China: A New Decade

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2019 was a landmark year for the Chinese healthcare industry.* Since the publication of the ‘Healthy China 2030’ blueprint in 2016 by the Chinese government, the entire sector has been virtually turned upside down. Against the warm backdrop of regulatory support, a series of policy changes were unveiled in the intervening years with the intention of ameliorating the discovery, development and distribution of innovative and/or affordable medicines to patients in China. Be it accelerated drug approvals or quality evaluations of generics, contract manufacturing operations or telemedicine guidelines, there has been a flurry of regulatory activity over the past few years.

 

Given the turbulence within the market, however, it was not until 2019 when various policy initiatives were converted from pilot into national practice that industry stakeholders were reassured that the new state of affairs was here to stay. On 26 August 2019, the Chinese government passed amendments to the Drug Administration Law (DAL) to formalize a new regulatory framework reflecting the significant advances that have been made.

A new habitat for healthcare innovation has been established in China. In this complex and fast-moving environment, intense market pressures and fierce competition will ultimately drive all species of stakeholders to evolve – or face extinction. Already, different evolutionary strategies have emerged, whether they be forming strategic partnerships with local players, carving out a niche leveraging medical education, or developing a comprehensive arsenal of assets.

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Variations on the Theme of Success

With China overtaking Japan to become the second-largest healthcare market globally in 2016, most, if not all companies, now see China as highly strategic. The relevance of the market is a double-edge sword, however. Deloitte China Partner Mike Braun, who has been observing the industry for nearly two decades, outlines, “The Chinese market is now so big as a proportion of the global market – and indeed, in revenues and certainly growth share – for MNCs that it is affecting stock and share prices. CEOs and general managers have to manage their operations in China knowing that their results usually affect the global businesses in significant and visible ways. China is becoming a very important market for these companies to build another equity story.”

 

CEOs and general managers have to manage their operations in China knowing that their results usually affect the global businesses in significant and visible ways

Mike Braun, Deloitte China

 

Despite popular misconceptions, he states, “in all its complexity, the China market is actually much better understood than other Asia-Pacific markets (like Japan, for instance). Our clients’ knowledge is absolutely first-class.” However, he cautions, “this does mean that the challenges that do exist are far more sophisticated and complex than they were before. We advise our clients that you need to have people on the ground that know the market well. If you rotate key executives or leaders every couple of years, you [lose] that market and institutional knowledge.”

Baxter President Greater China Shirley Xu, who has been with the affiliate since she joined as a sales manager an extraordinary 26 years ago, clearly fits that profile. In her sixth year at the helm, she reflects, “Baxter is an extremely diversified healthcare company, offering not only pharmaceutical products but medical devices and services … delivering products and therapies from the ER to the OR, and from the pharmacy to the ICU, as well as advancing patients’ care in their homes. I have seen how the organization has been built from scratch … to become one of the most strategic clusters globally for Baxter.” A core tenet, she asserts, is that “Baxter has been one of the pioneering companies focused on localization. We have five manufacturing plants and the majority of our products sold locally are manufactured locally.”

 

Trust is developed not from what you say but what you do

Shirley Xu, Baxter

 

Just as Rome was not built in a day, Xu underscores, “across the past three decades, we have built an extremely solid foundation that positions Baxter as a trusted partner within China’s healthcare ecosystem. Trust is developed not from what you say but what you do.” From her vantage point, she is gratified to have witnessed not only the development of Baxter China but also the overall industry. She exhales, “being able to grow with an organization over a long period is a beautiful opportunity. But behind these commercial numbers are the patients that have benefited from our products and services. The healthcare infrastructure and treatment options nearly three decades ago were truly at a nascent stage, but today, advanced treatment options and therapies [are] available to Chinese patients.”

Success in China can come in many forms. Amongst the freshest additions to the Chinese pharma industry is Takayuki Yamada, who joined Santen China in April 2019 after stints in Europe and Japan, and officially took up the mantle of GM in September that year. However, this is no disadvantage. He muses, “I see opportunities to leverage my understanding of European markets in China. The overall regulatory regime in China is completely different from Europe [but in terms of] healthcare budget management, China is actually very similar. The European Medicines Authority (EMA) oversees drug approvals [but] pricing and reimbursement differ based on the national processes and regulations of the EU member countries. Similarly, in China, different provinces have their own pricing and reimbursement systems, which companies have to navigate.” Furthermore, while reforms are ongoing, he pinpoints, “in certain aspects like Health Technology Assessment (HTA), health expenditure management [as well as] industry functions like medical affairs, China is still catching up to Europe.”

 

The overall regulatory regime in China is completely different from Europe [but in terms of] healthcare budget management, China is actually very similar

Takayuki Yamada, Santen

 

Having been present within the ophthalmology market in China for 13 years, jostling for first place against Swiss pharma giant Novartis, Santen’s Chinese affiliate already ranks second for the global group in terms of revenues. However, Yamada has his sights set on an even greater achievement: “our ambition is to position Santen China as the largest affiliate, surpassing even the Japanese market.”

Yamada explains, “to achieve this, we need to expand our presence here while evolving [our] organizational capabilities,” which is why Santen established a joint venture (JV) with local player Chongqing Kerui in 2016, one of only a handful of MNCs to do so. “Santen’s presence in China is mainly focused on top-tier hospitals in larger cities. However, the hospital network extends to community hospitals and clinics serving the grassroots population, especially in more rural areas, where affordability is a critical part of the equation. Through this JV, we are building a new manufacturing facility, which will maintain our quality standards while producing products catering to the specific needs of this market segment. It is important to find a good balance between quality and price.”

 

China is such a dynamic market and there are so many opportunities here – we do not want to miss anything

White Wang, Allergan

 

Regardless of their tenure, successful GMs are those that quickly appreciate – and relish – the need for speed in China. White Wang, Allergan China’s GM, was by no means new to the industry when he joined the affiliate in September 2018, having previously worked at AstraZeneca and Novartis. However, with its focus on medical aesthetics, Allergan is a different kettle of fish compared to traditional pharmacos. Wang reiterates, “Allergan is truly a very unique company: at once a pharma company, a medical device company, a cosmetics/aesthetics company and a digital company – there is no other company in the industry sitting at the convergence of all these areas, leveraging so many business models and talents. As a result, Allergan is a fast-moving, bold and innovative company that dares to make hard decisions.”

In just his first year with the company, Wang laughs, “so much has been achieved, from new product launches and reimbursement negotiations to the launches of our Allergan Innovation Center and Customer Experience Center in Chengdu, Sichuan Province to the establishment of our digital team [that] we have actually come up with a phrase ‘the Allergan year’, which equates to four or five years in other companies!” There is no doubt he speaks for most players within the industry when he rationalizes, “China is such a dynamic market and there are so many opportunities here – we do not want to miss anything.”

 

The Importance of Medical Education

With 1.4 billion people spread across 31 province-level entities, and a complicated healthcare system with different layers of administration between national, provincial and hospital levels, it is not always easy to see the method in the madness. This explains why, for a long time, China’s healthcare market was aggressively sales-driven, with complex supply chains directing the flow of drugs from manufacturer to patient. Tellingly, sales and marketing costs occupy around 30 to 40 percent of overall industry sales in China, compared to only 10 percent in the US. Even the large distributors find it difficult to navigate, with the combined market share of mainland China’s three largest drug distributors only reaching a paltry 34 percent in 2018 compared to 90 percent in the US and 70 percent in Japan. As part of the drive to trim the fat within the system, however, the government has launched the ‘two-invoice’ system to eliminate all but one of the layers between drug manufacturers and hospitals.

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The biggest challenge for pharma companies in China is to achieve the right commercial footprint across the country

Mark Lotter, Nuance Biotech

 

Based on his extensive experience in China helming both Big Pharma affiliates like AstraZeneca and start-ups (his first start-up, NovaMed Pharmaceuticals, was acquired by SciClone Pharmaceuticals in 2011), Nuance Biotech CEO Mark Lotter summarizes, “the biggest challenge for pharma companies in China is to achieve the right commercial footprint across the country. Even top MNCs like AstraZeneca, with 16,000 employees, do not manage to cover the entire market of 1.4 billion people. Local companies have traditionally used sales agents and distributors to commercialise and distribute their products [but] the challenge the traditional agent model faces is compliance – which, as you can imagine, is a significant concern for MNCs. There is nothing available on the China market which ensures both the education- and compliance-based approaches as required by MNC companies.”

Therefore, despite having retired in 2012, he could not resist jumping back into the fray to establish Nuance Biotech in 2015. Conceptualized as a “platform for innovation”, one of the key pillars of the company is their commercial infrastructure. In the short term, he explains, “we look to capture revenue that already exists in China – i.e. products already approved and on the market. Nuance has built a leading commercial and market access team designed to cover the leading cities and hospitals across China.” More remarkably, “we have launched a novel and first-in-class Open Commercial Platform to provide companies with the ability to select, educate and most importantly, perform quality control on third-party promotion. This required significant technology advances, building in the relevant compliance controls whilst ensuring MNC-like commercialisation of brands, the core focus being that of academic promotion, both at the disease and brand levels.”

 

The question is how a company like Helsinn can play in such a hot market where the top global players as well as strong local companies are both present

Enrico Magnani, Helsinn Pharmaceuticals

 

The need for – and value of – medical education increases markedly when it comes to innovative products. As China welcomes more novel medicines, the focus on compliant and effective academic promotion will only intensify. This plays to the strengths of Swiss cancer supportive care leader Helsinn Pharmaceuticals, whose first product, palonosetron IV, for Chemotherapy-Induced Nausea and Vomiting (CINV), was approved in November 2018. Given the competitiveness of the China market – and in particular, the cancer market in China – GM Enrico Magnani rhetorizes, “The question is how a company like Helsinn can play in such a hot market where the top global players as well as strong local companies are both present,” answering, “[within] chemotherapy, we can differentiate ourselves through both the innovation and quality of our products and through the services we can offer around our products, including medical education, which is a core competence of Helsinn.”

For instance, he illustrates, “one of the first positions we filled in China was the Head of Medical Affairs so we could start transferring the global product knowledge to our local operations and our partner. We have [also] started to work with the Chinese Society of Clinical Oncology (CSCO) to provide support and training for young and talented oncologists.”

 

Another important collaboration is our work with the CEO Roundtable on Cancer

Hans Schmid, Helsinn Pharmaceuticals

 

Chairman Hans Schmid supplements, “Another important collaboration is our work with the CEO Roundtable on Cancer, a global organization [progressing] towards the elimination of cancer through various initiatives, including the promotion of a healthy work environment within companies. The workplace wellness it promotes is very much in line with the Healthy China 2030 plan.” In 2014, Helsinn became one of three global founding companies to support this initiative and adopt a tobacco-free workplace in China. He adds, “most recently, we supported an event in Shanghai to celebrate ‘70 Years of Cancer Care in China’. It gathered representatives from government, medical, industry and public sectors to review the progress in cancer treatment over the last 70 years in China and looked at what the future might hold for oncology prevention and control.”

Medical education is not only the domain of established pharma players, it can also be the secret weapon that helps biotechs outsmart Big Pharma goliaths. Nanjing-based Frontier Biotechnologies is one of the few Chinese biotechs to have successfully advanced from molecule to market, with their flagship drug, Aikening®, being the first innovative HIV drug developed by a Chinese company.

Despite significant public awareness efforts globally, HIV/AIDs remain a highly stigmatized disease, particularly in China, while disease prevalence has been rising in recent years. CEO Dr CJ Wang laments, “the official numbers are around 1.25 million but the true figure could be higher. Each year, around 100,000 new HIV cases are discovered in China, and in 2018, the figure was actually closer to 150,000. What is even more alarming is that nearly half of newly discovered infections are late-stage patients with comorbidities that need to be hospitalized.”

 

We need to explain the benefits of our novel drug very well. Therefore, we have built a professional marketing and sales team to provide medical education and training to physicians

CJ Wang, Frontier Biotech

 

Wang proclaims, “Aikening® is the first long-acting HIV fusion inhibitor, effective against most-HIV-1 strains, including drug-resistant strains, with a good safety profile and no predictable drug-drug interactions.” Testament to the drug’s value, “within two months of product launch, Aikening® was added into the Chinese HIV Treatment Guidelines. Since it is the first long-acting injectable HIV drug on the China market, we are working within a virgin market. We need to explain the benefits of our novel drug very well. Therefore, we have built a professional marketing and sales team to provide medical education and training to physicians.”

This is especially important, Wang explains, because “patients with serious conditions such as comorbidities, drug resistance, surgery, impaired kidney and liver functions need fast-acting, efficacious and very safe injectables. In addition, our drug is believed to be quite suitable for post-exposure prophylaxis (PEP). In terms of mechanism of action and speed of onset, Aikening® would be beneficial for at-risk populations.”

 

A Portfolio Strategy

The head of the Greater China Healthcare practice and co-leader of the Asia Healthcare practice at McKinsey, Franck Le Deu, has termed the biotech boom ‘Chinese Biopharma’s Cambrian Explosion’. One of its most distinctive characteristics is Chinese biotechs’ marked preference for strength in numbers when it comes to portfolio composition, compared to their US counterparts’ aversion to owning multiple assets.

 

For a company to be successful, it needs to have a portfolio strategy … [otherwise a] single molecule carries the entire burden of the company’s success!

Rae Yuan, Sinovant Sciences

 

Sinovant Sciences is one notable case study. Established in 2018, it is backed by US biotech investment outfit Roivant Sciences as well as CITICPE, a large China private equity (PE) fund. CEO Dr Rae Yuan, a 20+-year industry veteran that formerly oversaw the Chinese R&D arms of Roche and Novartis, introduces, “Sinovant Sciences was established to be a bridge between global innovative research and patients’ needs in China. We are a “transformer” organization: we pick the right molecule to develop in the right way so that it can become a drug for the right patients at the right dose.” However, she cautions that “R&D is unpredictable. For a company to be successful, it needs to have a portfolio strategy … [otherwise a] single molecule carries the entire burden of the company’s success!”

She considers, “this is also important from a competition point of view. When Sinovant started in 2018, it was clear that the oncology space was already very crowded. We deliberately made the choice to develop a portfolio to balance the risks, opportunities, and the chances of success.” With 13 assets in development across eight therapeutic areas, including oncology but also infectious diseases, urology and dermatology, Sinovant undoubtedly has one of the most diversified biotech portfolios in the country.

 

I always tell my team, the first priority is survival. If we die, there is no story!

John Yu, CGeneTech

 

Another Chinese biotech that has opted to build a polymathic portfolio, albeit more painstakingly through inhouse development is CGeneTech, which CEO and cofounder Dr John Yu established in 2006. Their portfolio currently includes their flagship DPP-4 inhibitor diabetes drug, CGT-8012; a pre-clinical drug candidate for cataracts, CGT-1507; a generic version of the multiple sclerosis (MS) drug, teriflunomide; as well as a lyophilization technology for immediate release (Lyir) tablet ODT platform. He exhorts, “I always tell my team, the first priority is survival. If we die, there is no story! Today, the average cost of taking an innovative drug to market is USD 2.6 billion. Raising money can be very difficult. This is why even as we are developing our DPP-4 drug, we are also working on other projects to generate revenues.”

What unites these diverse projects is the ultimate purpose. Yu stresses, “we are focused on unmet medical needs. This is why we started to develop our MS drug. At the moment, there is only one MS drug available on the market and it is priced at USD 1,900 a month, which is very expensive. Fortunately, in May 2018, the Chinese government announced that this drug could be listed as an orphan drug, which means an accelerated regulatory approval pathway. We would just need to conduct a bio-equivalence (BE) study. We anticipate launching this MS drug in 2020, and it will be our first drug on the market!”

 

From our CRO success, we have built a strong financial buffer and robust cashflow to fund our ‘equity-for-service’ and cash investment model.

Cheney Mao, Viva Biotech

 

Turning the concept of ‘portfolio strategy’ on its head is Viva Biotech. A fascinating hybrid company, it was initially founded in 2008 by Chairman and CEO Dr Cheney Mao as a highly specialized CRO with a core focus on structure-based drug discovery (SBDD). In 2016, the company decided to embark on a new business model: incubating biotech start-ups from Day 1. Mao outlines, “this launched our ‘equity-for-service’ model to complement our existing ‘fee-for-service’ CRO model. From our CRO success, we have built a strong financial buffer and robust cashflow to fund our ‘equity-for-service’ and cash investment model. We are mentoring and supporting these companies from the very beginning of their journey, when they are in desperate need of investment and resources. We try to be a one-stop resource center for these types of projects and add value as an investor.”

 

Anti-PD-1/PD-L1 … or anti-anti-PD-1/PD-L1?

Meanwhile, other biotechs choose to diverge from the pack and focus on carving out their niche within one of the most crowded innovation spaces in China today: the anti-PD-1/PD-L1 checkpoint inhibitors. With already five PD-1/PD-L1 drugs available on the Chinese market (including global blockbusters Opdivo and Keytruda), and many more queuing impatiently in the development and regulatory pathways, many industry insiders are starting to question the commercial case for developing yet another PD-1/PD-L1 checkpoint inhibitor. Even looking at oncology more generally, the bandwagon seems full.

 

This is the Olympics in drug discovery. We need to participate – and win

Yuguang Wang, Maxinovel

 

While the logical conclusion might be to avoid the PD-1/PD-L1 space altogether, Maxinovel CEO Dr Yuguang Wang takes an audacious view: “this is the Olympics in drug discovery. We need to participate – and win. Our R&D strategy is to focus on disruptive innovation in the most important field – oncology – with a research theory that is different from the crowd.” While acknowledging that “the industry has crowded around antibody discovery”, he insists, “To me, being disruptive means we cannot follow the herd in doing anti-PD-1/PD-L1 antibodies. We must find the problem and then look at the problem through a different angle.”

As an example, he hints, “for PD-1/PD-L1 antibody drugs, the major problem is the low monotherapy treatment response rate. The current reasoning is that PD-L1 expression is low [but] we think that there must be more reasons for the observed low response rate.” Based on that, they have developed a next-generation PD-1/L1 inhibitor that is effective on both PD-L1-high and PD-L1-low tumours. He exults “in 2019 AACR, we reported that our clinical candidate, MAX-1, has similar efficacy in PD-L1-high humanized model as Imfinzi. In the 2020 AACR in San Diego, we will present our finding [that] we have successfully discovered a clinical candidate with superior efficacy over Keytruda in a PD-L1-low humanized model.”

 

In terms of the productivity and novelty of our pipeline, I daresay we are comparable to much larger-sized biotech companies and probably even the oncology divisions of some Big Pharma MNCs

Dajun Yang, Ascentage

 

Another biotech focused on oncology, Ascentage, has eschewed the fashion of checkpoint inhibitors to stay true to its selected area of protein-protein interactions (PPIs), specifically apoptosis pathways, for the past decade. CEO Dr Dajun Yang admits, “over the past ten years, many new technologies like cell therapies and checkpoint inhibitors like PD-1/PD-L1s have emerged. But we continue to believe that apoptosis is a very key area. Biologically, apoptosis is a very important regulatory pathway for cancer [though] it is very difficult to develop molecules targeting this pathway. [M]any companies have tried and failed.” The silver lining, he suggests, is that “the playing field is not as crowded, which means it is easier to differentiate and position ourselves” – and indeed they have, with six molecules already in clinical trials in the US, and all new targets and new molecular entities.

Yang posits, “in terms of the productivity and novelty of our pipeline, I daresay we are comparable to much larger-sized biotech companies and probably even the oncology divisions of some Big Pharma MNCs.” With their recent well-received USD 53 million IPO on the Hong Kong Stock Exchange (HKEX), Ascentage’s development strategy has clearly been validated.

 

We chose to focus on oncology because it is quite a mature area, particularly in terms of clinical development and regulatory processes

Chris Lu, Laekna Therapeutics

 

Also not shying away from the oncology challenge is Laekna Therapeutics, which draws its unique name from the Old Norse word meaning ‘to cure, to heal’. CEO Chris Lu laughs, “we chose to focus on oncology because it is quite a mature area, particularly in terms of clinical development and regulatory processes.” While this might mean contending with hundreds of other biotechs, the pros outweigh the cons: he highlights, “for instance, the US FDA offers many incentives for oncology drug development, such as fast track, priority review and Breakthrough Therapy Designation. Therefore, it is relatively easier to design the clinical path for oncology assets.”

They have already in-licensed three assets – an oral androgen inhibitor and two pan-Akt kinase inhibitors – from Novartis initially for prostate cancer (one of the deals also saw Novartis take a strategic equity stake in Laekna). However, they are not simply taking the easy route and relying on Novartis’ clinical data. Lu emphasizes, “we demonstrate innovation more through our clinical development strategy. For instance, we have initiated three trials, and only one was built on Novartis’ old POC trial. The other two are new designs with new indications derived from our internal exploratory studies.” The cherry on top, he continues, is that “new data has emerged that Akt kinase inhibitors could partner with androgen inhibitors in combination therapy. Therefore, we plan to combine both assets to treat late-stage prostate cancer when patients become resistant to androgen-inhibitor therapies.”

 

‘Tech’tonic shifts in healthcare

The influence of the Chinese tech giants of Baidu (China’s Google equivalent), Alibaba (Chinese Amazon) and Tencent (Chinese Facebook), or BAT, has utterly pervaded Chinese society. It is estimated that taken together, BAT controls or backs over 50 percent of the 124 ‘unicorns’ – privately held startup companies valued at over USD one billion – that exist in China. Now they, along with many other large conglomerates, are looking to stake their claim on the healthcare sector in the hopes of reaping rich rewards. With many strategic collaborations having been established between tech giants and pharmacos in China, and the incursion of many tech and finance executives into the thriving healthcare industry in China, there are certainly exciting times ahead and chances are high that the global market will soon be able to harvest the fruits of such partnerships.

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What is exciting is that [tech companies] are entering many parts of the value chain, from primary care, Internet health, hospitals, health technology, pharmaceutical innovation, and so on, bringing with them capital, technology and expertise

Jin Wang, McKinsey

 

McKinsey China Partner Jin Wang has been following the Chinese healthcare industry for over a decade. She explains, “in many other countries, the players are much more focused and specialized, whereas in China, the healthcare ecosystem is vast and dynamic. The work I do with McKinsey China revolves around this concept of ‘大健康’ (which loosely translates to ‘broad healthcare’), referring to the entire healthcare ecosystem and the players present within, from payers to providers, pharmacos, device and technology companies, digital and financial conglomerates, and so on.” When it comes to the role of tech companies, she marvels, “what is exciting is that they are entering many parts of the value chain, from primary care, Internet health, hospitals, health technology, pharmaceutical innovation, and so on, bringing with them capital, technology and expertise. Many are pushing the idea of trying to reinvent healthcare, and they have a very different conception and skillset (especially in managing large-scale businesses and organizations) compared to traditional healthcare companies.”

 

Our ambition is to use technology to expand the capacity of the healthcare system to serve patient needs

Geoff Kau, Ping An Smart City

 

Ping An is an extremely indicative example. Having started 31 years ago, it has since grown into the largest Chinese insurance company in terms of market capitalization as well as one of the top five financial institutions globally. In recent years, it has looked to muscle in on the healthcare sector with a series of prescient investments including, most famously, Ping An Good Doctor, which listed on HKEX in 2018 and is today the world’s largest online healthcare platform, conducting over 656,000 online consultations daily. Part of their healthcare ecosystem includes Ping An Smart Healthcare, which falls under the Ping An Smart City subsidiary, and GM Geoff Kau summarizes, “Ping An Smart Healthcare is our way to deliver technology solutions across the entire value chain – prevention, diagnosis, treatment and management – to increase care quality and efficiency,” adding, “on the most macro level, the healthcare problem in China, as in most developing countries, is the gap between supply and demand. Our ambition is to use technology to expand the capacity of the healthcare system to serve patient needs. The aim is to enable [healthcare practitioners].”

Ping An Smart Healthcare’s solutions have already been deployed across more than 70 cities in China.” Kau shares just one exciting initiative: “using various AI technologies to ‘digest’ over 28 million medical journals, over 20,000 clinical guidelines, over 270,000 clinical trial results and so on, we have developed a virtual medical expert [program] called ‘AskBob’. We have also incorporated this capability into tools that integrate into the electronic medical record (EMR) system to bring together all relevant data from point-of-care to lab results to doctor prescriptions. This enables us not only to recommend tests and treatments but also to retroactively evaluate the actual diagnosis and treatment process [in line with] clinical guidelines.” Given that around 40 percent of China’s population still live in rural areas, he stresses, “this is particularly useful. Quality of care and available resources might be lower in lower-tier hospitals,” adding that less than 20 percent of doctors in lower-tier hospitals have undergraduate degrees.

pius-hornstein

 

I hope that in 24 or 36 months, Sanofi China will be recognized as the number one pharma company in the digital space in healthcare in China

Pius Hornstein, Sanofi

 

Even conservative Big Pharma cannot resist the glittering promise of technology. Sanofi is perhaps one of the biggest proponents of technology within the industry globally, and Country Chair Pius Hornstein is keen to bring this mentality to China. He contextualizes, “In 2019, Sanofi nominated a Chief Digital Officer [with] a medical background. When I was in Brazil, I created a digital structure for the affiliate separate from Europe – as the first affiliate to do so – and since arriving in China, I did the same. We will have our own dedicated digital structure focusing on topics like innovation, data analytics, go-to-market models, multichannel models and so on. China is the place to do it because you have scale, speed and expertise, adding, “we want to make China the third big pole for digital innovation within Sanofi. I hope that in 24 or 36 months, Sanofi China will be recognized as the number one pharma company in the digital space in healthcare in China [with] tangible indicators of success, including patient outcomes, revenue and profit models.”

 

Investing in Precision Medicine

Stunning advancements have been made in medical technology over the past decades and many in the industry have pinned their hopes on precision medicine as the next wave to revolutionize healthcare as we know it. Ever since the 2016 launch of the 15-year, USD nine billion-China Precision Medicine Initiative, the country has aspired to become a global leader in this field, notably by capitalizing on its growing Big Data and AI capabilities. As a result, China has become fertile ground for cell and gene therapies as well as the technology behind this new wave of therapeutics.

Beijing based start-up EdiGene was established in 2015 to exploit the versatility of gene-editing to the fullest, or as CEO Dong Wei introduces, “[build] a strong foundation for the application and development of genome editing technologies as both therapeutics and tools. There are many directions you can pursue with such a revolutionary technology” but in 2017, the company decided they needed to concentrate on a few promising projects. Therefore, Wei came on board in 2018 to help take them into the clinic.

 

In the longer-term, we aspire to become one of the top companies for genome editing with the capabilities to save the lives of patients globally

Dong Wei, Edigene

 

EdiGene’s first program is an autologous hematopoietic stem cell transplant (HSCT) therapy developed for patients with beta thalassemia, an inherited blood disorder. Wei explains, “the standard of care in the US and EU consists of regular blood transfusions every couple of weeks. These infusion treatments may lead to an iron overload in patients, so patients require very close monitoring via regular MRI assessments, and iron chelation therapy to avoid organ failure. However, access to healthcare facilities is a big issue. This is why it is key to develop a one-time cure.”

Beyond therapeutics, EdiGene also wants to leverage their various proprietary technology platforms to “help MNCs solve their complex programs and optimize target therapies,” and ultimately, Wei envisions, “in the longer-term, we aspire to become one of the top companies for genome editing with the capabilities to save the lives of patients globally.”

Leaders in next-generation sequencing (NGS) Illumina also prefers to see the technology as a platform for collaboration and ‘to unlock the power of the genome to improve human health’, according to their slogan. GM Qing Li shares, “of all the healthcare technology companies I have worked for [including GE Healthcare], only Illumina truly has an open-source platform mindset. We work extensively with partners to share our technology so that our partners can develop new applications and products.” Illumina currently works with around 20 partners in China in areas like non-invasive pre-natal testing (NIPT) and clinical research.

Li opines, “Even as NGS technology is becoming more prevalent, I believe the industry is still working within a very small part of the entire accessible market. There are a host of potential applications and services and I think we are only scratching the surface of what could be achieved with NGS. We believe having more players and a vibrant playing field will drive a high-tide market.” The strategy that Illumina follows, based on what they term ‘competitive partnerships’, he emphasizes, “is a very smart and inclusive strategy. It allows our technology to permeate the entire market and supports our growth while simultaneously building the capabilities of the overall industry. [This] build a productive ecosystem in China [which] allows us to capitalize on the fullest potential of the market.”

 

Of all the healthcare technology companies I have worked for [including GE Healthcare], only Illumina truly has an open-source platform mindset

Li Qing, Illumina

 

With the rapid pace of technological change, constant reinvention is important, and even established players cannot rest on their laurels. Having joined the medical imaging industry in China in 1984, Canon Medical Systems China President Shin Matsuoka agrees, “I have personally undertaken all the key functions, including sales, marketing, after-sales service and maintenance, obtaining an intimate and firsthand knowledge of this industry. We must [always] pay close attention to the trends and developments within the global medical imaging industry as well as the strategic and policy direction of Chinese healthcare regulatory reforms,” underlining, “healthcare practitioners in China now demand more when it comes to precision medicine and personalized medicine.”

However, he warns, “to achieve personalized diagnosis during the running of high-throughput tests is rather challenging.” AI is now considered the key to solving this challenge, and for this reason, he adds, “Canon has always invested significantly into AI. According to independent data, Canon actually ranks in the top ten globally when it comes to the number of AI patents, and specifically within the area of large-scale medical equipment, we rank number one.”

He cites the example of their recently launched CT machine, the Genesis Trailblazer Ai640, which has the industry’s first complete AI assistant to cover scanning, reconstruction, pre-processing and post-processing diagnostics. He elaborates, “the “Pioneer Ai640” solution not only makes the imaging equipment ‘smarter’, but also makes the operation simpler and safer. It implements a series of precise inspection solutions such as AI-aware scanning, AI flexible registration, and AI flexible subtraction. These will provide more accurate and more quantitative data, helping imaging specialists to perform early screening, early qualitative and quantitative assessments to help achieve accurate diagnosis and treatment.” Not only that, other newly launched CT and MRI machines will all incorporate their AI technology. Matsuoka proclaims, “we will bring a new generation of AI medical equipment to the China market.”

 

A New Decade

With the rationalization of the Chinese healthcare market in recent years, innovative players have an historically unrivalled latitude to operate within the vast and underdeveloped landscape. While opportunities are plentiful and there is ample room for a multitude of different business and partnership models to co-exist, competition is fierce. But as Illumina’s Li opines, “competition is positive for our consumers, healthcare providers and ultimately patients. It pushes all of us to improve, both on the technology and the commercial sides.”

All eyes are on what the new decade in China might bring – and who the winners might be.

 

* This Long Read was put together in late 2019 and before the Covid-19 novel coronavirus outbreak,

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