SUZHOU, China – A recent revision to China's legal infrastructure for the pharma industry represents a concrete step toward bolstering domestic biotech innovation, said stakeholders gathered at last weekend's China Biomed Innovation and Investment Conference.

Since 2015, China has been trying out various measures to hasten the arrival of more and better drugs here. They've included priority reviews for much-needed drugs, a 60-day default review time for IND approval, and acceptance of overseas clinical data. Furthermore, a marketing authorization holder (MAH) system was put in place to allow companies without their own manufacturing facilities to file for new drug launches.

The result was a 75% increase in new drug approvals in 2018 vs. two years ago, said Pei Liu, director-general of the department of policies and regulations of the NMPA (formerly CFDA).

"We approved 48 innovative drugs last year, of which 38 were imported drugs. Eighteen cancer drugs were approved, up 157% from 2017," she added.

Liu also noted the conditional approval that China now grants, a measure learned from the U.S. system.

These measures are all enshrined in the revised drug administration law, which will take effect on Dec 1. (See BioWorld, Sept. 10, 2019.)

Chinese biotech entrepreneurs said they are ready to step up R&D efforts and join the global race thanks to the MAH system.

Beigene Ltd.'s China general manager and president Xiaobin Wu understands the new system well. The drugmaker has commissioned German pharma giant Boehringer Ingelheim GmbH to manufacture its monoclonal antibody tislelizumab.

"We benefit greatly from the MAH system. As an innovation-focused startup, it takes a lot to tap into antibody manufacturing," said Wu, adding that the German drugmaker helps Beigene shore up global competitiveness.

"Boehringer Ingelheim also upholds word-class standards. Beigene does not just aim at being a pioneer in China. We also hope to bring Chinese innovation to the world. We now can follow international standards in our quality control thanks to the MAH system," said Wu.

Emerging on the global stage

Strong government support is bearing fruit. Chinese drugmakers are making their presence known on the global stage and starting to out-license their assets to foreign players, according to Travis Hu, senior director, head of life sciences, greater China at Clarivate Analytics.

Last year, R&D giant Jiangsu Hengrui Medicine Co. Ltd. sold Arcutis Pharmaceuticals Inc. the U.S., EU and Japanese rights to the JAK1 inhibitor SHR-0302 for $223 million, and global rights to the BTK inhibitor SHR-1459 for $350 million to TG Therapeutics Inc., of New York, (though Hengrui holds on to the Asia rights, excluding Japan).

Biosimilar maker Shanghai Henlius Biotech Inc. also out-licensed its HLX-02 to U.K.-based Accord Healthcare Inc.

Other Chinese drugmakers that also out-licensed programs last year include I-Mab Biopharma (Shanghai) Co. Ltd., Tasly Pharmaceutical Group, Hansoh Pharmaceutical Group Co. Ltd., and Zhejiang Bossan Pharmaceutical Co. Ltd.

John Whittaker, managing director at J.P. Morgan Healthcare Investment Banking, said that Chinese drugmakers are catching the world's attention.

"The China and broader Asia market has been an important part of global business development and activity. And I can tell you that as we have dialogue with Western biotech companies, it continues to be a big area of focus in an area where many biotech companies are eager to learn more," he said.

Some limitations

Despite the regulatory reform, consensus at the conference was that China will still have to catch up in many ways.

In a country where the government plays a decisive role in almost everything, industry players urged it to do more to support biotech innovation, particularly in terms of capital.

Weakness in fundamental research is still a hurdle for China to develop its first-in-class drugs. "In the U.S., 15% of the research cost is spent on basic research, while in China it's less than 5%," said Dianbo Liu, president of Luye Life Sciences Group. "We call on the government to step up input in this area."

Chinese financial authorities also need to establish a diversified risk-return mechanism to encourage more capital be put into drug innovation, said health care investor Dajian Cai, founder of GTJA Investment Group.

"There should be some compensation for those who invest in small companies and innovative projects," Cai said. He already noted that China lacks long-term capital and sees far less direct financing than the U.S.

Not being able to keep up with industry developments sufficiently to be able to recognize breakthrough therapies is among the many issues.

Cell therapy and gene therapy, which Qiyu Chen, chairman of Shanghai Fosun Pharmaceutical (Group) Co. Ltd., called "critical breakthrough points" for China's biotech development in the future, have yet to receive the attention they deserve under the revised law.

Currently these therapies are just treated as drugs under the Chinese law, but NMPA's Liu said policymakers are already mulling regulations for the clinical research and translational application of new therapies.

China is also recognizing the importance of IP protection to drug innovation.

"The Sino-U.S. trade tensions made us realize that we must have our own intellectual properties and core competitiveness," said Liu. She cited the Chinese chipmaker ZTE that almost collapsed after the U.S. banned exports of core components to the company.

That scare is pushing China to act faster.

"So, we now talk about how to secure better development for innovative drugmakers by protecting their intellectual properties. We proposed an amendment to the patent law," she added. Two areas to look at would be patent linkage and patent compensation.

This could be seen as a response to what Jim Greenwood, president and CEO of BIO, suggested when drawing on U.S. biotech success.

"You cannot create innovation in your country if you're not protecting the property of your own innovators in your own country," he said at Bio Asia-Taiwan Conference in July. (See BioWorld, July 25, 2019.)

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