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European Pharmaceutical Contractor

Good Fortune

If you don’t think of China as your gateway to the rest of the world, you might want to take a second look. As the world’s third-largest prescription drug market, China’s pharmaceutical revenue continues to grow at a rapid pace. The market grew in value from $36.6 billion in 2008 to $46 billion in 2010. And where there’s a strong pharmaceutical market, there’s certain to be a demand for innovative and reliable contract research organisations (CROs).

With a population of more than 1.3 billion and GDP of more than 10.09 trillion – making it the second largest economy worldwide – China is positioning itself to become a global life sciences leader. And while research shows growth in most related industries, from biomedical to device, the most progress is being seen in drug development. Recent headlines have announced that Novartis has committed $1.2 billion and Merck & Co. has committed $1.5 billion to developing R&D facilities in China. Other big pharma companies planning to expand research efforts in the country include GSK, Bayer, Bristol-Myers Squibb, Eli Lilly, AstraZeneca and Boehringer Ingelheim (1).

While US and European pharmaceutical companies may have initially decided to set up locations in China for lower operating costs, many are now there because of the highly educated and skilled workforce. The total number of college graduates per year is a staggering six million, 150,000 of whom are life sciences graduates. On top of this large and growing talent pool, there were 180,000 returnees to China in 2011. Returnees are Chinese citizens who left China for education or career development in the US or Europe. Now, many of these professionals are returning for better career opportunities.

Focus on Shanghai

Like any other part of the world, demand creates high-stakes competition, which could be why there are currently 267 CROs in China vying for business. Although there are CROs in major cities such as Beijing and Guangzhou, there seems to be a higher concentration near Shanghai. Located on the eastern coast, Shanghai has a population of more than 23 million, making it not only the largest city in China, but also the most populous city in the world. At fi rst glimpse, the Shanghai Pudong skyline looks other-worldly. Its exotic beauty is punctuated by the 88-storey glistening metal and glass Jin Mao Building, and the fl uorescent pink globes of the Oriental Pearl Tower.

Picture yourself on a Google map. Once you find Shanghai, zoom in even further to Pudong. It’s in this area of the city where several life sciences and high technology parks can be found (there are more than 100 such parks in China). Zhangjiang Hi-Tech Park, for instance, has one of the highest concentrations of pharmaceutical and research companies in the world. The 25km2 park is home to 600 life sciences companies, including ShangPharma, Newsummit Biopharma, Sundia MediTech and Shanghai Medicilon. Pharma companies based there include GSK, Roche, Lilly, Pfizer, Novartis and AstraZeneca. Other life sciences parks in the area include Waigaoqiao Free Trade Zone, where WuXi AppTec is headquartered, and Chuansha Economic Park, where Shanghai Medicilon has a second location.

Capable, Responsive, Organised

China’s leading CROs all have unique capabilities and qualifi cations to handle specifi c areas of specialty. Whether they offer their client-partners preclinical or clinical services, or both, they are all accredited and accomplished. Consider these condensed profi les as introductions to these experienced corporations, rather than the entire story.

WuXi AppTec

If the outsourcing industry in China in constantly evolving, WuXi AppTec is at the forefront of those changes. Founded in 2000, WuXi AppTec is China’s largest and most profitable CRO. In addition to its facilities in China, the company has locations across the US: in St Paul, Philadelphia, Atlanta and San Diego, at the site of Abgent research reagent organisation, which it acquired in October 2011 (2). Since its inception, the company has grown from 400 to nearly 7,000 employees: 6,494 in China, including over 300 returnees, and 506 in the US (3). As well as being a global company, it’s also a public company, traded on the New York Stock Exchange (4). In addition to its headquarters in Shanghai, WuXi AppTec also has Chinese facilities in Tianjin, Wuhan, Suzhou, Beijing, Guangzhou, and more recently in its namesake city of Wuxi.

In October 2012, it announced the opening of its good manufacturing practice (GMP) facility for biologic drugs. This is big news, as WuXi AppTec is now the first facility in China to be compliant with GMP standards on three continents – China, the US and Europe. This state-of-the-art facility will also be the first operation in the world to use 100 per cent disposable equipment for producing biologics drug substances (5).

ShangPharma Corporation

As the parent company for Shanghai ChemPartner and Chengdu ChemPartner, ShangPharma started by providing R&D services to Eli Lilly. Ten years later, Lilly is ShangPharma’s largest customer and accounts for 21 per cent of its 2010 revenue. In fact, it opened a new facility just to meet Lilly’s growing needs. With ample lab/office space, Association for Assessment and Accreditation of Laboratory Animal Care (AAALAC) accredited animal facilities, and a cGMP manufacturing facility, ShangPharma provides a comprehensive array of services. The new facility will add another 110,000ft2 of lab/office space.

The company, which announced plans to go private in July 2012, was founded in 2002, and employs more than 1,600 scientists. It states that 40 per cent of its scientific staff have postgraduate degrees and all of its scientific leaders were educated in the US or Europe.

Pharmaron

Founded in 2003, Pharmaron is the third largest CRO in China, providing R&D services across a number of disciplines. With its headquarters based in Beijing, the privately held company announced in January 2010 that it had acquired Bridge Laboratories China to extend the range of services it offers. Bridge provided the first western standard good laboratory practice (GLP) compliant preclinical toxicology services in China. The acquisition was to make Pharmaron the first integrated CRO in China capable of offering drug discovery and development services in support of investigational new drug (IND) filings (6).

In October 2012, Pharmaron signed a multi-year drug discovery partnership with AstraZeneca. In the arrangement, a dedicated staff of several hundred scientists will support AstraZeneca’s global Innovative Medicines Units. The use of a single partner for screening and chemistry services is expected to provide improved efficiency to AstraZeneca’s drug discovery programmes (7).

Shanghai Newsummit Biopharma Co Ltd

Newsummit Biopharma differentiates itself from other Chinese CROs with its unique business model of using a network of service providers. Founded in 2008, the company uses this approach to provide preclinical drug development services at a competitive price to its own clients.

In 2010, Newsummit reported revenues of $30.5 million from its five technology park locations. In the first half of 2011, revenues climbed about 57 per cent ahead of the previous year to $23.6 million. At the beginning of 2012, it had 309 ongoing service agreements with 119 clients. Of these, 69 companies had entered into more than one agreement with Newsummit, representing 85 per cent of the company’s business.

Hangzhou Tigermed Consulting Co Ltd (Tigermed)

Until the recent announcement by WuXi AppTech to move into the clinical space, Tigermed was the leading provider of clinical-stage services. Based in Hangzhou, the CRO operates seven subsidiaries and has 40 branch offices in 27 Chinese cities, including Hong Kong (8). Since its inception in 2002, Tigermed has provided services to more than 300 local and global clients. The company is known for Phases 1-4 clinical trials services in oncology; infectious diseases, especially Hepatitis B virus; cardiovascular; pulmonary and respiratory; and preventive medicines and vaccines.

In August 2012, Tigermed completed its $80 million initial public offering (IPO) on the ChiNext Exchange, a division of the Shenzhen Stock Exchange that is tailor-made for the needs of enterprises engaged in independent innovation and other growing venture enterprises. Tigermed plans to invest $32 million from the IPO to improve its services.

Sundia MediTech Company

Sundia MediTech’s founder put the seventh largest Chinese CRO on the map when she was featured in a 2011 CNN series of articles on China titled, ‘In Search of the Chinese Entrepreneur’ (9). Although she stepped down as CEO in February 2012, the company remains customer focused and innovation driven – two respected qualities when it comes to being successful in China (10).

Sundia was formed in May 2004 by what CNN journalist John Kao called “sea turtles”, Chinese pharmaceutical executives who had worked in the US and were returning to China. In May 2007, it banded together with two other Shanghai-based CROs, United PharmaTech and HD Biosciences, to form a CRO Service Alliance.

It was named one of the top 50 most valuable companies for investment in China in 2007 and 2008. It was also ranked 52nd in the Deloitte Technology Fast 500 Asia Pacific list and 16th in the Fast 50 China list in 2008.

JOINN Laboratories

Having recently completed its 1.2m ft2 heptagon-shaped facility in Taicang near Suzhou, JOINN Laboratories is poised to become one of the leading preclinical CROs in China. The company was named after the phonetic spelling of two Chinese characters (zhao yan), which mean: ‘bringing hope to human beings and improving people’s health’ and ‘we will become bigger and stronger’. It’s a fitting name for the 17-year-old company that has conducted 1,400 studies and filed more than 450 IND and new drug applications, 90 per cent of which were for domestic studies (11). The company has an additional facility in Beijing, as well as an American office in Germantown (12). The privately held CRO was founded in 1995, certified for GLP compliance by China State Food and Drug Administration (SFDA) in 2005, accredited by AAALAC in 2008 and inspected by the FDA in 2009 (13).

Shanghai Medicilon Inc.

Known locally as Medicilon, the company was recognised as one of the top seven Chinese CROs by Citibank in 2010 and one of the top 100 companies by Forbes China in 2011. Founded in 2004, the company has its headquarters in Zhanjian High-Tech Park, with an additional facility in Chuansha Economic Park, Shanghai. Medicilon is known for providing integrated services across biology, chemistry and preclinical categories. With more than 200,000 ft2 of lab space, it has the largest animal facility in Shanghai. It has AAALAC accreditation, FDA GLP compliance and Chinese SFDA GLP certificates (14).

From Outsourcing to Partnering

While drug developers may have outsourced R&D to China for its lower operating costs in the past, they are now partnering with these companies to provide services on a global scale. This snapshot of the top CROs in China highlights the fact that these global companies provide valued jobs and services to all three continents. In the second instalment of this two-part series, coming in the next edition of EPC, our ‘trip’ to China will bring us full-circle back to the US to look at American companies that are expanding their services to China.

The author would like to thank Greg Scott, President and Founder of ChinaBio LLC, for his contribution to this article. ChinaBio is a consulting and advisory firm based in Shanghai.

References

1. Lilly extends contract with Chinese CRO ShangPharma, PMLiVE, November 2012
2. Rooney M, Sr Marketing Mgr, Pharma, WuXi AppTec
3. Aldridge R, Director of Investor Relations, WuXi AppTec
4. Cai H, PhD, VP of Corporate Alliances, WuXi AppTec
5. Daverman R, PhD, WuXi AppTec opens China’s first GMP biologics facility, ChinaBio Today, 16th October 2012
6. Daverman R, PhD, Pharmaron acquires Bridge Labs China, ChinaBio Today, 11th January 2010
7. Daverman R, PhD, Pharmaron, a Beijing CRO, announces partnership with AstraZeneca, ChinaBio Today, 14th October 2012
8. Chen W, VP, Business Development, Tigermed Consulting Ltd
9. J Kao, In search of the Chinese entrepreneur, CNN World, 15th September 2011
10. Dr Xiaochuan Wang Resigns; Sundia MediTech names new Chairman and CEO, BioSpace, 14th February 2012
11. R Daverman, PhD, JOINN takes big leap into China’s CRO Future, ChinaBio Today, 8th November 2009
12. Xu W, VP, Dir of Business Development, JOINN Laboratories
13. Jingliang G, Marketing Mgr, JOINN Laboratories
14. Rehse P, VP, Shanghai Medicilon Inc

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Nick Charles is an American medical marketing professional. In addition to his work in the Department of Laboratory Medicine and Pathology at Mayo Clinic, he has been published in Discovery’s Edge at Mayo Clinic; Medicine at Michigan at the U-M Health System at the University of Michigan; Keck Medicine and USC Health at the Keck School of Medicine of the University of Southern California; Pitt Med at the University of Pittsburgh School of Medicine; Brown Medicine at the Warren Alpert Medical School of Brown University; EUSci at the University of Edinburgh; the Oxford Medical School Gazette at Oxford University; and in European Biopharmaceutical Review and International Clinical Trials.
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