BIOCOM, a trade group representing Southern California’s life sciences industry, is ramping up partnership efforts in China to meet an emerging desire for novel drug therapies.
While intellectual property (IP) protections and the Chinese government’s willingness to pay for expensive new products represent two large and lingering question marks, Joe Panetta, president and CEO at BIOCOM, said his last trip to China was surprising.
“We visited one of the largest pharmaceutical companies in China – Yangtze River Pharmaceuticals – which is pretty strongly government-backed and which has been long known to be a generics and traditional Chinese medicine company,” said Panetta, noting a statue of Mao Zedong in the company’s courtyard. “When I got there, not only did I see their long-established generics manufacturing facilities, but I also saw their 14- and 10-story innovative research towers that are under construction. They assured me that the future for them is not in generics, and the CEO said clearly to us: ‘I want to meet companies in San Diego, and I want to access new therapies that we can commercialize here.’”
Panetta said a portion of China’s population – by some estimates a portion as large as the total US population, according to Panetta – is becoming increasingly affluent, and has the “desire to access new therapies as well as the means to access new therapies.”
Despite a rising tide of affluence in major cities, many people living in China’s outer provinces are still in need of basic medical services, a problem China’s ambitious, $125 billion health reform initiative hopes to alleviate. “First they have to build delivery centers, and [the Chinese government] is talking about building hundreds of hospitals and thousands of clinics throughout the provinces in China, and they have to first deliver basic therapies and diagnostics and devices, but the question is how soon will it be before the government begins to take an interest in more innovative technologies,” said Panetta. “They have a long way to go, but to me, what that says is that there’s a lot of opportunity for a long time in China.”
The best way to enter the Chinese market is through partnerships, said Panetta, citing talks with companies residing in “large biotech parks in Shanghai and Beijing, and the China Medical City that’s being built from the ground up in Taizhou,” as well as US and European pharmaceutical companies that have a presence in China. “The Chinese would love for our companies to go over there and set up shop,” said Panetta. “What they tell us is that they want to learn how to innovate…I think the payback for our companies is clearly the 1.3 billion person market in China.”
BIOCOM hopes to facilitate partnerships with Chinese companies through conferences and trips to China, in order to “understand who we can build relationships with, what those relationships need to look like, and where we can build those relationships,” said Panetta. “[US] companies need to be careful about how much of their intellectual property they take to China when they create partnerships, and how much they keep [in the US],” said Panetta, and concerns remain about the level of talent and skill that exists, beyond the research level. “Several years ago, the discussion on Asia tended to gravitate toward outsourcing, low-cost research and low-cost early stage discovery efforts,” said Panetta. “That’s changed pretty drastically. It’s a terrific opportunity four our life sciences industry in Southern California,” he said.