The Swiss biopharma licensed Regenxbio’s AAV9 vector for its $2.1 million spinal muscular atrophy therapy Zolgensma.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 117,600+ biopharma pros reading Endpoints daily — and it's free.

Volker Wagner (L) and Jeff Legos

As Bay­er, No­var­tis stack up their ra­dio­phar­ma­ceu­ti­cal da­ta at #ES­MO21, a key de­bate takes shape

Ten years ago, a small Norwegian biotech by the name of Algeta showed up at ESMO — then the European Multidisciplinary Cancer Conference 2011 — and declared that its Bayer-partnered targeted radionuclide therapy, radium-223 chloride, boosted the overall survival of castration-resistant prostate cancer patients with symptomatic bone metastases.

In a Phase III study dubbed ALSYMPCA, patients who were treated with radium-223 chloride lived a median of 14 months compared to 11.2 months. The FDA would stamp an approval on it based on those data two years later, after Bayer snapped up Algeta and christened the drug Xofigo.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 117,600+ biopharma pros reading Endpoints daily — and it's free.

Ex­elix­is pulls a sur­prise win in thy­roid can­cer just days ahead of fi­nal Cabome­tyx read­out

Exelixis added a thyroid cancer indication to its super-seller Cabometyx’s label on Friday — months before the FDA was expected to make a decision, and days before the company was set to unveil the final data at #ESMO21.

At a median follow-up of 10.1 months, differentiated thyroid cancer patients treated with Cabometyx (cabozantinib) lived a median of 11 months without their disease worsening, compared to just 1.9 months for patients given a placebo, Exelixis said on Monday.

Rafaèle Tordjman (Jeito Capital)

Con­ti­nu­ity and di­ver­si­ty: Rafaèle Tord­j­man's women-led VC firm tops out first fund at $630M

For a first-time fund, Jeito Capital talks a lot about continuity.

Rafaèle Tordjman had spotlighted that concept ever since she started building the firm in 2018, promising to go the extra mile(s) with biotech entrepreneurs while pushing them to reach patients faster.

Coincidentally, the lack of continuity was one of the sore spots listed in a report about the European healthcare sector published that same year by the European Investment Bank — whose fund is one of the LPs, alongside the American pension fund Teacher Retirement System of Texas and Singapore’s Temasek, to help Jeito close its first fund at $630 million (€534 million). As previously reported, Sanofi had chimed in €50 million, marking its first investment in a French life sciences fund.

Mi­rati tri­umphs again in KRAS-mu­tat­ed lung can­cer with a close­ly watched FDA fil­ing now in the cards

After a busy weekend at #ESMO21, which included a big readout for its KRAS drug adagrasib in colon cancer, Mirati Therapeutics is ready to keep the pressure on competitor Amgen with lung cancer data that will undergird an upcoming filing.

In topline results from a Phase II cohort of its KRYSTAL-1 study, adagrasib posted a response rate of 43% in second-line-or-later patients with metastatic non-small cell lung cancer containing a KRAS-G12C mutation, Mirati said Monday.

Den­mark's Gubra to col­lab­o­rate with Bay­er on pep­tides; Sam­sung and Bio­gen re­ceive FDA ap­proval for Lu­cen­tis biosim­i­lar

Danish biotech Gubra announced a research collaboration and license agreement with Bayer to develop peptide therapeutics to treat cardiorenal diseases. The collaboration will utilize Gubra’s peptide drug discovery platform to identify potential candidates.

This is not the first time Gubra has partnered with a company on peptide therapeutics — they partnered with Boehringer Ingelheim back in 2017 to create peptide therapeutics to treat obesity.

Ex-My­lan em­ploy­ee pleads guilty to in­sid­er trad­ing, il­le­gal­ly deal­ing on FDA ap­provals, earn­ings and Up­john merg­er

A former Mylan IT executive pleaded guilty Friday to an insider trading scheme where he bought and sold stock options on another executive’s advice.

Prosecutors secured the plea from Dayakar Mallu, Mylan’s former VP of global operations information technology, after uncovering the plan. Mallu collaborated with an unnamed “senior manager,” the SEC said, to trade options ahead of Mylan public announcements regarding FDA approvals, revenue reports and its merger with the Pfizer generics subsidiary Upjohn. The two subsequently shared profits.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 117,600+ biopharma pros reading Endpoints daily — and it's free.