Riding the wave of Chinese research innovation

WRITTEN BY

Maria Dahl & Gayatri Varma

Maria Dahl Executive Director, Scientific Partnering & Alliances, AstraZeneca

Gayatri Varma Director, Partnering & Strategy, MedImmune

Earlier this month, on the eve of the annual J.P. Morgan healthcare event, we arrived in San Francisco to take part in a panel discussion on ‘Cross-border licensing deal trends – Perspectives from leading biopharma players’ at the BFC Global Healthcare BD & Investment Conference.

As one of the leading Chinese healthcare investment banks, BFC focuses on cross-border financing, M&A and licensing. Drawing on these experiences, it assembled a strong group of panellists representing healthcare and finance. So, it was no surprise to see the event extremely well attended, with more than 500 people from the Chinese pharma, biotech and investment community, as well as those with a strong interest in this dynamic market.

Recent years have seen great progress in innovations coming from Chinese biopharma companies and academic institutions, which have developed world class technologies as the barriers to accessing talent and capital have reduced.

Unmet need in China

Releasing these reserves of innovation will be key as the country works to tackle its unmet medical needs in areas such as oncology, and particularly lung cancer, as well as metabolic diseases like diabetes and respiratory ailments.

As a company, we’ve been working to meet these challenges in China since first establishing operations there in 1993. From a business perspective, given that more than 20% of our annual revenue comes from the country and we now have more than 10,000 employees in China, we are certainly heavily invested there.

But it’s also an important source of new medical innovations, so access to innovation is also important for us. The BFC conference highlighted the breadth of work being undertaken in China, and from the presentations it was clear that there is a lot more innovation happening in China than people are generally aware of. The message was clear: the sophistication of the research that is done in China has increased tremendously in recent years and is comparable to what’s happening in the West.

Close collaborations

To tap into these skills and the research, AstraZeneca has struck a significant number of licensing deals that follow a variety of transaction models – from pure licensing to joint ventures and even helping to form spin-out companies.

Looking back over the past decade of deal-making activity, an early prominent agreement – a $20 million global in-licensing deal for its c-MET inhibitor anticancer candidate – was struck with Hutchison MediPharma in 2011. As is the case with much of the wider sector, today Hutchison MediPharma is noticeably bigger, with many more capabilities and a very different company.

The year after the deal with Hutchison MediPharma, our biologics research and development division MedImmune formed a joint venture with WuXi AppTec to develop and commercialise a novel biologic for autoimmune and inflammatory diseases in China. Both partners have an equal stake in the joint venture, which develops biologics for the local Chinese market and also plays an important role in increasing AstraZeneca’s understanding of the country’s regulatory environment.

Another interesting development over the past ten years is the way that Chinese companies now have the scale and capabilities to develop and commercialise their medicines in China and also  increasingly to do so outside the country. This can be illustrated by a deal we signed in 2016 with Alpha Biopharma. It was a brand-new company set up by China’s LYZZ Healthcare Venture Fund, to which we exclusively out-licensed the global rights to an AstraZeneca compound.

And our deal making approach has continued to evolve. In 2017, we signed a strategic joint venture with SDIC Fund Management Company, a private equity company, to form Dizal Pharma. The company is an equally-owned, stand-alone company in China that aims to discover, develop and commercialise potential new medicines globally. As part of the deal, AstraZeneca contributed three developmental assets and a team of around 100 employees in Shanghai in return for capital as well as equity and representation on the Dizal board.

This trend continues with MedImmune, from which we spun-out six inflammation and autoimmunity molecules into a new, independent biotech company, Viela Bio, with the support of three of the largest investors in China who put up $250 million to help establish the company.

An ambitious deal landscape

As these examples show, it’s clear that as the Chinese sector matures and companies grow, we’re seeing a wider variety of deals of an increasingly ambitious nature, which certainly bodes well for the levels of research innovation seen within the country’s biopharma sector.

At the same time, Chinese companies’ thinking about licensing, as well as how they partner with companies outside China, has also evolved. In fact, a common theme to all the talks at the BFC conference was how well Chinese companies have adapted to working with the outside world, to the point where their way of operating is similar to our way of working in the West.

These levels of activity, and the pace of change that’s driving them, makes it an exciting time to be working with Chinese biopharma companies and universities, and we look forward to developing many more such partnerships in the future.

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