Editor's Note: The fourth of the panels held at ChinaBio® Day, held in conjunction with BioPharma America™ on September 15 in San Francisco, was a discussion of practical tips for getting the most out of a partnership after the deal is signed and the work actually begins.

Panel Moderator
Ellen Leznik, MBA, JD, Founding Partner, Virtual Law Partners LLP

Panel Members
Jie Liu D’Elia, PhD, MBA, VP, International Business Development, Simcere Pharmaceutical Group
Joanne Jiang, PhD, MBA, VP, Business Development and International Project Management, Fountain Medical Development Ltd
Brian Moloney, PhD, VP Business Development, BioDuro
Yu Zhao, PhD, VP, Tianjin International Joint Academy of Biotechnology and Medicine (TJAB)

Leznik (Virtual): What are the practical tips for the “marriage” stage of partnerships?

D’Elia (Simcere): Many China companies are headed by China executives who aren’t used to selling assets. We went public in 2007 so that we could do deals, and we haven’t been very successful in the last two years in finding deals. We did complete the deal with Epitomics earlier this year. Foreign companies are looking for a China partner to help them market their drugs in China. Other companies are looking to find a China company to buy rights in China. There are three models of deals: (1) western-style but with China rights only to save money; (2) co-development where the China company does a different indication or completes some development work (this is similar to our deal with Epitomics); or (3) non-core assets from big pharma company.

Moloney (BioDuro): We have more of a project view than a corporate one because of our CRO orientation. Early on, the rumblings about China CROs were about cost. Cost is being replaced by quality as the most important consideration. We were one of the first CROs to more toward risk sharing. We see smaller or even no upfront fees in the future.

Jiang (Fountain): The maturity of China CROs has been changing rapidly in last few years, but there will always be some friction between partners. There’s an old Chinese saying, “If you don’t fight, you don’t form a family.” Fountain can be a third party mediator.

Zhao (TJAB): Each party brings something to the table; the question is: do you appreciate the value brought by other party? Once a deal is signed, you must work to accommodate change. A change in personnel can have a huge impact on how well a partnership works.

Leznik (Virtual): Which deal structures work?

Jiang (Fountain): Project or FTE based model is most often used. Partners, including the CEO or senior partners, have to have a relationship to make it work.

D’Elia (Simcere): The CEOs of the partnering companies, if they have relationship, can break an impasse that develops among lower level managers.

Zhao (TJAB): Typically, there is only one person who can make a big decision. Trust is more important in China than in the US.

Leznik (Virtual): Do you have practical suggestions for practices that overcome problems between partners?

D’Elia (Simcere): Make sure you file IP in China. You must follow up PCT with a National filing. Another requirement is to set up realistic expectations for revenues. Innovative drugs do not fare well in China. To check your potential partner’s revenue projections, hire an independent market researcher to determine the size of the potential market for a product.

Moloney (BioDuro): Remember that it is a long-term relationship, so invest time getting to know each other. It is best to start small and then grow. Once the project is started, don’t move the goalposts when the project is halfway completed.

Jiang (Fountain): Approach the project as an integrated project where the China-centered plans are part of a larger whole. If a product is being developed only in China, SFDA will look at it skeptically.

Zhao (TJAB): Be clear what you are going after.

Disclosure: none.