As part of the Fall Issue of DDW’s Market Report, Dr Henry Li, CSO, Crown Bioscience examines cycles of innovation in the Chinese life sciences industry and how they provide opportunities for global drug discovery breakthroughs.
Drug research and development in China has changed dramatically since the turn of the century and will continue to evolve towards innovation. Chinese regulatory and economic trends underscore the progression of life sciences innovation from a pool of outsourced talent resources, to ‘follow-on’ drug candidates, to engineering advances in drug discovery. China has recently made an effort to promote homegrown drug discovery. Opportunities for global companies exist if they can develop strong relationships with Chinese biopharma key opinion leaders (KOLs) and deliver specialised services that fuel the innovation that the industry needs to continue growing.
Pharmaceutical and biotech companies in China have experienced tremendous growth over the past 25 years. Are there opportunities for global companies to support this burgeoning sector, or should industry strategists be concerned about limited opportunities for foreign entities in this region? Will global innovation be stifled? To answer these questions, it is necessary to trace the path of life sciences and the drug development innovation cycles, inherent in the Asia Pacific (APAC) region.
Early drug development
The Chinese economy has changed in the past 25 years. Prior to the 21st century, state-owned operations drove the majority of life sciences work, with very little organic research and discovery to fuel innovation. Most work focused on generic patents, or on China’s ability to provide economical outsourced labour. ‘Development’ consisted of reverse engineering drugs already in existence after the patents expired. Biopharmaceutical companies outsourced much of the small molecule drug discovery work to Chinese counterparts, who were highly skilled and more cost-effective than their western counterparts. This work included standard discovery operations, eg. chemical synthesis, screening, analytics, preclinical absorption, metabolism and excretion (ADME) pharmacokinetics and pharmacology.
With this approach, funding for homegrown R&D was scarce. The integrated drug discovery and new drug development that allow innovation to improve therapeutics – and treatments for patients – were far behind advances in the West.
Two major trends created changes in the Chinese life sciences industry. The first was the explosive growth of China’s economy around the early 2000s. The World Bank referred to this pace as ‘the fastest sustained expansion by a major economy in history.’1 The life sciences sector grew greatly during this economic explosion and ownership shifted from state-owned to private organisations.
The second trend was an emerging concentration of life sciences talent in China. After many years of outsourced work, a knowledge base grew organically, starting with small molecule, chemistry-based expertise. This eventually expanded to include biology-based development. With more advanced work occurring in China – much of which was still originating overseas – companies and universities began training people locally. China started accumulating a critical mass of experience and talent. With this influx of advanced knowledge, private sector investments grew into homegrown enterprises able to leverage Chinese economic expansion.
In addition, China advanced its regulatory agency to oversee drug and medical product development, now known as the National Medical Products Administration (NMPA, formerly the China Food and Drug Administration or CFDA). This framework of oversight looked toward the type of innovations seen in the West to fuel growth.
First onset of innovation
The first iteration of innovation in China’s drug discovery evolution focused almost entirely on follow-on, or ‘me too’ drugs. Chinese drug sponsors would take a well-established product from the West and create a new chemical entity with the same target or indication. One of the first approved drugs under this approach was an epidermal growth factor receptor (EGFR) inhibitor, which already existed in the West. With the success of this, and other similar approaches in development, the Chinese government deprioritised the funding and review of generic programs, forcing work into these ‘follow-on’ programs.
China’s extensive programmed cell death 1 (PD-1) development programs provide an interesting case study about the unintended consequences of the follow-on approach, and how it laid the groundwork for the next stage of innovation in Chinese drug development. With PD-1 being the life sciences equivalent of open-source code, it was a natural fit for Chinese drug developers to accelerate investment into these types of programs.
The first PD-1 targeting drug in the world was approved in late 2014.2 Using a different antibody target or molecular sequence, about 100 of PD-1 programs sprung up in China. Coupled with massive inflow of investments from China’s expanding economy, within a few years, the Center for Drug Evaluation (CDE) of the NMPA approved approximately eight PD-1 programs (the majority of which were developed in China), with numerous other programs in late-stage testing.3 But true innovation was limited, as there were many companies – sponsors, manufacturing, and CROs – doing the same thing.
Progress stalled, as the massive strain on preclinical resources created a development bottleneck. From animal models required in preclinical research, to patients required for trials, the approach took its toll. Costs increased. Timelines extended beyond forecasts. Even China’s large population, with significant cancer incidence, was running short of patients who might need therapies that were essentially follow-on programs.
Fortunately, Chinese business can adapt. Many cancer clinicians and pharmaceutical executives realised that too much of this ‘follow-on’ strategy was not good for patients or businesses. Treatment options remained limited with narrow scope of innovation. Competition, coupled with high development costs, reduced the ability of private enterprises to recoup investments in these programs.
The next stage of innovation focused on engineering molecules and targets. Chinese life sciences companies started moving to innovation but still with different characteristics compared with the West. Identifying new targets, drug development platforms and methods of biology or chemistry-based interventions, are the hallmark of drug discovery in the US, with well-established research pipelines coming out of both corporations and academia. Without the backbone of discovery infrastructure, the Chinese life sciences industry has yet to compete in this arena.
Innovation in China trended now towards the engineering side. Working from a target or molecular entity that was already well-established, Chinese discovery injected a way to attack, approach, or combine efforts to improve outcomes. For example, bi-specific antibodies (BsAb) are a powerful general platform to create different antibody drugs with proven success in the West, and now represent an opportunity for transformative therapies coming out of Chinese R&D in a rapid and massive scale. The Chinese approach for identifying and combining targets is possibly even more efficient than that seen in other parts of the world, requiring fewer resources and less time to identify and advance novel programs into the clinic.
While this trend was a step towards novel drug discovery and intellectual property (IP), the Chinese response to the Covid-19 pandemic demonstrated that this approach – one that left fundamentals up to other parts of the world – was still too limiting to foster breakthroughs.
Chinese biopharmaceuticals moved quickly to identify a vaccine candidate to combat Covid-19. However, the vaccine was based on older technology – namely recombinant proteins or inactivated (attenuated) viruses.
Innovation came out of the US and Germany, where scientists quickly developed and rolled out messenger RNA (mRNA)-based vaccines. In China, there seems limited (or delayed) access to mRNA technology or the radical approach to developing a program based on innovation.
So, while the potential for drug discovery in China evolved significantly in the first 20 years of this century, there is still a long way to go. Fortunately, continued government investment, and the ability to adapt, will bring Chinese life sciences into the next era of breakthrough innovations. So, what does that mean for the rest of the world?
A path forward
One of the strongest signs of China’s commitment to developing a strong R&D infrastructure – one that fosters true discovery-based innovations – is the ruling issued by the CDE in July 2021. Similar to the US Food and Drug Administration’s (FDA) mandate on developing new therapies that show improvement on the existing standard of care to garner regulatory approval, the CDE issued guidelines on developing oncology drugs that require a demonstration of clinical benefit compared with existing therapies. This clinical value-oriented approach is designed to improve patient outcomes, redirecting scientific and financial resources towards programs that demonstrate innovation – true breakthrough therapies.
A leading oncologist in China, Dr. Jin Li of Tonji University Medical School, gave a keynote speech at the Suzhou Conference on Post-Covid-19 pharmaceuticals, proposing a relatively radical idea to further jumpstart discovery innovation. Noting the lack of benefit to patients and tremendous waste of preclinical and clinical resources in Chinese R&D, he suggested moving up the benchmark for innovation to earlier in the drug development process. Instead of setting up, as the CDE suggested, the gate to determine clinical benefit at the last stage before regulatory approval, he proposed instating the requirement before the program enters the clinic. If the program does not represent an innovative approach to addressing disease, the CDE would not allow the program to advance. This, he argued, would eliminate the preponderance of duplicative programs in late-stage trials that are mainly attempting to beat the standard-of-care benchmark by simply getting to the market first.
Obviously, this is a controversial concept. Both regulators and private company executives note that this may stifle innovation, if government oversight limited opportunities when it remains to be seen whether a compound will emerge successfully through clinical trials. After all, there is a long way to go between identifying a potentially innovative therapy and delivering it to the patient.
However, the fact that Chinese life sciences R&D leaders are including discussions about radical approaches to true innovation signals the continued evolution of Chinese drug discovery. The market and regulatory agencies are open to accepting more risk to fuel innovation and to move away from the ‘follow on’ mentality.
This most recent shift will expand opportunities for companies to do business in China, particularly clinical research organisations. The industry is moving towards conducting true, traditional drug discovery and R&D in China. The Chinese government, from both a funding and regulatory perspective, is committed to continue supporting this work.
As a result, China’s fledgling life sciences discovery infrastructure will need support to keep pace with demand. High-end discovery and development services will likely see the highest growth. China is leaning away from the ‘follow-on’ mentality, which means tremendous opportunities will exist for organisations that can form strong relationships with Chinese life sciences executives and offer innovative ways to approach drug development.
Recent industry trends indicate increased demand for drug discovery services and opportunities for organisations to grow their high-end service businesses. Approximately 25% of Crown Bioscience’s CRO business is on the ground in China, which represents the fastest growing segment of the business. In addition, long-standing clients are embracing innovation. As one example: Shanghai Institute of Materia Medica (SIMM)—the largest academic drug developer in China, has opted to forego the traditional method for cell line authentication (STR/SNP assays). Instead, the organisation will use Crown Bioscience’s proprietary NGS-QC panel.4 As Chinese drug discovery infrastructure expands, specialised outsourcing capabilities, from advanced cell lines and animal models to 3D tumour organoids and high content imaging analytics, will likely be in high demand.
The life sciences industry as a whole, and ultimately patients, will benefit from the large influx of resources designed to marry innovation with engineering efficiency that is now coming out of China. Less than a year ago at the Suzhou Conference, the China Pharmaceutical Innovation and Research Development Association (PhIRDA) and other APAC trade groups noted that, “…from the perspective of the global market, [the] pharmaceutical industry has ushered in a golden period of development driven by both the technological progress and demand growth.”5 Drug discovery, with its infinite possibilities, is at the forefront of this journey of innovation.
Volume 22, Issue 4 – Fall 2021
About the author
Henry Li, PhD, Chief Scientific Officer, Crown Bioscience has spent more than 25 years engaged in life sciences research, specialising in oncology drug development. He currently serves as the Chief Scientific Officer of Crown Bioscience, a JSR Life Sciences company and a leading cancer preclinical and translational research organisation specialising in outsourced oncology drug discovery. Dr. Li earned his PhD from UC Irvine and his bachelor’s degree from the University of Science and Technology in China.
- Morrison, W.M. (2019). China’s Economic Rise: History, Trends, Challenges, and Implications for the United States (CRS Report No. RL33534. Accessed from Congressional Research Service: https://www.everycrsreport.com/reports/RL33534.html
- Cancer Research Institute (2021, August 12). PD-1/PD-L1 Approval Timelines. https://www.cancerresearch.org/en-us/scientists/immuno-oncology-landscape/pd-1-pd-l1-landscape#timelines
- Wang, X., & Wang, X. (2021, February). New Drug Approvals in China in 2020. DIA Global Forum. https://globalforum.diaglobal.org/issue/february-2021/new-drug-approvals-in-china-in-2020/
- 4Xiaobo, C., Wubin, Q., Zhenzhen, S., Qi-Xiang, L., & Sheng, G. Authentication, characterization and contamination detection of cell lines, xenografts and organoids by barcode deep NGS sequencing, NAR Genomics and Bioinformatics, Volume 2, Issue 3, September 2020, lqaa060, https://doi.org/10.1093/nargab/lqaa060
- China Pharmaceutical Innovation and Research Development Association (PhIRDA) (2020, Nov 02). News & Event:s Grand Opening Ceremony -2020 CBIIC, Discuss New Trend of Pharmaceutical Innovation for the Post-CVOID-19 Era. http://en.phirda.com/artilce_21181.html?cId=1