SHANGHAI – By most measures, the inaugural Wuxi Healthcare Forum last week was a success. The free event was attended by more than 2,000 mostly Chinese participants, many of whom stood in the aisles of the swanky St. Regis Shanghai Jingan ballroom to hear about China's role in the future of health care.
Ge Li, Wuxi Apptec Group's powerful founding chairman sat attentively, front and center, through the two days of panels and talks. He likely was gratified by what he heard. The general sentiment is the future is looking very bright.
The event was organized in record time. Most of the planning occurred since January after the multihyphenate CRO/CMO, Wuxi Apptec, held its popular gathering in San Francisco during JP Morgan. Not even Chinese New Year, which occupied most of February this year, could slow the organizers down. In the end, more than 5,000 people registered.
Nor has the U.S.-China trade war done much to dampen the overall enthusiasm of industry leaders for China's role in global innovation, although some acknowledged the lurking threat.
The forum's speakers ran the gamut of the Wuxi Apptec universe from bankers and venture capitalists, to big pharma execs, startup biotech founders, academics and hospital principal investigators, many of whom are clients of Wuxi while others were potential clients.
A G2 biotech world
"I am extremely bullish on the China opportunity," said Ken Hitchner, chairman and CEO of Asia Pacific ex-Japan at Goldman Sachs, who was interviewed on stage by Yibing Wu, head of China for Temasek, a Singaporean sovereign wealth fund.
"China will likely be the innovation leader in health care," Hitchner said. "I would take that even broader and say we are going to have two economies in the world with greater than US$20 trillion GDP... We are going to have two innovation centers, the U.S. and China, across the whole technology and health care platform. It will be a dramatic reshaping of the world."
Goldman's Hitchner has had a privileged seat to the emergence of this G2 world – the economic theory that there will be two global superpowers – that looks set to engulf the biotech sector in the coming decade.
Of the seven IPOs in Hong Kong, since the April 2018 rule change to allow pre-revenue biotechs, Goldman handled six of them, including Cstone Pharmaceuticals Ltd., a Wuxi venture-backed startup that went public last month. The U.S. exchanges still remain a viable option for Chinese firms, said Hitchner; now companies just have more choices.
"We have had the opportunity to work with so many great Chinese companies; about half want to go to Hong Kong, about half want to go [list] in NYC. We are agnostic; we will lay out the arguments either way," Hitchner said.
China by the numbers
One of the strongest endorsements for the disruptive potential of China's biotech industry was another non-Chinese, non-scientist, John Oyler, the founding CEO of Beigene Ltd., widely considered to be China's most successful biotech company.
Oyler pointed to the transformative power of two regulatory changes in China to have an impact on the industry as a whole: the first is China's move to reimburse innovative drugs and the second is China's adherence to global clinical trial standards.
"China decided to reimburse 1.4 billion people for innovative drugs, and over the course of the last three years they have chosen to do that," he said. "They are not U.S. prices, but they are quite reasonable prices; it is roughly $1,000 to $4,000 per month [for cancer patients]."
That doubles the number of patients the industry can reach, pressuring the industry to rethink its business models.
"In China, there are over 4 million new incidences of cancer a year. If you multiply 4 million by one to four thousand dollars . . . it is a reasonable commitment to those patients and it fundamentally reshapes the industry. The global market is no longer a couple billion people; it includes China from a reimbursement perspective," he reasoned.
Further, now that China has joined the International Council for Harmonisation (ICH), the body that governs global clinical trial standards, China's large patient population will be a significant contributor to global studies.
"Ninety percent of the money and 90 percent of the time in our industry is spent on clinical trials," Oyler said. "China joining the system can enable us to be better and faster, and that is absolutely critical. The single biggest problem we face running clinical trials is enrolling patients. The clinical trial sites in China are 20 times as big as the biggest sites in the U.S.
"They are building [clinical trial] capabilities. The shortage right now is the human capital – the systems and organizations that can help run clinical trials. But in the future, it is very clear world clinical trial science is going to shift to China. The U.S. and Europe will be important, but the patients are here. Thirty to 50 percent of the patients will come from China and China's KOLs will be present in every oncology meeting," he explained.
Chris Chen, the CEO of Wuxi Biologics, was another China enthusiast. He joined Wuxi with experience at Lilly under his belt and after having founded a biosimilar startup in China.
Ten years ago, he said, "I spent a month with Dr. [Ge] Li and we asked ourselves how can we transform the global biologics industry. We did not say we would transform China's biologics industry; we said we wanted to transform the global biologics industry."
Today, Wuxi Biologics is working on 15 first-in-class molecules from China, Chen said. "I had a dream I will be making global quality biologics for China, but I never dreamed it would come so fast and on such a massive scale."
The success of Wuxi Biologics comes not just from the global pharmas that hire their services but the growing number of local startups that are driving the industry.
"The Shanghai area has 600 [life sciences] companies; it has already exceeded San Diego," said Chen. "Now it is a global third hub for biotech: San Francisco, Boston and Shanghai. If you add the area between Shanghai, Nanjing and Hangzhou, this area boasts more than a 1,000 companies. These companies are not only working on innovative small molecules but also innovative biologics."
Clouds on the horizon
Much of the optimism is based on the belief that the U.S.-China trade war will not close borders further. If it does, it would hurt the prospects of China-based global firms like Beigene and Wuxi Apptec as well as the entire biotech industry, with both China and U.S. already so entwined.
"Collaboration is extremely important," said Bai Lu, a professor at the School of Pharmaceutical Sciences, Tsinghua University and former GSK R&D scientist. "If we have politics, hostility, a trade war, then global collaboration will be difficult."
Collaboration remains central to China keeping up the pace of its rapid development. The reality is that the innovation gap between China and the U.S. is still significant.
"I measure true innovation by two criteria: first-in-class or best-in-class and, secondly, a brand new platform: the target is new, the pathway is new, and so on and so forth," said Jonathan Wang, founding partner of Orbimed Asia. "If that is the measurement, then China is poor; today's situation is not good. The U.S. has roughly 50 percent of all of its drug development in innovation; we have less than 5 percent. That is the gap."
Wang, who said he has made a personal commitment to invest in innovation, went on to say that he is optimistic that a transformation is underway from fake innovation to the kind innovation that meets a higher bar.
But much like the binary outcome of a biotech investment, he said those in China are looking at a binary future, too: "If things go south, and the trade war between the two countries does not go well, then I think a lot of returnees will return to where they have returned from.
"I pray this does not happen, I hope we can keep accelerating."