Chinese firms increasingly pursue global partnerships to raise international profile, offering cue for Korean rivals
China’s biopharmaceutical and biotechnology companies are rapidly expanding their global presence, driven by robust drug pipelines and an increasingly proactive approach to securing international partnerships, according to a leading expert in the Chinese biotech industry.
“Looking at the first two months of licensing and cross-border deals involving Chinese innovators, the volume has already surpassed the entire first quarter of last year,” stated Fangning Zhang, a partner at McKinsey & Company’s Shanghai office, in a recent interview with The Korea Herald in Seoul.
Zhang highlighted the significant shift in Chinese biotech firms’ strategies, noting their proactive efforts to promote their technologies and establish global collaborations. This trend gained momentum following the COVID-19 pandemic.
“Five years ago, many Chinese biotech companies felt they possessed valuable assets but lacked global recognition,” she explained. “With international travel restrictions in place during the pandemic, they recognized the need for a more assertive outreach strategy.”
Consequently, Chinese biotech executives have actively engaged financial advisors, leveraged their networks, and participated in global industry conferences to enhance their international visibility, she added.
Data from PharmCube indicates that Chinese biotech companies announced 38 out-licensing deals in the first two months of this year, positioning them to exceed last year’s total of 186. After achieving a record $137 billion in out-licensing deals last year, Chinese biotech companies have already secured $49 billion in such contracts this year alone.
“Chinese companies exhibit a strong openness and are actively seeking collaborative opportunities,” Zhang emphasized.
“Last year in China, we observed multiple discovery partnership deals between multinational corporations and Chinese innovators. This extends beyond merely licensing one or two assets; it involves leveraging your partner’s R&D discovery and early development capabilities due to their efficient and cost-effective approach.”
Zhang identified efficiency, platform technology, and artificial intelligence in drug discovery as key factors driving the growing number of deals and partnerships between Chinese biotech firms and leading global pharmaceutical companies.
“In China, delivering a discovery candidate can be two to three times faster and at a fraction of the cost compared to global benchmarks,” she stated. “Furthermore, China can accelerate patient enrollment in early development stages compared to global standards. Identifying and capitalizing on such opportunities for acceleration is crucial.”
Regarding China’s recent initiative to implement a 30-working day review process for investigational new drug (IND) applications, reducing the existing 60-day review period, Zhang described it as part of a decade-long regulatory reform.
“The intention remains to encourage domestic innovation while simultaneously attracting Western pharma companies and other players to drive innovation within China,” she clarified.
Concerning the “NewCo” model, referring to the popular practice among Chinese biotech firms of spinning off promising pipelines into new entities established in more investor-friendly jurisdictions to attract global capital, Zhang emphasized that it’s a means to an end.
“The NewCo model is one of several vehicles or pathways for Asia-based companies to unlock the true global value of their assets. This can involve M&A, out-licensing, or co-development and co-commercialization partnerships,” she explained.
“The question isn’t whether to pursue the NewCo model, but rather which assets, at what stage, should prompt consideration of a globalization strategy. Then, for that specific asset or situation, determine the optimal pathway for the company, considering capital resources, potential value capture, risk tolerance, and the likelihood of securing the right partner. It’s a multifaceted consideration, akin to triage.”
Zhang, who previously worked at Pfizer as a senior associate scientist, recounted conversations with “quite a few Western executives” at the JPMorgan Healthcare Conference in San Francisco this January, who expressed surprise at the level of innovation occurring in Korea.
“To me, this suggests that the capabilities and momentum of the Korean biotech sector could benefit from greater global awareness and recognition,” she said.
“If you possess valuable assets but lack visibility, you risk missing opportunities. Greater extroversion is essential.”
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