ChinaBio LLC: China as one of biopharma's biggest players




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Video title: ChinaBio LLC: China as one of biopharma's biggest players
Released on: October 27, 2009. © PharmaVentures Ltd
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In this interview, filmed at BioPharm in San Francisco, Dr Fintan Walton speaks with Greg Scott, President and Founder of ChinaBio LLC.

They discuss:

• Greg's transition from a management consultant to founding ChinaBio LLC
• the pace of technology and patents in China
• intellectual property and legal protection over techs
• the difference between bio companies in the west and in China
• the funding system in China
• innovation and Genentech’s involvement in adopting new breakthrough therapeutic approaches
• advice on how other firms should approach the Chinese market
• China's future as the world's number one developer of new drugs
Greg Scott's transition from a management consultant to founding ChinaBio LLC
Fintan Walton:
Hello and welcome to PharmaTelevision news review here in San Francisco at BioPharm America. On this show I have Greg Scott, who is President and Founder of ChinaBio based in Shanghai. Welcome to the show.
Greg Scott:
Thanks very much Fintan. It's pleasure to be here.
Fintan Walton:
Greg, you've founded ChinaBio which is a specialty house if I could describe it a consultancy and information provider based in China, how did an American end up in Shanghai doing the type of thing that you're doing?
Greg Scott:
Well it's actually a pretty interest story. I went to China in fact my first trip to Asia was in November 2006 and by tour of China ended in Shanghai and I sneaked in one business meeting in Shanghai and discovered what is now a Zhangjiang Hi-Tech Park which houses about 500 biotech companies and I didn't even know there was a biotech industry in China. So I decided right there and that I have to go back and learn more about that. So I went back in January 2007 and there basically have been there half time, and then a little over a year ago I moved there and there in a full time, so
Fintan Walton:
So it was a journey of discovery and your background is in this, in the pharmaceutical industry?
Greg Scott:
Actually no, I was very interested in biotech and Life Sciences as a student and started out as biology major in college but then discovered computers.
Fintan Walton:
All right.
Greg Scott:
And went into Computer Science and management consulting in my career. And then as a sort of semi serial entrepreneurial I sold my third company in 1998 and then started doing angel investing primarily in the Life Sciences industry.
Fintan Walton:
Okay.
Greg Scott:
So then when I went to China, I basically went there initially as an angel investor looking for early stage opportunities and then things evolve from there.
Fintan Walton:
Okay. So what is the ChinaBio actually doing there in Shanghai?
Greg Scott:
So we basically have two main lines of business, one as you say is the information side I think, so we publish a news letter ChinaBio today which has about 17,000 subscribers and we do essentially daily updates on what's going on in China and we also do weekly updates and do some special reports as well. We also produce events so we've had six investor firms now in China and we've had total of nearly 100 companies present at those events and they've raise a total of about $100 million in venture capitals, so it's been a recently successful firm for companies to get money, raise money in China and most of those companies obviously are based in China. And the other thing that we do is consulting, so we consult primarily to, to large pharma and US companies look for things in China, so we can to technology, searches, market surveys, and so on, but we also work with smaller and mid size companies in China looking for partners in the West as well.
Intellectual property and legal protection over techs.
Fintan Walton:
Okay. So now that you've you are in China, and you are practicing your business there, how would you describe the current evolution of pharmaceuticals and biotech in China?
Greg Scott:
Well it's very rapidly evolving as you can imagine, there is an expression in China moving at China speed sort of a taken it from the phrase in -- within an internet speed, so really things move very quickly in China and change pretty dramatically in the less than three-years that I have been there. So when I initially went there for example large pharma were not interested in anything other than late stage products coming out of China that basically have a proof a concept data at international standards. Now we are engage by several of the large pharma looking for very early stage technology most often preclinical stage technologies in China that basically don't even have proof of concept. So the big pharma have realized there is a lot of interesting technologies coming out of China. We also did a survey of patents in China, there has actually been 18,00 novel molecules patent that in China, so there is a pretty robust set of technologies available for companies that are interested in that.
Fintan Walton:
Okay. Well you've touched on a very important point, because obviously those people you are not so familiar with China, well often looked at Chinaas a place where may be intellectual property is not well as respected as outside China, is that still true or is that a myth?
Greg Scott:
Well in somewhere in between. It's not really a large issue particularly in the pharma industry because it's obviously difficult to steal a drug, run across the street open a new factory and besides there aren't that many approved Western drugs in China. Over the last five-years there has only been nine novel molecules approved in China. So there isn't a very robust set of things to steal from Chinayet. I think in the device industry it's much easier to steal intellectual property. Also I think the government is definitely cracking down may be we can see that in the three-years. We've been in China and there is much less incentive now for someone to try and steal some technology in China.
Fintan Walton:
So it's an embrowning situation?
Greg Scott:
Absolutely, yes.
The pace of technology and patents in China.
Fintan Walton:
One of the basic things of course with intellectual property is not just simply having the laws in place respect for WTO and so forth, but it's the practices within the universities, practices within the laboratories?
Greg Scott:
Right.
Fintan Walton:
So what is from your perspective the state of that, you know what is the quality of science currently going on in China?
Greg Scott:
That's actually very good question, there is probably two different answers for that, one is that the overall quality of the technology in China I think is very high. As I mentioned in our conference here yesterday, ChinaBio Day conference in San Francisco that there has been 40,000 attorneys each year over the last three-years and most of those have advanced degrees in science. So there is lot of attorneys bringing their technologies, experience and knowledge they've gained in the West in the United States back to China. And so they are producing very much world class technologies in China. I think one of the issues in China is kind of on the IP side the quality of IP well there is a lot of patents been generated in China, not all the scientist know how to create world class IP and so some of the IP that's been filed is classified sort of as junk IP if you will which may be a little bit harsh, but I think there is still an education process going in China which is relatively new to intellectual property impact.
Fintan Walton:
So one thinks is well the patent the other one is the practice the whole area of IP, which requires diligences prosecution I should say of the patents themselves?
Greg Scott:
That's right, well I think we leant very early on as we didn't look for investments in Chinais that a lot of the entrepreneurs didn't now how to create global IP, they would file a China patent they wouldn't think about doing a PCT or filing a US patent and they would miss the deadlines for example on the technology.
Fintan Walton:
Okay.
Greg Scott:
Are the patent in China would conflict with the patent in the US and possible under prosecution both of those would fail.
Fintan Walton:
Right. Now you've also mentioned the number of biotech companies
Greg Scott:
Yeah.
Fintan Walton:
That you've come across within China, and in fact how many biotechnology companies are there and how would you relate those to the type of biotechnology companies we got here in the West?
Greg Scott:
Well we basically did a survey of Life Science companies in China and there was a total of about 75,00 Life Science companies in China and within that there is probably roughly 25,00 what I call biotech or biopharma companies in China.
Fintan Walton:
And then how well are they developed, are they, are they small you know one or two people are we're talking about biotechnology companies with some significant size?
Greg Scott:
Well a large number of those are fairly early stage companies and some of them are you know one or two staff basically doing very early stage research. But a fair number of those now do have product on the market, as you probably know China really developed from the generics market, so lot of the companies had generics on their market fairly early on and now are moving into more innovative product.
The funding system in China.
Fintan Walton:
Right. So that's bringing us on to the funding environment within China, clearly this big commitment from the government both at central level and also local level to fund biotech directly?
Greg Scott:
That's right.
Fintan Walton:
So how is that what is the shape of that and how does that relate to venture capital and private sources of capital?
Greg Scott:
Well as you know there is now the mega new drug development program in China which is bringing $12 billion from the Central Government to early stage drug development and that's the first time the China Government has really created program dedicated specifically to new drug development, and it's also one of the largest technology programs, technology funding programs in China. So we expect a lot to be coming out of that, we've already actually identified about a 121 projects that have been funded by, by that source. And we are seeing some results already coming out of that. Most, most -- of about $2 billion will be spend over the next 12-months coming from that program.
Fintan Walton:
So there is a significant push from China to develop biotechnology?
Greg Scott:
That's right, there is, there is actually I believe more funding available in China right now then in the United States, because we do have this very strong government focus and that also drives not only funding from the Central Government but from also provincial and local governments as well, basically when the Central Government decides to do something most of -- local governments jump on the same band wagon, so there is roughly 50 incubators that have been created in China now from this funding and other funding.
Advice on how other firms should approach the Chinese market
Fintan Walton:
Right. Obviously European's and American's are much more used to working with the Chinese from manufacturing point of view, but before pharmaceutical companies, biotech companies were looking to get into China particularly at the research and development stage, to collaborate with those biotech companies or other companies that have that competitance often it's they've got competences in outsourcing and so forth. What recommendations would you make to those organizations about how they should approach China?
Greg Scott:
Well, I think one of the most important things to do when they approach China is to work with someone who has an understanding and what's going on in China, it can take quite a while to sort of get your feet on the ground and understand everything, because of the, the large numbers of institutes and universities, there is well over 200 universities and institutes doing research in the Life Sciences and specifically in biotechnology as I mentioned there is over 50 incubators, there is a number of companies that are doing very early stage research and actually have someone there, who basically understands what's going on, you aren't going to have to go through that complete learning process, that basically took us almost two-years to go through that. Also we've visited over 30 universities and institutes in China. we've visited 40 of the CRO's and CMO's for example, so we have a pretty good understand of what's actually happening there.
The difference between bio companies in the west and in China.
Fintan Walton:
So part of that is also understanding the culture within China, is there a much of a big difference between the culture in China and those who are operate in the West?
Greg Scott:
Yeah, that was obviously one of our topics yesterday in one of our panels. And I think the consensus of the panelist was the culture differences are relatively minor, there are some and you probably need to do some things a little differently in China, then you might do in the US or in Europe. But generally business is business, and I think you can approach China without worrying about doing committing any major four pauses[ph] and being rejected for that. China is actually a very open society, I found.
Fintan Walton:
And of course a lot of the people who are running the institutions and so forth are attorneys?
Greg Scott:
That's absolutely correct. Yeah
Fintan Walton:
And they're more westernized?
Greg Scott:
Yes, yes. That's right. As I mentioned 40,000 attorneys a year are populating a lot of the Life Science company, so you can't they are pretty familiar with how things are done in the West, they may still be relatively new. They are doing something they may not have negotiated in licensing or out licensing deals before so there is some running process involved in that on their part. But overall things are fairly easy to do in China.
China's future as the world's number one developer of new drugs.
Fintan Walton:
Right. Then going forward and how you see China evolving, you've said in the short time that you've been there it's evolved incredibly fast?
Greg Scott:
Right.
Fintan Walton:
What's your perception now, where do you think China is going to go in the next five-years?
Greg Scott:
Next five-years, I think that generally predictions in China have proven to be wrong because they predict this is going to take longer then people think to get things done. And so I think in a five-year time frame we are going to see China, there has been some predications that it's going to be the number one filer of patents in the world. I think China will probably be certainly the number two in terms of drug development and the drug market overall. And I think China very shortly after that will probably be the number one developer of new drugs in the world. So I think that's why we are seeing that big influx now or the big pharma and other companies coming to China, because I think if you don't enter China fairly quickly you're basically going to kind a miss the boat, because the relationships were already been established and as you probably know in China as most everywhere in the world is this very relationship based.
Fintan Walton:
So, okay. Just one of the subjects I want to touch on is the SFDA.
Greg Scott:
Right.
Fintan Walton:
The Chinese FDA and so forth. What piece of advice would you give to outside companies who are looking at China and looking that their drugs are being approved in China?
Greg Scott:
You know that's
Fintan Walton:
That regard to SFDA?
Greg Scott:
I actually think that's one of the areas where things are more different in China then probably anywhere else in the world. The SFDA is still a relatively young organization it obviously went through some major changes in 2007 when the head of the SFDA was executed for (indiscernable) and it's still basically trying to recover from that. Things generally in the SFDA move slowly anyway that has slow things down, we are now starting to see things move a little more quickly in the SFDA, but the IND process in the SFDA takes much longer in the US even in the best of circumstances. So you can expect that in IND is going to take you from the data filing anywhere from 6-months to 24-months before you receive approval. And it is an official approval process. The good news is in US as once you get into human things go relatively quickly, so you can't expect once you get into human to get approval anywhere from three to five-years. But I think it's very important to have someone in US that you working with again that knows the language, knows the people, knows the system and kind of work things through for you.
Fintan Walton:
Okay. Well Greg Scott, thank you very much indeed for coming on the show.
Greg Scott:
Thanks very much Fintan.
Greg Scott
President and Founder ChinaBio LLC
Mr. Scott has helped launch over thirty life science startups in the U.S. and China as a founder, investor and advisor. He founded the ChinaBio LLC in January 2007 to help fund and mentor early stage life science companies in China, and provide consulting and research services to pharma and biotech companies with business interests in China. Mr. Scott is also the president and co-founder of Life Science Angels, an angel investment group that has funded 30 biotechnology and medical device companies since 2005, and executive editor of ChinaBio Today. He is also a strategic adviser to ChinaSF, an initiative of the Mayor of San Francisco to connect China and San Francisco business interests. He previously held senior executive positions at Price Waterhouse, Capgemini and MCI, and was co-founder of a 200-person consulting firm. Mr. Scott attended University of Missouri, where he studied mathematics, microbiology and computer science.
ChinaBio LLC
ChinaBio By the end of 2008, less than two years from its inception, ChinaBio had organized five major conferences in China, including four ChinaBio Investor Forums and the BioCapital China Summit in Beijing. For 2009, it has plans for another six major events, including the first ChinaBio Partnering Forum in Shanghai in June, and its first US event in September in San Francisco. ChinaBio has also, also worked with some of the world's most respected pharma and biotech companies, including Roche and Pfizer, and helped China biomedical companies raise over $60M US. Its in-house research staff tracks China's biotech industry including novel technology development, clinical trial activity, VC investments and M&A and IPO activity. This information gives ChinaBio and its client's critical insights into the direction of the industry and how China will impact the future of the global biopharma industry.