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China Biotech Grows Up; Facts and Inferences from an In Vivo Sector Review

publication date: Nov 9, 2023
author/source: Richard Daverman, PhD

Here are some interesting facts: Around one quarter of active drug development now has a Chinese origin, with particular emphasis in biologics, cell therapies and cancer R&D.” Or: “There are now around 5,000 drugs under active development by China headquartered companies, part of an ecosystem of around 1,700 drug developers. Remarkably, it was only five years ago that Chinese companies collectively possessed just 1,000 drug programs, and 10 years ago the figure was a mere 200.” For context, these numbers compare to 22,000 drug assets in development globally. The data was reported in an In Vivo report called “The Growing Pains of Chinese Biotech,” which is available online (see story). 

One of the things that China biotech companies do best, In Vivo points out, is follow-on drugs, the use of their platform technologies to mimic the action of new global drug classes. It says, “The classic example is “the programmed cell death protein 1/ligand 1 (PD-1/L1) market, where the total now stands at 12 approved China-originated monoclonal antibodies. This pattern is also being played out across a multitude of drug targets, even for those that are still in the developmental stage. Over half of the anti-TIGIT pipeline is Chinese, while home-grown biotechs are often leading the developmental effort for new chimeric antigen receptor (CAR) T-cell designs.”

As the title of In Vivo’s article suggests, there are some problems with all this growth, though maybe the problems are less serious than the title suggests. Mainly, this refers to the difficulty of finding investor capital to fund young biotechs as they advance their assets through clinical trials, a core problem. However, as investor capitalists have slowed down their biotech investments, following the downturn two years ago in China biotech IPOs, the companies have turned to other lucrative deals to raise needed backing.

In Vito points out: “Chinese biotechs are securing around $2-3bn in upfront fees and milestones of up to $30bn, in addition to any separate financing or product revenue streams. While there has been a slight drop from the peaks of 2021, perhaps relating to the regulatory realities of commercializing assets without US-based trials, demand is still robust."

It continues: “Short-term funding solutions are also essential, such as scaling alliance structures in a way that eschews milestone payouts in favor of immediate cashflow. HutchMed (China) recently secured $400m upfront from Takeda for a vascular endothelial growth factor (VEGF) antibody, while Akeso negotiated $500m upfront as part of a $5bn potential deal with Summit for its PD-1/VEGF bispecific antibody.”

To sum up the situation, In Vitro pulls out an old cliché: Rome wasn’t built in a day. But given the spectacular growth of China biopharmas, In Vitro offers a more interesting thought. Stepping back from the immediate, it says, “US companies have captured much of the value of checkpoint inhibitors, while Europe will be able to ride the GLP-1 wave. Perhaps it will be Chinese biotechs that will unlock the commercial potential of cellular or genetic therapies at scale over the next several years.”

Disclosure: none.




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