Editor's note -- BioWorld™, the daily biopharma newsletter from ThomsonReuters, has published two articles based on panels and discussions with participants at the seventh annual ChinaBio® Partnering Forum, which was held in Shanghai April 15-16. The current article, derived from a plenary panel discussion, analyzes the interplay between novel drugs and biosimilars in China's growing number of biotech companies. In the next few days, ChinaBio® Today will post a second BioWorld article on the various meanings that "innovation" can take on in China's drug development sector. The articles are reprinted with the gracious consent of BioWorld (www.bioworld.com).

 
Biologics in China: A 3-legged Race between Innovation, Biosimilars

by Shannon Ellis, Staff Writer, BioWorld

SHANGHAI – Any discussion of innovative biologics at the recent ChinaBio® Partnership Forum inevitably brought up biosimilars; it is difficult to have one without the other, probably because local companies of any size or staying power developing biologics take that twin strategy, filling their pipelines with biosimilars, whether me-too or bio-better, along with a smattering of novel candidates.

That is true for such firms as Innovent Biologics Inc., of Suzhou, or Shanghai Henlius Biotech Co. Ltd., which has an innovation center in Freemont, Calif., and labs in Shanghai and Taipei.

In some cases, companies that started out with high hopes to do only innovative drugs have found along the long road to market that it is just not feasible.  

“We have survived these 12 years,” said Yuliang Huang, CEO of Generon (Shanghai) Corp. Ltd., during his introduction, in reference to the firm’s tenacity and frontrunner status. Its earliest candidate is a novel drug, F-652, a human interleukin-22, but Generon now also is doing what Huang coined a bio-innovative drug, F-627 (benegrastim), a next-generation drug to Amgen Inc.’s Neulasta (pegfilgrastim) for the treatment of neutropenia.

“Given the cost of developing a new drug, how can this industry continue like this?” asked Peter Luo, founder and CEO of Adagene (Suzhou) Ltd. “The question is, what can you do in this industry to fundamentally transform it?”

Leaving aside the CFDA regulatory issues, he answered, “What I try to do is provide value to the chain of supplying good antibodies and good targets. “Our platform is good for process development. Our bispecific platform has a very robust expression and purification process. We are thinking of all kinds of combinations for immunotherapy targets and all kinds of targeted therapies,” he added.

Other companies, meanwhile, are using their base in biosimilars to branch into more innovative categories.

Scott Liu, president and CEO of Henlius, said his firm’s capability “is not only to do development and manufacturing of biosimilars but also discovery research, to produce a strong pipeline in innovative areas.”

“We have seven novel antibodies in the pipeline. . . . we can make three antibodies for $50,000 treatment cost; that is our competitive advantage,” said Liu.

But while six of the top 10 blockbuster drugs in the U.S. were biologics, Michael Yu, CEO and founder of Innovent, pointed out, last year China’s list of top 10 bestselling drugs contained not a single biologic. Biologics only account for 2 percent of prescription drugs sales.

Instead of giving him pause for concern, Yu said he sees that as an enormous opportunity. The need is great and “the gap is narrowing,” he said. “In China, there could be 21 antibodies approved and on the market: 12 imported and nine locally manufactured. The growth rate for imported antibodies over the last five years has been over 50 percent a year and, for locally made antibodies, the growth rate has been 97 percent,” he said. 

“China has half of the biotech history of the U.S., which has had 40 years to develop,” reminded Jonathan Wang, senior managing director for Orbimed Asia, which manages $1.4 billion in health care-focused venture investment in the region and has made 23 investments. “China has just started to just pay attention to blockbusters and biosimilar drugs.” 

Peering into pipelines, he predicted that will soon change and China will be awash in antibodies. “The big targets are like Herceptin [trastuzumab, Roche AG] and so we are talking about five to 15 significant players; in 8.2 years you will see an ocean of big antibody-based drugs on the market,” he said.

“Speed to market is critical,” he said. “And size matters – the partnering, the scale, the brand name. I do see more partnering, but in the next five to 10 years I foresee there will be huge trouble. There will be companies doing biosimilars that are not fast enough and not big enough. If you are company No. 5 on the same target to reach the markets, [then] the competition, the gross margin, the pricing will go against you,” he added. 

With the business model so challenging for biosimilars, there is still hope for truly novel drugs to come out of China.

“There is a huge amount of discovery currently happening here. China’s Nature index has overtaken Japan,” said Anand Gautam, director of R&D, innovation sourcing and academic partnerships at Novo Nordisk.

“I am really surprised more biotechs are not doing innovative work in China. “Why are there so many beautiful discoveries coming out of China, and why are there so few biotechs trying to translate them?”

Note: The Plenary Panel: China's New Wave of Innovation was moderated by Steve Yang, PhD, Executive VP and COO, WuXi AppTec.

Panelists were:

Yuliang Huang, PhD – CEO, Generon (Shanghai) Corporation Ltd.
Scott Liu, PhD – President and CEO, Henlius Biotech Co., Ltd.
Peter Luo, PhD – Founder and CEO, Adagene (Suzhou) Limited
Joe Zhou, PhD – CEO, Genor BioPharma and VP, Walvax Group

Disclosure: none.