China’s Emergence Into the Global Pharma Industry




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Video title: China’s Emergence Into the Global Pharma Industry
Released on: January 20, 2009. © PharmaVentures Ltd
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Recently big pharma have been taking advantage of the financial and industrial environment in China. In this interview Fintan Walton and Dr. Bill Guo, founder and Chairman of Venturepharm, take a look at the evolution of the biopharma industry within China. Dr. Guo speaks of the dramatic changes that China has been experiencing and, as his company rides at the forefront of these changes, the reasons he predicts that China will very shortly be a major player in all aspects of the pharmaceutical industry.
Origin of Venturepharm.
Fintan Walton:
Hello and welcome to PharmaVentures Business Review here in Melbourne, Australia. On this show I have Bill Guo who is the Founder and Chairman of Venturepharm. Welcome to the show.
Bill Guo:
Yeah, good morning.
Fintan Walton:
Bill Guo, you are the founder of the company that was founded in China in 1999.
Bill Guo:
Yeah.
Fintan Walton:
And today you have 2,500 people and you describe yourselves as a pharmaceutical services company or?
Bill Guo:
Right.
Fintan Walton:
A services plus company?
Bill Guo:
Exactly, yeah.
Fintan Walton:
So tell me how did you set up Venturepharm?
Bill Guo:
Okay. The company was setup in 1999. It's the first company that went public outside the China as a R&D driving company so we are the first public company, the R&D driving Chinese pharmaceutical company. Yeah, then that we are also the first company to acquire a Chinese company to acquire Nasdaq listed American Biotech company the name is called CBI, [PharmaDeals ID = 32254] .
Fintan Walton:
Right.
Bill Guo:
We are also the first company where we avail a lots of products and number one we are also the company to raise the money from the Swizerland, Geneva yeah, yeah
Fintan Walton:
Right.
Bill Guo:
Chinese company.
Signficant changes and developments in pharma industry in China
Fintan Walton:
Okay. So, so what's important here is the development of obviously the pharmaceutical needs inside China and there are lots of pharmaceutical companies coming into China there is already an existing group of companies inside China so you presumably you are running on the - riding on top of this significant change that's happening within China?
Bill Guo:
Right now in China this is number of the big pharma they move to China. So then they go there they need what kind of a service there is a number of medium or small sized biotech company from North America they shift to China, they are looking for outsourcing in China for the low cost reasons, for the talent pool and then very important it's driven by the China government ranking of the wonderful largest market in the world. So Venturepharm is a whole kind of service we provide there is we provide a service that we call full service, we call it CO, CRO, CMO and the CSO, so we provide a from the drug discovery to Pharmaceutical Development Service which we said as the formulation department service and the preclinical service, clinical trial service drug registration and manufacturing service and the contract sales service is really we try to provide a full service, the reason is for that is because if what you " you go to the China is now the only reason over the cut to your R&D cost very important is your cut your timing to finding the drug so fully inter with, full service how we provide the very critical important role with this regard.
Fintan Walton:
So in another words pharmaceutical companies can move from one service to the next?
Bill Guo:
Yeah.
Fintan Walton:
So if they can take advantage of the clinical trials capabilities"
Bill Guo:
Right, right.
Fintan Walton:
They can use your manufacturing capabilities
Bill Guo:
Right, yeah.
Fintan Walton:
And all the way through in the end
Bill Guo:
Exactly.
Fintan Walton:
Doing sales?
Bill Guo:
Yeah. So while they doing the drug discovery at that stage they can see how to optimize to come on the lead, when they come to the in the (indiscernable) part you can think about - even in the (indiscernable) to think about how to design the clinical trial you can put a lot of R&D phase consolidate together to become really is a short of a time and their fully integrated service. So our goal is to provide the most of the affordable over the class R&D.
Fintan Walton:
Right, okay. So clearly with China, it's got its own regulatory services inside China?
Bill Guo:
Correct.
Fintan Walton:
And so, do companies come to, to do clinical trials specifically for registration in China or are they just doing clinical trials also for elsewhere around the world?
Bill Guo:
Yeah. I think the equation has been changed with time. Initially people come to Chinais only for local registrations, so they only come there for let it be a bioequivalent study or Phase I study. Well more and more company now they treat China as a global part of a global multi part centre, so there is a magazine said, I think it's a Financial Time said there is a China is tapped as one of the most of the favor place all industries to do clinical trial. Yeah, so it's a part of multiple trials. Now there is more and more medium size biotech company treated China as at a first territory to register their drug global wise. So they are not going there to do clinical trial their staff on the (indiscernable) stage.
Fintan Walton:
Right so it's - part of the overall global strategy that a company would adopt they would consider the use of doing some of the work in China as part of that global strategy?
Bill Guo:
Right, right. So Venturepharm right now is a really kind of US had a court or US " but the China operation is a - had a court in China project management in China and the big operation in US in China. Yeah, yeah so that's as we have a facility in the Richmond field of Virginia, we have about like 100 people in the US and then we have people in the UK and then England(indiscernable) is front of Melbourne here, we have one of the world class pipe type drug discovery company namely Mimotopes. So we are pretty much all over the world to provide the clients with the service.
Venturepharm's Business model
Fintan Walton:
Right. Now part of this journey that you've taken the company that included raising capital for the business, equity capital and obviously then you've listed on the Hang Seng as well?
Bill Guo:
Right. Yeah we listed on Hang Seng. So right now we have like a two public vehicle one is listed in Hang Seng and another one is listed in the Nasdaq that's the company what we acquire.
Fintan Walton:
Right, okay. And so, as part of your own strategy of building up the business, you're building it organically but you are also doing it through acquisitions?
Bill Guo:
Right,. So our first strategy is building through more acquisition, but now we found that integration is really some of that will take the time. So we try to adopt well changed our strategy by going through the partnership also through the alliance. Yeah, so even like in Australia we really want to find a lot of good company, because Australiais the one best in the world in term to do clinical trial for clinical trial, so if we have a company (indiscernable) are there to do competent trial, we do Asian trial in China add together that could really can make us very affordable, world class quality so really can help this top industry because you know the cost for R&D is so high even we can try to create a some new model can make their cost like a save it a 75% and the time is in one set of trial. So this industry will become more attractive to the investor and make it people especially the patient more field affordable, so government happy, investor will be happy yeah employee are happy. Yeah.
Fintan Walton:
Alright. Now the other thing do you " does Venturepharm take on some other risks are you obviously you work on a fee for service basis?
Bill Guo:
Right, right.
Fintan Walton:
Would you if a biotech company was taking a product and a plan to take a lot of the clinical trials would you consider taking that drug on and taking some of the risks as part of a collaboration or licensing deal?
Bill Guo:
Right, right. That's a great question. Yeah, so when you Business model the fund of transition is choose our model is we call a service plus because our small and the medium size company they cannot afford to R&D anymore so we help them to do sort of a co-investment but there is co-investment it's a total given legal entity, so they are independent, so if we set a if we have some our product which is under our research platform for other client, yeah, yeah we can tell the investor you see whether you can invest or you invite them to invest their money to co-invest on the project or help their clients, so one side we provide the R&D service, the our side we provide the client is a financial service that already is a service plus or you can say investment plus Business model.
Fintan Walton:
So the clients that you've got are obviously international and have you got clients here in Australia?
Bill Guo:
Yeah we got clients also in Australia, yeah.
Fintan Walton:
Sure. So it's an international?
Bill Guo:
Yeah it's really international, our client base is already international.
Fintan Walton:
Yeah so proportionately how big is your business in relation to clients or that are major pharmaceutical companies, so major pharmaceutical companies use your services compared to biotech companies?
Bill Guo:
Yeah.
Fintan Walton:
What proportion do you have between those two groups?
Bill Guo:
Yeah, so our main goal is to provide company can mainly really help those company like a biotech company. Because as a biotech company in the future probably don't go more virtue, yeah more outsourcing, big pharma is pretty much well established inside and there is may be 75 or 85 " 80% of the new product probably also will come out from biotech company, so right now our majority clients will be bigger pharma, yeah but now we shift to more focus on medium and small sized biotech company.
Venturepharm's Strategy of globalisation.
Fintan Walton:
Now the other thing as you've already mentioned that is I suppose unique features about the company because normally people think of a Chinese company keeping its operations mainly within China, but you have adopted a strategy of globalization outside China as you said you've got presence here in Australia, in US and in Europe.
Bill Guo:
Yeah and in UK, yeah.
Fintan Walton:
And so that strategy is evolving through acquisitions?
Bill Guo:
Yeah it's evolving through acquisition, yeah but our new strategy is going to be mainly focus on alliance before is through acquisition, but we found public alliance where more key to the good talent.
Fintan Walton:
Right. Now if I could just change slightly to the environment within China because obviously everybody looks at China they can see that as a rapidly growing economy from a pharmaceutical and biotech perspective as an observer and a player in that field in China, what's actually happening there are we getting we've heard lot of stories of major pharmaceutical companies coming in but the emergence of biotechnology in China itself, what is the state of play there?
Bill Guo:
Yeah, yeah. I probably did very good candidates to answer that question because really from the battlefront of the China, yeah. So they have the experience the dramatically change right now in China yeah. The first the big change is China is a, I think business 2010 China probably will rank as a one of the top market in the world. Yeah that's the one change, so that's the one
Fintan Walton:
For pharmaceutical products?
Bill Guo:
For pharmaceutical products for life science pharmaceutical product. The second change that we per see is just in Shanghai area top 25 " the top of the pharmaceutical and the biotech industry top of 25 all set their R&D in Shanghai area. And also in that area the people project in term of the number of the people as the drug discovery scientists also will be number one, Shanghai that area compared to rest of the world. And in term of biotech company in Shanghai under that great area probably will exceed San Diego in term and the new drug come out, I think by 2015 it's will be probably also exceed more than the Boston, so there is the huge number of opportunities in there is because that market size and because as a cost reason and the very important talent pool, because they have one 1.3 billion people there. And so then for that number as base, so number of, so will come out a lot good scientist in that area.
Fintan Walton:
Right. And what's also important presumably is the movement of companies like Roche
Bill Guo:
Right.
Fintan Walton:
Setting up their discovery activities in China because that also helps to, to build that talent pool?
Bill Guo:
Right, exactly. Right that is they also attract a, because the pharmaceutical structure they have like a cut off a lot of R&D facility from North America then that are going to shift to Asia, the China of service that one of the most attractive for them to do so, yeah the talent pool there.
Opportunities in china.
Fintan Walton:
So clearly as we watch Chinagrow and evolve over the next years are we likely to see a major Chinese pharmaceutical company appear on the same size as Glaxo or a Pfizer is that likely to happen?
Bill Guo:
Yeah, yeah. I think that China right now have two good opportunity, one opportunity is because the market grows itself, the second it's because of the R&D shift from the North America to Asia. So it's really drived by this two great opportunity, great opportunity will create greater business. So now we see the first part of China become one of the market we do see a lot of company similar like Dr Reddy, Ranbaxy yeah in India the business company in China they are growing very, very fast. Yeah they got a specialty firm or some ways like generic company it's growing very fast and also we can see some of the service company, yeah because also taking job of outsourcing like a venture fund, like Venturepharm some of those, it's a service company also take a venture job of this opportunity growing out but very fast.
Fintan Walton:
So we can obviously going to see over the next few years an emerging infrastructure
Bill Guo:
Right.
Fintan Walton:
Throughout of throughout China?
Bill Guo:
Yeah.
Future vision of Venturepharm.
Fintan Walton:
So Bill Guo as you look today into the future for your company what is " what's your vision what would you like to see Venturepharm be like say in the next five-years, what would you like to see?
Bill Guo:
Yeah, yeah. So we really want to like grow as a venture fund become like world says number one affordable, world class, like a fully integrate service channel, yeah it's a very important.So we can really like a compared or compete with like Covance and Quintiles those company, to take - really take advantage of the opportunity in China, yeah.
Fintan Walton:
Well Bill Guo, we are looking forward to looking at that evolve over the next few years. Thank you very much indeed for coming on the show.
Bill Guo:
Yeah, thank you very much.
Bill Guo
Chairman
Bill Guo is the Chairman and founder of Venturepharm Group, a leading full service provider to world life science industry. Venturepharm Group now has two public companies, Venturepharm Lab, the first China CRO listed in Hong Kong and CBI, the first Chinese CRO's acquisition of a US CRO in NASDAQ.
Venturepharm
Venturepharm Asia is a global life science leader with a strategic focus on venture capital, merchant banking, CRO, CMO, CSO, compound partnering, and royalty sharing. The group develops an innovative full service plus model to position itself strongly in the life science industry. Currently Venturepharm Asia has more than two thousand employees. Venturepharm is the largest global provider of pharmaceutical development service in China. Venturepharm provides full service of drug discovery and development that take new drugs from "Idea to patients." These include API (Active Pharmaceutical Ingredient), formulation development, clinical trial, product registration, marketing & sales to pharmaceutical distributors and patients in China and overseas.