Part 2: Is the Emerging Asian Market an opportunity for biotech or pharma?




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Video title: Part 2: Is the Emerging Asian Market an opportunity for biotech or pharma?
Released on: August 18, 2009. © PharmaVentures Ltd
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  • Summary
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  • Participants
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In this panel discussion Fintan Walton looks at the emerging Asian markets and asks his guests what opportunities they see for different sectors of the industry in this arena. Sandy Macrae, Senior Vice President for GSK's Asia Pacific Japan and Emerging Markets R&D, Ken Macleod, Partner at Paul Capital Healthcare and Bill Guo, Chairman of Venturepharm give their views on this topic following their diverse experiences of the rising Asian biopharma industry.
Innovation, Funding and expanision in emerging markets.
Fintan Walton:
So when we go to UK and you are looking at the innovations component part one of the things, one of the features that we've seen as you've already mentioned in countries like India is particularly which has already got a mature pharmaceutical industry and also manufacturing industry that innovation is not necessarily coming through biotech companies per say but through these more mature companies?
Ken Macleod:
I think what you see there is that one of the things that people I do think are focused on is the fact that in manufacturing there is a price advantage and that's undoubtly true, but I think in the same way on the R&D side in say in China there are also some real innovative advantages, innovation advantages in India and these countries as well on the manufacturing side, that the formulation work that is done in India is now as good as it is anywhere else in the world. And you then start to see that be done with some cost advantages as well, so you see some real innovation there. So I think that's not just on the new chemical entity our development work it's on the existing products as well generic products as well. And then if you then go back to the sort of the new work that's been done the new drugs that been developed yeah those are by enlarge being primarily developed within those companies, now there are one or two start ups which have received some funding there are some venture funds from the US and Europe that have invested in companies in India and there are one or two Indian venture firms that have funded start ups as well, but I would still say that primarily that the funding which is the serious funding that's required it's being funded from the revenue streams there have been generated through selling branded generics in the home market or generics in the international markets, so
Fintan Walton:
But for the local companies within the emerging markets and let's say use India as an example again their need to grow is obviously growing within their own country but they also need to grow outside their own country
Ken Macleod:
Absolutely.
Fintan Walton:
In order to get that dominance?
Ken Macleod:
Yeah, absolutely I think if you look at where you've that has gone both ways, you've seen those companies expand into other emerging markets going to say Latin America, are going into Eastern Europe and taking that same model which they have applied very successfully in India or it did in China and actually apply them in other emerging markets. But I also recognize that there is a very big market in Europe and in the US and so they've sort to expand into those markets as well. And generally I think our interest is, is where there is some kind of added value to it to generic or some additional barriers for entry.
Funding, Venture capital in china and cluster effect around Shangai.
Fintan Walton:
Bill, if I can go to you again and one of the things you've mentioned was really important is the amount of money that the Chinese government is putting into biotech both obviously in terms of educating the people, but also creating incubators within the universities themselves and populating those incubators. The question is, is there a sufficient amount of risk capital or venture capital within China to take biotech forward or is it going to be dependent on outside companies like GSK coming in and setting up those research centers first so looking at how biotech and innovation is developing within China, how do we see that actually happening?
Bill Guo:
You see a lot of good ingredient over there it not just the Chinese government they putted their big funding over there you will here see a lot of good like investment firm you can see fidelity Investments [ph], you can see all those bigger firm open matter all those bigger firm they all moved to there and also you can see the pharmaceutical company also relocated their research to there, so all the ingredient get together this seems like a - yeah there a lot of good ingredient that come together to make that like a brief I mean familiar to a good product as they just did that - you can see what kind of
Fintan Walton:
So it's a creation of a cluster?
Bill Guo:
Yeah cluster.
Fintan Walton:
A cluster effect particularly around Shanghai?
Bill Guo:
Yeah, yeah particularly Shanghai you can see all these they are good CRO company there, they are good big - bigger pharma there, it has a good investment company go there and a good sort of a new business classroom affordable, accountable and also and reliable and then speed every good ingredient go there.
Ken Macleod:
My impression is there that most of the companies that have been started in China in biotech tend to be service based companies and so they are gonna generate a revenue stream and that's one of their early stage, early priorities of
Bill Guo:
Right.
Ken Macleod:
Is that correct?
Bill Guo:
You are right.
Ken Macleod:
Okay.
Bill Guo:
So there we can see before is found like a early discovery service now they moved to preclinical now moved to clinical, yeah and the country manufacturing and even a sales service.
Sandy Macrae:
But it's an effort [ph] to with companies like GSK recognizing the medical need and the commercial opportunity in China that we will be there shoulder-to shoulder with the Chinese biotech's
Bill Guo:
Right, right, right.
Sandy Macrae:
And that must be a very healthy environment?
Bill Guo:
Right, right, right. Yeah. So you go there is not just for the affordable research or is just for (indiscernable) of you just go there to help with the patient because there is a lot of patients they really needed just like (indiscernable).
Sandy Macrae:
There will be 18 million patients in China with COPD.
Bill Guo:
Right Right.
Sandy Macrae:
18 million.
Bill Guo:
Yeah, that's largest.
Sandy Macrae:
Mean that's a normal medical need.
Bill Guo:
Yeah that's normal, yeah.
Generic products in emerging markets and the business models.
Fintan Walton:
But it comes into another area when people think of emerging markets they also think, and I am not just specifically saying China but emerging markets in general tend to be populated with generics, tend to be there seems to be a higher number of generic products there for historical reasons and so forth so?
Ken Macleod:
Let's get some things straight what - I mean there is an enormous percentage of generics dispensed in the US and in Europe, so it's a very hard percentage whatever it is. So what the difference is, is that there is a market now for that's been created for newer [ph] medicines which you know for diseases of older age and for you know go along with being a developed nation and all I think that you are saying is it that's gonna happen in China.
Fintan Walton:
Yeah, but I think also I am looking at the GSK strategy, because the GSK strategy which is largely non-generics?
Ken Macleod:
Right.
Fintan Walton:
You are looking at branded generics you've recognized that within these markets for you to or for GSK to be successful commercially you have to change your business model?
Sandy Macrae:
We have to adopt our business model to whichever country we are in. So in India, GSK is the second biggest company, secondly only to a generic manufacturer. And we've recognized that there you've got offer both IP protected compounds and branded generics and within the Indian market there is a real desire amongst patients and doctors to prescribe a generic that they recognize that is attached to a company that they respect that they know will manufacture it well, will provide the medical back up and the safety and the regulatory support. So I think that's the fact of life in India and that's why we are working out this in that country.
Fintan Walton:
And for Ken when you are looking at your investments do you are your investments going into more generic based companies when you are looking at those emerging markets or what type of companies are utilizing capitals financing capabilities?
Ken Macleod:
You know, I mean given that the companies themselves will have a broader spectrum of interest which might include NCA's and sometimes what they're looking for is financing on what we might call added value generics.
Fintan Walton:
Yes.
Ken Macleod:
And that is what, what our interest is. I don't think we have any great interest in say some solid or dose of the product just about to go off patent, but I think when there is some added value, some additional barriers to enter yes I think we are interested in those kind of things.
Fintan Walton:
Right. And to get a feel for China, Bill , somebody once said to me said that there are literally 100's of small pharmaceutical companies in China, is that true?
Bill Guo:
Yeah, yeah.
Fintan Walton:
And what are those companies typically look like? What are they selling? What sort of drugs are they tending to market in China?
Bill Guo:
Yeah in China you can even see what type of different kind of pharmaceutical companies basically before they've had a lot of small local pharmaceutical companies they are pretty much focused on generic product, but now they getting like (indiscernable) acquisition they become more and more big pharma and this bigger pharma they even like they go publishing in this in the New York what we see in Hong Kong yeah that become that is also a sort of translate themselves to become a specialty pharma. Yeah, focus on certain area, so yeah.
Fintan Walton:
So is there - I mean so obviously some - obviously some of them may be in Chinese medicines as well?
Bill Guo:
Yeah, yeah our medicine yes.
Fintan Walton:
So where does Chinese medicines fit in relation back to the you know more western style drugs and so forth is do you think that China has something to offer in that respect back to not just in within China but outside China?
Bill Guo:
Yeah I think there is also a lot of regulatory issue, yeah because China there the bigger driver is that the local people they have been they have like used them for thousands thousands of years yeah they had these skills rely on just (indiscernable) of the drug, but now the people look - they also want to export the drug to overseas but as this in the Europe they also have a all kind of regulation, but the regulation is bigger hurdle for them to export.
Fintan Walton:
Right.
Bill Guo:
Yeah.
Fintan Walton:
But do you think that those regulations will also change within China so that Chinese medicines will become less likely to enter the market?
Bill Guo:
I think now the regulations are getting tight and tight, yeah. Yeah it's not like before the Chinese medicine so they can clean they can almost cure all the disease, now they have to focus on what they are really good at, yeah.
Fintan Walton:
So, so Sandy you, you are not likely to go in buy a Chinese medicine company?
Sandy Macrae:
We will look at old science and you know we often are proposed Chinese or Indian herbal medicines and we always look at them seriously because some of them have an effect that is believed by the patients and the doctors who prescribe them, but it all concern to the science if the science is good enough we will look at it.
Short term and long term aims of GSK's unit.
Fintan Walton:
Right. So when you look - if I could go through the three of you finally just looking at the emerging markets from your perspective Sandy and you - this new unit that's been set up specifically to tackle the opportunity that resides within these emerging markets, what is the short term aims and longer term aims for them for your organization clearly we've already seen some acquisitions of a product specifically, but what can we expect to see in terms of GSK's activities or should we be should we have a natural organic evolution or we going to see further acquisitions?
Sandy Macrae:
So I would suggest that there will be organic evolution, there will be an underpinning by our vaccines business which is incredibly important and with the fluid discussions recently that short term how important that part of our business is, there will be a continued growth in our branded generics either through organic growth or through additional acquisitions. And then from the IP part we want to move medicines into this area either from our own pipeline or partnering with others and when we partner with others that may be on single assets or it may even be whole pipelines from companies that just don't have the resource in the emerging markets.
Paul Capital Partners's perspective on opportunities in emerging markets.
Fintan Walton:
Okay. And with you Ken, do you see as Paul Capital Partners moves into these markets moves more into the emerging markets what sort of opportunities did you see and are there any specific opportunities that you think will be unique to the emerging markets that will be of interest to a company like Paul Capital Partners?
Ken Macleod:
Yeah I mean, I think one thing that we've recognized is that the pharmaceutical market is a truly global market now. I think if we went back 10-years ago the only consideration would be the US and may be we might think about Europe and Japan, now I think not only the bigger companies recognized that they need to take account of the local needs of the so called emerging markets, but everyone has to and they will continue to give importance. So we will look around the world for the right kind of opportunities for ourselves and we've talked a lot about China and India and I think they are very important because they represent such an enormous population base in it, it's almost a third of world's population between the two of them. So I think that's what we focused on them, but there are other opportunities in other countries around the world, we've spoken about the companies in Latin America and then you know there is - we haven't even mentioned Taiwan and Korea today which you know are creating other opportunities. So I wouldn't say that there are any specific companies or but I would certainly say that there are many markets that begin to look attractive from an investment point of view.
Venturepharm's future activities in china.
Fintan Walton:
Right. And from your perspective Bill, looking at Venturepharm which is a organization that provides services to the pharmaceutical industry, do you see those services changing as time goes by obviously you've already mentioned that the emergence of discovery is becoming increasingly important, I understand your organization was largely focused on clinical drug development within China, so what do we see and what would you see happening now going forward for your activities in the emerging markets of China?
Bill Guo:
You can see more and more activities that's happening at preclinical and clinical trial right now especially people view that the China's SFDA regulation going to have huger change so they have to be little targeted upon, so the first aim is study and the multiple trial study is going to be much easy to conduct in China from prospective of the (indiscernable), so we perceive there is going to be huge big opportunity from preclinical and the clinical trial on the especially on development side.
Fintan Walton:
Okay.
Bill Guo:
Yeah.
Fintan Walton:
Thank you very much indeed. So I'd like to thank all three of you for coming along and discussing the whole area of emerging markets. Thank you very much indeed.
Sandy Macrae:
Thank you.
Ken Macleod:
Yes, thank you.
Bill Guo:
Thank you.
Bill Guo
Chairman and founder of Venturepharm Group
Dr Sandy Macrae is Senior Vice President for GSK's Asia Pacific Japan and Emerging Markets R&D, a team that seeks and develops medicines for those markets. He trained in medicine and pharmacology at Glasgow University and then specialized in endocrinology at the Royal Postgraduate Medical School, Hammersmith Hospital, London. He has a PhD in genomics from King's College Cambridge and completed his post doctoral research work at Duke University, USA. Sandy first joined SmithKline Beecham(now GlaxoSmithKline) in Neurosciences in 1997. Since then he has held a number of positions including Vice President for Scientific Licensing in Worldwide Business Development, Vice President in Clinical Development for Musculoskeletal, Inflammation, Gastroenterology and Inflammation, and Vice President for Infectious Diseases which included leading their Diseases of the Developing World clinical group. Ken Macleod, Ph.D. joined Paul Capital Partners in 2004 and is responsible for sourcing, evaluating and negotiating European and Asian investment opportunities for Paul Capital Healthcare. Based in London, Dr. Macleod previously held senior management positions over a 15-year career at Serono, Abbott Laboratories, and Beecham Pharmaceuticals. Prior to joining Paul Capital Partners, Dr. Macleod was a Venture Partner at Schroder Ventures Life Sciences where he was responsible for deal sourcing, evaluation, and negotiation of pharmaceutical investment opportunities. Dr. Macleod earned his Ph.D. from the University of York, UK and his B.Sc. with honors in Biology from the University of Manchester, UK. 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. Having obtained the medical degree in China, Bill went to Canada to pursue his MSc and PhD studies in pharmacokinetics and physical \pharmaceuticals at the University of Toronto, and obtained MBA from Herriot Watt University and Executive Education from Judge Business School, University of CambridgeUK. Fortune magazine recognized him as one of the most promising entrepreneurs in China. A list of his awards includes 2005 National Hero by the State Council of China; One of the Ten Best Management Elites in China (2004); one of the ten most influential individuals in economic field of China (2005); Sole winner of Youth Chinese Entrepreneur Award by Asia Business Week (2003); 2005 Entrepreneurs and Innovation by British Chamber of Commerce.
GlaxoSmithKline
GlaxoSmithKline Plc is a United Kingdom based pharmaceutical, biological, and healthcare company. It is the world's second largest pharmaceutical company and a research-based company with a wide portfolio of pharmaceutical products covering anti-infectives, central nervous system, respiratory, gastro-intestinal/metabolic, oncology, and vaccines products. It also has a Consumer Healthcare operation comprising leading oral healthcare products, nutritional drinks, and over the counter medicines. GSK was formed in 2001 by the merger of GlaxoWellcome (formed from the mergers of Burroughs Wellcome & Company and Glaxo Laboratories), and SmithKline Beecham (from Beecham, and SmithKline Beckman). Paul Capital PartnersPaul Capital Partners established Paul Capital Healthcare in 1999 to meet the financing needs of healthcare companies, institutions and inventors. Today, the firm manages one of the largest dedicated healthcare funds globally with a total of $1.4 billion in assets under management. The Fund focuses on commercial stage healthcare products and investment opportunities in North America, Europe, and Asia. To date Paul Capital Healthcare has closed more than 30 investments in the pharmaceutical, biotechnology, medical device, and diagnostics areas. Public and private companies, research institutions and universities, and individual inventors have all benefited from the flexibility of Paul Capital Healthcare's investment approach. This capital has enabled them to transfer product risk, finance clinical and commercial development projects, acquire new products, fund university programs and capital needs, avoid conflicts of interest, unlock shareholder value, and monetize product royalties. Venturepharm GroupVenturepharm 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. Listed as a Hong Kong public company (8225), Venturepharm (China) has experienced dramatic success since its inception in 1999. Powered with 7 of Smart technology platforms, it has over 400 non-patent infringed products approved, or pending. In addition, 6 of NCEs (new chemical entities) are at preclinical stage. These products encompass over 13 major therapeutic areas. In 2004, Venturepharm was valued by FORTUNE magazine as one of the five most promising companies in China. Since 2000, Venturepharm has achieved revenue CAGR of 133% and EPS CAGR of 383% annually.