China's Fountain Medical scores $62M as demand for CRO services surges
Circa 2016, China secured its status as the second-biggest market for prescription drugs. The soaring demand for medicines has fueled the return of key scientific talent, the appetite for spending on drug research and development, while China’s cost advantage has lured multinational pharmaceutical makers to set up R&D shops in the region and stimulated the domestic CRO industry. In 2007, a former Quintiles (now IQVIA) executive set up his own CRO in China — Fountain Medical Development Limited (FMD) — and on Friday, the company unveiled a $62 million Series D round of financing.
The company, set up by Dan Zhang, originally targeted a niche market that has been neglected by both global and local CROs. Global CROs cater largely to multinational pharmaceutical makers, as local pharma players are often priced out of their services. Meanwhile, domestic CROs focus on serving local drug developers, since they are not usually equipped with the resources required to conduct international multicenter trials.
FMD was created to “answer the needs of innovative, single compound companies entering the clinical stage. They are mainly local and international start-ups that are not fully established yet so most of their financing comes from the government or grants. Normally, they would be looking to start Phase I clinical trials,” Zhang said in an interview earlier this year with C-suite publication PharmaBoardroom.
The CRO industry in China — which includes global players such as IQVIA, LabCorp and Parexel and domestic outfits including Wuxi AppTec, Pharmaron, and Meidicilon — was worth about $9.7 billion last year, according to data compiled by market research company ReportLinker, which estimates that number will climb to roughly $34.3 billion by 2025.
In 2017, China joined the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use (ICH), an organization that brings together regulators of the biopharmaceutical industry globally to assess the scientific and technical aspects of drug development.
With the standardization of clinical research in China through ICH, FMD is now focused on attracting biopharma players — including the smaller single-compound biotechs from the United States and Europe who previously would have out-licensed their products to multinational pharma companies or to local Chinese companies — to China.
The new injection of funds will enable “Fountain Medical to expand and improve our service offerings to existing global clients, and better cater to the needs of Chinese pharmaceutical companies with global aspirations as well as multinational companies with China aspirations,” Zhang said in a statement on Friday.
This round of financing for FMD — which has more than 1,700 employees worldwide covering 55 cities in China, as well as major delivery centers across the United States, Europe, Japan, India, and the Philippines — was led by Goldman Sachs, with Lilly Asia Ventures as co-investor.
Before co-founding FMD, Zhang worked with Sigma-Tau Research as well as Quintiles. He is a member of the grant review committee for the National Drug Development Fund of China and serves as a consultant for the National Medical Products Administration (NMPA). He is also a member of the ICH E19 Expert Working Group.