Bloomberg Businessweek - USA (2019-06-10)

◼ BUSINESS Bloomberg Businessweek June 10, 2019

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challenge:localcompetitors.Chinesecompa-

niesareintroducingpatentedcancertherapiesin

theirhomemarketbasedonPD-1inhibitors,which

usethebody’simmunesystemtofighttumors.

They’redoingit atfarlowerprices—sometimesa

thirdofwhatU.S.drugmakerscharge—whichwill

likelygivethema legupathome.Andtheirambi-

tionsgofarbeyondthemainland,withseveral

alreadypreparingtoselltheirmedicinesintheU.S.

andworldwide.

ThepushintoPD-1drugsmarksoneofthefirst

foraysbyChina’spharmaceuticalindustryinto

complextreatments.It’sthecomingofagefora

localindustrylongfocusedoncheapgenerics

andchemicalingredients,andit’sbeingaidedby

Beijing’seffortstospeedupdrugapprovalsand

channelmorefundingtowardhealthcare.

Developinga world-classpharmaceuticalbusi-

nessisa priorityforChina’sleaders.Beijing’s

MadeinChina 2025 planidentifiesthedrugindus-

tryasoneof 10 sectors—alongwithaviation,electric

vehicles,andadvancedrailequipment—inwhich

Chinawilllookfortechnologicalbreakthroughs.

Oneway Chinesecompaniesplantoelbow

intothemarketis lowerpricing.ShanghaiJunshi

BiosciencesCo.begansellingitsdrug,calledTuoyi

inChina,inDecemberfor187,000yuan($27,105)for

a year’sdoseformelanoma,a skincancer.That’s

one-thirdthecostofusingMerck’sKeytrudain

Chinaforthesameconditionoverthesameperiod,

accordingtodatacompiledbyGuosenSecuritiesCo.

Junshiis conductingclinicaltrialstoentertheU.S.

market.(MerckdoesbusinessasMerckSharp&

Dohme,orMSD,outsidetheU.S.andCanada.)

Chinesecompaniessaytheirmedicinesare

structurallydifferentfromwhatAmericancom-

paniesoffer.“Weareveryconfidentinourown

patentaroundtheworld,”saysWuXiaobin,presi-

dentofBeijing-basedBeiGene,whichhasfiledfor

approvalforitsPD-1druginChinawhileit contin-

uesitsinternationalclinicaltrials,includinginthe

U.S.“Wehavebeenwellpreparedonthisbecause

we’vealwaysplannedtogoglobal.”

Jiangsu-basedInnoventBiologicsInc.,which

alsosellsa PD-1therapyinChinathat’scheaper

thanthetwoforeignbrands,hasa licensingagree-

mentwithEliLilly& Co.throughwhichtheU.S.

pharmagiantwillalsoberesponsibleforclinical

trials,furtherdevelopmentwork,andmarketing

themedicineoverseas.

OtherChinesebiotechnologycompaniesare

alsopreparingtoenterlocalandoverseasmarkets.

JiangsuHengruiMedicineCo.,oneofChina’sbig-

gestdrugmakers,onMay31 said its PD-1 drug had

received Chinese regulatory approval. “PD-1s are

at the cutting edge of science and are transforming

cancercare,”saysBradLoncar,a biotechinvestor

andchiefexecutiveofficeratLoncarInvestments

inLenexa,Kan.SothepushbyChinesecompanies

into these drugs won’t just “transform care in China

but also have global implications,” he says.

China is new to developing innovative drugs,

so managing their safety and efficacy remains

a risk, says Zhang Jialin, an analyst with ICBC

International. Chinese companies say their trials

show their medicines are safe, and some are fol-

lowing up with larger studies.

FirstapprovedintheU.S.in2014,PD-1drugshave

boostedsurvivalratesformanypatients.Although

Chinaseesabout 4 millionnewcancerpatients

annually,PD-1drugsaremuchlessprevalentthere.

Suchmedicineswillbringinonly$170million in

Chinesesalesin2019,marketresearcherFrost&

Sullivanestimates.Globalsalesforthesetherapies

willclimbto$78.9billion by 2030, it says, with China

projected to account for about a fifth of the total.

So far no PD-1 drug, domestic or imported, has

made it onto China’s public health insurance list,

so patients would have to pay out of pocket. That’s

difficult in a country with a per capita disposable

income of 28,228 yuan, or $4,090. Companies are

willing to cut prices to get on the government reim-

bursement list, says Junshi CEO Li Ning.

The competition also suggests fresh challenges

for foreign drug companies in China, the world’s

second-largest pharmaceutical market. Bristol-

Myers’s and Merck’s PD-1 drugs are already far

cheaper in China than in the U.S. Global Oncology

Express, a trade publication affiliated with one of

China’s top oncology centers, calculated that a vial

of Keytruda sells for 17,918 yuan in China, com-

pared with 33,000 yuan for the same amount in

the U.S. And both companies say they have special

programs to offer the medicines at discounts for

low-income patients in China.

In a statement, Bristol-Myers said joint efforts

by local and foreign companies will help address

patients’unmetneedsinChina.MSDsaysKeytruda,

nowtheonlyPD-1therapyapprovedinChinafor

bothmelanomaandlungcancer, is well-positioned,

partly because later entrants will face more hurdles.

Ronald Ede, Innovent’s chief financial officer,

says he’s seen local drugmakers grab as much as 85%

of the market for a generic drug or medical device

from global rivals withinonlya fewyears.“This will

happen in the PD-1 marketaswell,andit’llcome

faster,”hesays.�DongLyuandLudiWang

THE BOTTOM LINE Four million new cancer patients are

diagnosed each year in China. That market growth is encouraging

local drug companies to develop advanced cancer medicines.

$75b

50

25

0

2018 2030

● Projected market

sizeofPD-1and PD-L1

antibodydrugs

◼China

◼ Rest of the world