Europe, China Forging Closer Links

China has quickly moved from being essentially a generics supplier to becoming one of the world’s top three biotech R&D centers. Although its first embrace of biotech innovation was based on a ‘fast-follow’ model, addressing clinical targets identified and validated elsewhere, the country is now an originator, focused on novel products and technologies that are globally competitive. That is reflected in the rapid growth in dealmaking involving Chinese assets. The Chinese biopharma industry completed 62 deals in 2022, 96 deals in 2023 and has already completed 73 deals during the first three quarters of this year, Jimmy Wei, president of Chime Biologics, of Wuhan, told delegates attending the Europe-China Biotech Business Forum 2024 at BIO-Europe Monday. The value of the deals is climbing sharply too. It reached about $40 billion last year and is on track, he said, to reach $60 billion to $70 billion this year.

“A big portion of the deals is in preclinical drugs,” said Wei. That reflects the immaturity of the country’s collective pipeline. Oncology is a major focus area. “Most of the deals involve ADC drugs,” said Wei. Its country’s strength in that space was reflected by Genmab’s $1.8 billion acquisition earlier this year of ProfoundBio, a Chinese-American firm with operations in Seattle and Suzhou. “Innovation from China is really coming of age,” said Tong Zhang, co-founder, chief financial officer and chief business officer of VelaVigo, which is developing advanced biologics, including ADCS, multi-specific antibodies, and T-cell engagers.

The company began operations in Shanghai three years ago and recently established a presence in Boston. Its rapid progress reflects the capabilities of China’s emerging biotech innovation ecosystem. With an initial capital raise of less than $50 million, VelaVigo has already developed a pipeline of seventeen products, three of which are now progressing to investigational new drug (IND) filings. It would require 50% more cash and 30% more time to get to a similar position elsewhere, Zhang said.

For Konstantin Matentzoglu, a supervisory board member at Polpharma Biologics, a Dutch-Polish biosimilar drug developer, China almost represents a strategic imperative, at least for some products aimed at the European market, where, he said, it is very difficult to make money because of poor reimbursement for biosimilars. “There is a massive push for cost reduction,” he said. China not only offers a competitive cost profile, it also offers commitment and speed. “China can deliver.”

For some Chinese contract development and manufacturing organizations, Europe may also become a strategic imperative, given the level of political support in the U.S. for the Biosecure Act, which currently could keep at least some players out of the U.S. market. “In the US it’s going to get difficult in the medium term,” Matentzoglu said. “I think that’s not lost on the European industry and investors,” Zhang said. “If the US chooses to go the other way, we still have our European friends.”

Ferring Pharmaceuticals, of Saint Prex, Switzerland represents one example. The company was an early mover in China, opening a manufacturing facility in Zhongshan in 2005, and it opened an R&D facility, the Ferring Institute of Reproductive Medicine, in partnership with The Institute for Stem Cells and Regeneration and the Chinese Academy of Science. There are huge opportunities to develop institutional partnerships in China, said Ferring's senior vice president of R&D Alan Harris. “If they know there’s an opportunity to expand their innovation from China, they will work with you early.”