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China at JP Morgan Conference - A Few Observations
For the first time in 29 years, the industry's most important annual gathering of life science executives and investment professionals, the JP Morgan Healthcare Conference, added a track to focus on a single country - China. Fourteen private and public life science companies from China presented their progress and plans to a standing-room-only crowd on the 32nd floor of the St. Francis tower - which also offered the best view of San Francisco at the event.
Presenting companies representing a broad range of industry segments including generics/biopharma (Simcere (NYSE: SCR), 3SBio (NSDQ: SSRX), Fosun (SH: 600196), Novast), services (ShangPharma (NYSE: SHP), drug distribution (SinoPharm, Eddingpharm), hospitals/Clinics (Chindex (NSDQ: CHDX), Concord), and novel drug development (Hutchison MediPharma (AIM: HCM)).
Although the breakdown appears neat, Chinese companies are sometimes difficult to classify, as the business models in China are often hybrids.
For example, Chindex (NSDQ: CHDX) manages a successful chain of hospitals, but is also in the medical device business. Fosun Pharmaceuticals, part of a major multi-industry conglomerate, has formed a JV with Chindex to distribute medical equipment (see story). And most of the generics/TCM companies, including Simcere and 3SBio, are pushing hard to become novel drug developers. And even Hutchison, which is one of the leading developers of novel molecules in China, derives its revenue from a variety of partnerships with big pharma, to the point where it almost seems a services company (see below).
While I was not able to catch all 14 of the China presentations, it was interesting to see the range of professionalism in delivery and content. Simcere gave one of the best presentations I saw, delivering succinct information about the company and its plans (see below). 3SBio, the only company to present in Chinese rather than English, spent 15 of its 30 minutes setting up the translation equipment, and then spent most of the remaining time imparting general info on China and its pharma industry that the audience probably already knew.
That said, the interest in all the presenters was very high, and the room was overflowing for every presentation I saw. Here are a few notes/observations I made during the presentations:
Simcere (NYSE: SCR) is best known in China for its injectable generics, but has established a US-based business development group and announced a "Product-oriented M&A" program to continue their march into novel drugs. They are spending about 6% of revenue on R&D and have recently completed a 200,000 sq ft R&D center in Nanjing, which they called "the largest in China." They signed several in-licensing agreements including a co-development with Bristol-Myers Squibb in November (see story). Simcere's 2000 sales people sell to 8,000 hospitals and 130,000 physicians in over 600 cities throughout China. Since 2002, Simcere's CAGR has averaged 33%.
3SBio (NSDQ: SSRX) (沈阳三生制药) has also been active, with four deals listed in ChinaBio's proprietary database. A co-development agreement with Ascentage in Shanghai (see story), will give them access to novel molecules Ascentage acquired from Ascenta, a US-based biopharma, in its spinout (story). 3SBio has 350 sales staff selling to 2000 top tier hospitals.
And Samantha Du made a compelling presentation of Hutchison MediPharma's impressive story. An ex-Pfizer scientist, Samantha has built a global pharma company from scratch that, in my opinion, represents the best of what China has to offer in novel drug development and entrepreneurial spirit. The company now includes 250 scientists, five clinical assets with three global Phase II trials underway, and research partners including J&J, Lilly, and Merck Serono. Hutchison raised $21M in 2010, and Credit Suisse was sitting next to Samantha during the presentation, so I bet you can guess what's next for Hutchison.
Oh, and the reception? Well, what happens in China receptions stays in China receptions, but suffice it to say, it was a great place to rub elbows with the movers and shakers of the industry.
And if you can't wait for the China track at the 30th JP Morgan Healthcare Conference in 2012, join us for our 3rd annual ChinaBio Partnering Forum in Beijing in May! (www.cbpf2010.com)
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