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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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August 29, 2011

Chinese Pharma: No Shortage of Ambition, Anyway

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Posted by Derek

When does China take the next step in drug research? They already have a huge contract research industry, and they have branches of many of the major pharma companies. But when does a Chinese startup, doing its own research with its own people in China, develop its own international-level drug pipeline? (We'll leave aside the problem that not even all the traditional drug companies seem to be able to do that these days). It still seems clear that we're eventually going to have a Chinese Merck, or a Chinese Novartis or what have you - a company to join North America, Western Europe, and Japan in the big leagues. The Chinese government, especially, would seem to find this idea very appealing.

Opinions differ, to put it mildly, about how far away this prospect is. But Chemical and Engineering News is out with an article on homegrown Chinese research that explores just this sort of question. But you run into passages like this:

In a meeting room in a building resembling a residential home in Shanghai’s Zhangjiang Hi-Tech Park, Li Chen and John Choi describe the business plan of their new company. Called Hua Medicine, the firm will launch breakthrough drugs within four years, they predict. Hua will manufacture the compounds and sell them with its own sales force. It will also license its internally developed drugs to multinational companies.

Yet right now, Hua is a modest operation that employs eight people. Hua doesn’t have an R&D lab yet, let alone a manufacturing facility. It operates in a loaned building formerly used by the administrators of the industrial park...

It can be easy to dismiss such ambitious business plans as simply talk aimed at gullible investors or government officials handing out subsidies. Except several start-ups are led by people who have long track records of success. Moreover, the money financing these start-ups comes not from relatives and friends, but from savvy investors knowledgeable about the drug industry.

Well. . .yeah. Let me join those who dismiss business plans that are as ambitious as that one. The way I understand the drug industry, if you're planning on launching a breakthrough drug within four years, you must have that drug in your hand right now, and it has to have had a lot of preclinical work done on it already (and in most therapeutic areas, it needs to have already hit the clinic). And note, these guys aren't talking about their one pet compound, they're talking about launching drugs, plural. Drugs that they discover, develop, manufacture and sell. And they have 8 people and no labs.

No, something is off here. I get the same feeling from this that I get from a lot of leapfrog-the-world plans, the feeling that something just isn't quite right and that the world doesn't allow itself to be hopped over on such a deliberate schedule. Thoughts?

Comments (47) + TrackBacks (0) | Category: Business and Markets | Drug Development | Drug Industry History


COMMENTS

1. Virgil on August 29, 2011 12:07 PM writes...

Well, the article leads off with a picture of someone in a lab coat holding up a flask of colored liquid, so they must be serious, right? And with Alan Baxter from GSK on board, what can possibly go wrong?

Permalink to Comment

2. Coere on August 29, 2011 12:19 PM writes...

You assume these drugs will be sold largely outside China. They will likely sell them within China for domestic consumption.

The business model is to test the drug on the consumer before actual trials begin.

Since the Chinese govt allows their population to eat and breath toxic waste, I can't see how this would be much of a departure from their current policies.

Permalink to Comment

3. Student on August 29, 2011 12:24 PM writes...

Hypothetically...if they tested this stuff on their own people with extremely mild regulation, would develop nations still use that data for the approval process. If not, how hard would it be for them to bypass Chinese regulations as a homeopathic drug, maybe label it "modified herbal medicine" sell it, make lots of money, and then scale up to international regulations and become a competitor?

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4. johnnyboy on August 29, 2011 12:33 PM writes...

@3: "if they tested this stuff on their own people with extremely mild regulation, would develop nations still use that data for the approval process."

No.

"how hard would it be for them to bypass Chinese regulations as a homeopathic drug, maybe label it "modified herbal medicine" sell it, make lots of money, and then scale up to international regulations and become a competitor?"

If their compound is labeled a drug, it is not possible to follow the path you describe, they'd have to jump through the same regulatory hoops as every other drug, regardless of how big the company is. If their compound is labeled a herbal or nutritional supplement, then yes - hell they don't have to 'scale up', they could do it today as there is no regulation on those.

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5. GreedyCynicalSelfInterested on August 29, 2011 12:40 PM writes...

Sounds like a stock promotion to me. They are promoting their stock to the unwashed masses, pump up the value, cash out and then disappear.

It does not have to be illegal. Does anyone remember "Planet Hollywood?"

Permalink to Comment

6. johnnyboy on August 29, 2011 12:43 PM writes...

Is the example you cite from that article the best one they had ? If so, this reminds me of the "Biopunk" book you mentioned a while back. I bought the book and read through about half before throwing it across the room in disgust. Everything I saw in there was perspective-free, breathless hype about 'research' that's about 50 years away from yielding anything resembling a drug or a therapeutic approach, yet gets hailed by reporters unencumbered by perspective as 'starting a new biotech industry'.

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7. Chemjobber on August 29, 2011 12:53 PM writes...

Here's my problem with that article:

Who was kidding who? Did Tremblay write this up, knowing that they were making fools of themselves... or is he really that credulous?

Or am I just a Luddite skeptic?

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8. newnickname on August 29, 2011 1:10 PM writes...

I was at a biotech with a very ambitious business plan being promoted at all of the top VC road shows. It included powerpoints promising delivery of the first IND application in a very short, highly aggressive time frame. At first, I thought it was a typo with the wrong year (current year instead of current +1 or +2). That did not go over well with the MBAs.

Considering where we were (further behind than the Chinese guys mentioned by Derek above), I offered the opinion that the only way we would have an IND in that time frame would be if we took the entire remainder of our start-up money and bought one. The MBAs who came up with the business plan gave me looks that could have killed.

For those of you interested in the rest of the story, there was never an IND. There was never even a candidate for an IND. Most of the money went to lawyers, consultants and MBA-only "business dinners" at 4 and 5 star restaurants. Apparently, that's a part of MBA due diligence: seeing who can order the finest bottle of wine (which comes from fermentation, a biotech related process, which is about all the MBAs know about biotech and drug discovery).

I know this is Derek's blog and not a "forum" but I also wanted to mention the "Do We Spend Too Much on Education?" debate at the New York Times, Opinion Pages, "Room for Debate", August 23, 2011.

Permalink to Comment

9. You're Pfizered on August 29, 2011 1:56 PM writes...

@CJ

Education: French, English, Chinese, and Japanese speaker. MBA, University of Western Ontario, 1994. B.A. in Economics, Concordia University (Montreal), 1987.

With this background, maybe it sounded reasonable.

I think that there will be a lot of slick people with great PowerPoint slide decks who enrich themselves during this money grab, but very few will ever deliver on what they are promising, much like newnickname mentioned.

If it were as easy as this article paints it to be, pharma wouldn't be in the position it's in right now.

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10. Gunter Leiderhosen on August 29, 2011 2:03 PM writes...

I wonder if there will be lead in these Chinese drugs...

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11. Josh on August 29, 2011 2:26 PM writes...

I'd love to invest, but unfortunately I already sent all my money to this nice Nigerian man who sent me an email. He promised me $22,500,000 in return.

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12. pete on August 29, 2011 2:41 PM writes...

The name of the company is Hua Medicine. That can be alternately pronounced as,
"Wha? Medicine?"
or
"HOO-AHH!! Medicine!!"

Permalink to Comment

13. iridium on August 29, 2011 2:48 PM writes...

A drug in 4 years...

What about to try homeopaty?
It works very well a lot of people and since it is just water you could save a lot of money going in one step from

1. Thinking a cool name for the "drug"
to
2. printing the lable and being ready to sell it

that should work even in just 1-2 years....

Permalink to Comment

14. quintus on August 29, 2011 3:00 PM writes...

All they need to do is employ 5,000,000 people to do the work and test the compounds on themselves (employees) and pay them peanuts.
Easy!

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15. Innovorich on August 29, 2011 3:21 PM writes...

I just stopped reading that paragraph at "breakthrough drugs within 4 years . . "

Like you say Derek, hopping the world does not happen. They might be catching up, but they're not already 3-4 times better and also able to circumvent regulation and many of the time consuming operations required just to make a clinically effective, manufactured and accepted drug.

Somebody is lying to get money for their life science company . . . this doesn't just happen in China!

Permalink to Comment

16. Anonymous on August 29, 2011 3:33 PM writes...

I was interested and read the article Derek linked. Most of the start-up companies mentioned therein have the expressed plan of marketing to China only, which means that they aren't planning to do US clinical trials. However, there are a few companies mentioned that have, or are working towards, US clinical trials...don't dismiss the whole group just because Hua Medicine clearly has no concept of reality.

Permalink to Comment

17. PharmaBoy on August 29, 2011 3:44 PM writes...

I assumed (although perhaps incorrectly) that the business plan was to secure the Chinese rights to an existing drug and "launch" it China. There are many drugs in the world and very few of them in China. To get an already approved drug on the Chinese market would take 3-4 years presuming the need for dose range finding and Ph III studies in the target population.

Permalink to Comment

18. Stephen Fye on August 29, 2011 3:51 PM writes...

This type of 'optimism' and gullibility is not unique to China. I often review grants and/or have conversations with potential collaborators that overlook the need to 1) discover the drug (especially the chemistry bit is missed - drugs come from HTS right?); 2) develop the drug. Even in big US Pharma, every merger/reorg is followed by an announcement that the new management team has fixed the pipeline and now has great Phase III assets almost ready to launch (which came from the previous 'failed' paradigm(?)).
Immaculate conception is a great myth, reality is hard labor. You'd think the reporter's job would be to intervene with some industry averages for comparison.

Permalink to Comment

19. HFM on August 29, 2011 3:51 PM writes...

@newnickname: I was at a biotech like that once. The MBAs asked the grunts to put together a flowchart depicting our estimated time-to-launch, which we did. I heard through the grapevine that they'd used our chart in a VC meeting...except on the X-axis, they changed "years" to "months".

Yes, that biotech no longer exists. And the beatings shall continue until R&D improves...

Permalink to Comment

20. Chemjobber on August 29, 2011 4:03 PM writes...

Quintus! Long time, no see. How are you doing?

Permalink to Comment

21. old man on August 29, 2011 5:30 PM writes...

If it sounds too good to be true...

Permalink to Comment

22. Susurrus on August 29, 2011 6:46 PM writes...

Where the hell is Terry? I was expecting a lively debate about this one.

Permalink to Comment

23. anonymous on August 29, 2011 6:47 PM writes...

This kind of over sell doesn't surprise me. Such is the solidity of CEO Wu's company that rumour has it that it hasn't been paying its workers.

Permalink to Comment

24. Quintus on August 29, 2011 7:09 PM writes...

Hi Chemjobber,
I'm ok and you?

Permalink to Comment

25. Quintus on August 29, 2011 7:12 PM writes...

Hi Chemjobber,
I'm ok and you?

Permalink to Comment

26. Anonymous on August 29, 2011 8:11 PM writes...

yes, early days for them. However, they started the same with everything else. Nobody took them seriously. It may have taken 10 years to develop a drug for a company. But it only took 3 times that to develop the whole Chinese economy. Given time, they can make it happen. Btw, many people, including people who grew up and received their educations here are moving there. Do not just ridicule them.

Permalink to Comment

27. Orion on August 29, 2011 9:36 PM writes...

I do not miss canceling my subscription to C&EN. Good journalism can be found elsewhere, in which I will enjoy reading how such fantastic claims play out.

I will agree with the general observation that the Chinese are not the least bit unique in their ability to spin such tales. They've learned from the best! I hope they learn from our mistakes as well.

Permalink to Comment

28. Chemjobber on August 29, 2011 10:13 PM writes...

Good, quintus, things are fine. Hope all is well.

Permalink to Comment

29. Sisyphus on August 29, 2011 10:44 PM writes...

"Drugs that they discover, develop, manufacture and sell." should read:

Drugs that they "acquired" the IP for, manufacture and sell.

Permalink to Comment

30. Shazz on August 29, 2011 10:45 PM writes...

The unstated assumption is that the Chinese equivalent of the drug industry that could emerge in the coming decades will be an imitation of the (now failed) business model of modern western drug companies.

It ignores the possibility of the Chinese to do drug discovery in the way it was done before the 1970s (lots of animal models, lots of boots on the ground).

It also ignores the other possibility of the Chinese running with the emerging biotech tools in an environment relatively unencumbered by legislation and ethics. If a country is going to do wonderful/terrible things with genetic modification it will be China.

Permalink to Comment

31. Sisyphus on August 29, 2011 10:49 PM writes...

"Do We Spend Too Much on Education?"

YES!!!

Permalink to Comment

32. Moiety on August 30, 2011 2:26 AM writes...

Hype, hype and more hype. With nothing we will promise you everything.

Permalink to Comment

33. JF Tremblay on August 30, 2011 3:18 AM writes...

Hi Derek,

I didn't know you had mentioned my article here. I came to In the Pipeline because I was looking for inspiration for an upcoming article on contract research.

The part of my article that is quoted on this website is the first few paragraphs. At that stage of a story, I don't want to burden the reader with a lot of details. John Choi of Hua told me that their first compound is still under development in the US where it has reached the NDA stage. That's what Hua wants to launch in China within 4 years. China will become the world's second drug market this year and growth continues. Comment No. 17 above is spot on.

One person above wrote that I am gullible. I don't mind that observation at all. I never know what to believe when China is involved, so I may be actually more gullible than 10 years ago. A lot of organizations have achieved a lot in a short time in that country, and others have promised things that didn't happen. I was introduced to the BioBay high-tech park in Suzhou when it was a PowerPoint presentation, and things there have developed as promised 5 years ago, more or less.

Separately, I welcome all suggestions about researching and writing an article about contract research, preferably one that involves Chinese companies because I am based in Hong Kong. Every October, C&EN publishes an article or a series of articles on contract research and I'm not too sure what to do this year. Many thanks. JF


Permalink to Comment

34. A Nonny Mouse on August 30, 2011 6:34 AM writes...

#17

Yes, I know someone (UK resident) who has set up a business in China (with government investment) which is involved in conducting clinical trials. Their objective is to take drugs that have not been licensed in China (or are at late stage 3) and to conduct the necessary trials for use in China. They then take a share of the revenues from the originator. I am told that they are working a couple of large US pharma companies (names withheld just in case).

Permalink to Comment

35. emjeff on August 30, 2011 7:12 AM writes...

I'd love a look at the lab notebooks, wouldn't you?

The whole article is a bunch of breathless hype, written by some journalist who could not pass "Kiddie Chem", and who has absolutely no concept of how research is done. My respect for journalism is at an all-time low.

Permalink to Comment

36. Anonymous on August 30, 2011 8:22 AM writes...

Hi everyone
As I promised I returned to china, now I am working as a production manager in a fluorochemical company to help to design their product line, R&D. As I wrote here before, to find a chemical job in china is not as difficult as in US. I am proud to work for a Chinese company and develop the frontier chemicals to replace the china market of 3M and DuPont and compete with them on international market.


Since Derek is discussing the competition of drug discovery in china, I’d like to give some comments. It seems everyone here doesn’t know the model in China of development of new drugs. As to my knowledge I can describe two drugs development strategy.

The first strategy is formal model, me-too strategy, usually FDA doesn’t encourage me-too drugs in US, that’s why in these days multi-international companies don’t want to spend too much time to develop me-too drugs. However, in china, the government found it is more realistic to encourage me-too drugs development rather than develop new chemical entry, at least it also has its own intellectual property.

Thus a Chinese company can synthesize 50-200 similar chemicals of approved drug in US as drug candidate and further test the bioactivity and for clinical trials. It does takes about ten years to market a me-too drug. One example is “Imrecoxib”
http://www.interfax.cn/news/18042

Another strategy is bio-drug, usually there are 200 failed bio-drugs in US which reach phase II or Phase III. And there is no IP in china due to the unpromising future, thus some companies found that modifying the candidate and try the clinical trial in china can be promising.
One example is “Endostar”

http://www.cancertherapychina.com/index.php?option=com_content&view=article&id=78:endostar-antiangiogenesis-therapy&catid=24:Antiangiogenesis%20Therapy&Itemid=120

After these introduction I hope you can understand these two models, if you want to do business related with chemicals, especially bulk chemicals, you can find my company for collaboration(we have a lab with 50 master level employee and a factory with 1000 ton capacity for relative simple chemicals). In addition, if you are doing drug discovery in china I may give you some suggestion as a paid consultant, probably I am one of the best professionals in drug industry in china. Good luck to you guys.

Regard hua company I can assure you guys that they don’t have IP either in US or in china, 4 years for a new drug is impossible in china, usually even a generic drug need two years time to approve.

Permalink to Comment

37. LFV on August 30, 2011 8:36 AM writes...

The claims made by the Chinese pharma group just sounds like an updated version of The Great Leap Forward....and I'm expecting similar results from this trial.

Permalink to Comment

38. RB Woodweird on August 30, 2011 8:51 AM writes...

Well, if 10,000 Pfizer employees take 20 years to get a drug to market, then 50,000 Hua Med employees can get one to market in 4 years. Do the math, people.

Permalink to Comment

39. MoMo on August 30, 2011 10:26 AM writes...

C and E news and the ACS should just change its name to the Asian Chemical Society.

Thats all I have been reading about in this rag is about how great things are going in China and how dismal we are at research these days.

More treason and more reason to stop ACS membership all together and start publishing in PlOS or other online journals. Your days are numbered ACS, so milk it while you can!

And when it comes to taking a drug from China I hope the editors at the ACS like Baum are the first in line.

Permalink to Comment

40. anonymous on August 30, 2011 1:26 PM writes...

@36:

To the FDA, an NME is an NME. FDA doesn't give jack about whether it's a "me-too drug"; . It's the payors that want added-value for the added cost (theoretically). If its not an NME, then there is the 505(b)(2) pathway, which requires a lot less testing than a full NME (b)(1).

This gets to the second part: you still have to have the IP space to operate for a b2. What you are suggesting is that China is flagrantly and blatantly ripping off IP holders everywhere else.

I'm stunned

Permalink to Comment

41. Dr Manhattan on August 30, 2011 2:00 PM writes...

Stunningly unsophisticated, and indicates that they have a long way to go in just learning the business. I had several Chinese scientists com over to our lab in the mid-1980's. The Cultural revelotion gutted an entire generation of science, and tehy still have some way to rcover. Remember, the much vaunted Chinese manned space program is currently having a redux of NASA'a 1960's Project Gemini.

Soon though, you will be able to buy compounds similar to some Western drugs...but now with melamine!

Permalink to Comment

42. @China on August 30, 2011 3:27 PM writes...

Rampant corruption and a peculiar sort of innate gullibility when it comes to home grown or state projects is rampant in china.

Currently both the west and the 'east' aren't spending enough on the 'right' sort of education. Bottom line, it's always about passion combined with innate field specific intuitive expertise at the top when you're talking about any hierarchical organization that's going to make 'something' - money is a byproduct of this (generally a massive one) but when it's the goal it's mediocrity or will devolve into such. These people exist, they're just enjoying their work and lives too much too do attempt such logistical everest like distractions most of the time.

How do you think you'd do at the top Derek?
I'd invest.

Permalink to Comment

43. Healthy on August 30, 2011 5:55 PM writes...

I agree that it seems that just because of the clinical trials their intentions seem ahead of schedule. Anyway, I think that these leapfrog-the-world are a good thing as they force quantum leaps instead of slow overdoing. The former is a way more unsecure bussines but when it successes it is really more meaningful. Moreover, if you take a look at chinese brands they reduce the final product cost by reducing intermediaries insurmoantable commisions which are basically drugs fault.

For research lines, ideas, peers and funding please check the non-profit agingportfolio.

Permalink to Comment

44. Coughing on August 30, 2011 7:10 PM writes...

What about aquisition..... If they have the money.

Permalink to Comment

45. WB on August 30, 2011 11:47 PM writes...

I wouldn't be surprised if all they can come up with is some traditional 'Chinese medicine' that would never get FDA approval. And they are very likely to get their government's approval to sell placebos and snakeoil. It's going to be another complementary medicine sham.

Permalink to Comment

46. Guppy on August 31, 2011 12:27 AM writes...

I can kind of see how some of these mee-toos might be useful for Antibiotics.

In nature, these sort of compounds often aren't produced as a single pure entity, but as a cluster of related entities with little tweaks in them. Having a variety of each might slow down how quickly their targets get their resistance mechanisms optimized.

Permalink to Comment

47. George Baeder on September 16, 2011 2:03 PM writes...

I stumbled across this forum by accident. The level of provincial ignorance in these comments is amazing. Apparently someone saw a paragraph somewhere and is drawing conclusions without any understanding of Hua's strategy (license in compounds at Phase II) This sort of willful ignorance is identical to attitudes I saw in:
Textiles in the 70s
Consumer electroncis in the 80s
Telecom in the 90s

Does anyoone actually think that Pfizer or Novartis represent the "model" for the future of the industry? And that success in China means creating a home grown dinasour on Western platform? Think again. A new model is beginning to take shape.

Permalink to Comment

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