Editor's note -- BioWorld™, the daily biopharma newsletter from ThomsonReuters, was in attendance at the seventh annual ChinaBio® Partnering Forum, held in Shanghai April 15-16, and produced two articles based on the Forum's panels of industry experts. In this article, the theme is "innovation" and how different China-involved biopharmas define the term. Previously, ChinaBio® Today published a BioWorld article that discussed the interplay between novel biologic drugs and biosimilars in China's biotech companies (see story). The articles are reprinted with the gracious consent of BioWorld (www.bioworld.com).

For Big Pharma in China, Innovation is in the Eye of the Beholder

By Shannon Ellis, Staff Writer, BioWorld

In its seventh year, the ChinaBio® Partnering Forum is the most active partnering event in China, akin to the J.P. Morgan Healthcare Conference. Even after a tough year for Western companies with corruption probes rattling the industry and regulatory hurdles inching ever higher, “Big pharmas are still committed to China,” said Greg Scott, founder and chairman of the ChinaBio Group in his keynote address. “Partnering activity is definitely on the rise.”

Big pharma business development executives, local biotechs led by top-notch scientist returnees, life science venture capital investors and a smattering of companies from around the world all show up in force at the event. Given that China is on track to be the number two pharmaceutical market in the world explains why the forum manages to attract 800 people.

For Western pharmas, finding new partners is becoming more urgent in a tough business environment. Their business model in China has relied on off-patent drugs with a large chunk of revenues coming from preferential originator pricing, guaranteed by the government.

Although not openly discussed, it is well known that the days of this preferential pricing policy are numbered. Given the challenges for big pharma to get innovative drugs approved and on the market, each company is scrambling to find the best way forward and partnerships with local companies are likely set to increase.

“Everyone is looking for innovation; it is the basis of our business. Of course, there is innovation in China. How is it generated? It is generated in partnerships. Every company has its own recipes for how to do that,” said Hans Lindner, vice president for global external innovation & alliances, global drug discovery, Bayer Healthcare.

THE “I” WORD

Although innovation was the buzzword in conference panels, there were different definitions and approaches to achieving it. For Roche AG, innovation in emerging markets nudges closer to a relativist proposition.

“Innovation is in the eye of the beholder,” said Mark Noguchi, vice president and global head, alliance and asset management at Roche Partnering. He explained the company byword, “For China, From China” to mean that innovative medicine for the China market might be very different than an innovative medicine for Western Europe or the U.S.

“We customize our approaches depending on what patients we are trying to serve,” he said.

He also said they were looking for innovation in China to bring to global markets.

Roche has actively supported local biotech development, having licensed out candidates with global potential to Hua Medicine (Shanghai) Ltd. and Ark Biosciences Inc., to employees who left Roche to become biotech CEOs. They also inked a collaboration deal with Ascletis Inc. for the China market.

Since foreign companies are stymied from bringing in their own pipelines through the imported drug pathway, creative partnership becomes a crucial way forward.

“We are thinking about strategies to have our global portfolio the same as local,” said Ajay Gautam, executive director and head of external collaborations for Asia and Emerging Markets at AstraZeneca plc. “There is a camp that says there is huge innovation here and others that say not really,” said Gautam, who coauthored an assessment of innovation in emerging markets published in Nature. “At AstraZeneca, we are in the middle.”

AstraZeneca stands out for the joint venture between its biological arm, Medimmune LLC and the open access service company, Wuxi AppTec. This JV is viewed as a test model for how Western pharma can bring in innovative compounds more quickly.

At the beginning of April, it was announced that the CFDA had accepted the JV’s investigational new drug application for MEDI5117, an anti-IL6 monoclonal antibody falling under the category of a class 1 therapeutic biologic.

Steve Yang, who a year ago left AstraZeneca to join WuXi as executive vice-president and COO, said, “It is a very significant milestone, to find a solution to allow our customers to enter the local market through the local development pathway; it provides acceleration and flexibility to conduct clinical trials.” 

AstraZeneca said innovation is their mainstay, and their in-house science unit is delivering on it. “We are discovering novel molecules in our China labs,” said Gautam. AstraZeneca has said that its local R&D center has delivered innovation to its global operations.

Investing in an R&D center in China has been a common tactic shared by all multinational pharmas in China. Another approach taken by all has been combing China’s universities and institutes for good projects and collaborations, creating a network of arrangements.

“I interact with many innovators across China, and in the last two or three years, I see amazing transformation that makes my job so interesting,” said Yongkui Sun, vice president, Greater China lead, external science affairs, worldwide licensing and acquisition, at MSD R&D.

“MSD has collaborations with six institutes in areas of cutting edge science. . . . Our MSD scientists across the globe interact in an intimate fashion with innovators in China. There is a landscape change within China,” he added. 

Sun cited MSD’s recent support of the global GPCR Consortium, spearheaded by Shanghai Institute of Materia Medica and Shanghai (SIMM) and Ihuman Institute under ShanghaiTech University as one example of world-class science coming out of China.

MSD has also made a substantial commitment to local biotech, Beigene Ltd., taking ex-China rights for its PARP inhibitor. (See BioWorld Today, Nov. 14, 2013.)

“In the past the company had a defined area of interest,” said Sun. “We are open to all opportunities that break through science and [are] open to working with academics and biotech companies.”

For the Johnson & Johnson Innovation Center in Shanghai, about six months have passed since they had their grand opening.

The largest health care company in the world spent on average $8 billion a year on external innovation over the last 10 years, said Mingde Xia, senior director at Johnson & Johnson Innovation.  Almost as much as their $10 billion internal R&D budget. 

“In the past year we are not doing generic or biosimilar, everything is innovation,” said Xia. “We have many products in first or second position.” 

For J&J, innovation and partnership in China is a long-term proposition and a part of the strategy that sets it apart has been its work with universities to train the next generation of innovators. “Specifically we want to incubate the whole ecosystem because we are very early stage in China. We want to have good ecosystem for innovation from the beginning.”

Disclosure: none.