A manufacturing first in China

We’re sure you all remember that in December of 2017 InsightCity reported that “if you wanted to hold a commercial drug license in China, you had to manufacture the product using only in-house facilities. Yep, no outsourcing of drug manufacturing.” Sounds like us. As an update, this week STA Pharmaceutical, a subsidiary of WuXi AppTec, reported they were the first CMO to get regulatory approval to manufacture a commercial drug in China. For a nice summary of China’s Marketing Authorisation Holder (MAH) program from the Economist, go here. What’s next? Well, if we look into our crystal ball, this has to fully open the doors to increased business for CDMOs, provide flexibility for innovator companies in China, and open the door to smaller innovator companies that couldn’t afford their own manufacturing facilities in China. In essence, we’re talking about a land grab.

CDMO industry sees mo’ mo’ expansion

It’s a decent time to be a Contract Development & Manufacturing Organization (CDMO). Google “CDMO expansion” and you’ll spend hours sifting through recent and relevant articles about how CDMOs are expanding, merging, and/or acquiring assets. Recently, one of the industry’s largest CDMOs (WuXi AppTec) raised more than $353m in its initial public offering on China’s Shanghai exchange. Here are two good sources for recent activity in the CDMO space: 2017 DCAT summary and one from 2018. For a more graphical summary of CDMO activities, see this infographic. And if that’s not enough, here’s one example of a recent 1,000-person expansion from Lonza at their New Hampshire site. Given all the activity in the industry, we don’t see a way around the fact that soon CDMOs will have Mo’ Money, Mo’ Money.

Amazon is behind

Now that Amazon, JPMorgan Chase, and Berkshire Hathaway have their healthcare sandbox to play in, guess who is a lot further along? Nope, not Dr. Feelgood, it’s the Chinese. According to a recent NY Times article, “tech companies like Alibaba and Tencent have made health care a priority for years, and are using China as their laboratory. After testing online medical advice and drug tracking systems, they are now focused on a more advanced tool: artificial intelligence.” A few tidbits about health in China = 1.5 doctors for every 1,000 people (~half the US), largest number of obese children in the world, and they have more diabetes patients (110 million) than anywhere else. And money is flowing everywhere. Tencent, the internet giant, is reportedly plowing tens of millions into American health tech start-ups. If you’re a person, this is good news, as more tech should equal better health.

Monkey Monkey

This week, Chinese researchers successfully cloned two genetically identical long-tailed macaques (aka monkeys). Using a technique called somatic cell nuclear transfer animation (SCNT), scientists started with 79 embryos and implanted them in 21 female surrogates that resulted in 6 pregnancies and the births of the 2 monkeys. Mice, sheep (remember Dolly?), pigs, now monkeys. What’s the difference? According to many scientists, the successful cloning of primates is a huge step in learning more about complex animals, like humans. This advancement also reinvigorates the discussion around the ethical aspect of medical research and we’re not going to go there. InsightCity would have named one of the monkeys “Brass” just so we could play the song, but that’s just us. Thanks for reading. You’ve been patient and we know what monkey clip you’ve been waiting for, so here it is. Enjoy.

Revenge for the Opium Wars?

In the 1800s, the Chinese Qing dynasty found itself on the defending end of two wars designed to open closed Chinese ports to foreign trade, and essentially get the Chinese people addicted to opium. Fast forward to 2018, and one of the aggressors in those wars—the US—finds its own population dangerously addicted to opium. Well, opium derivatives at least. A US Senate investigation reported last Wednesday that Chinese e-commerce sellers are a huge supplier for carfentanil, which is: 10,000 times more powerful than morphine, mainly used as an elephant tranquillizer, and considered for use as a chemical weapon. And it’s coming right through US ports via the US Postal Service, who haven’t fully implemented suspicious package detection systems. So that’s fun!

Invented (not Made) in China, there’s a big difference

Pop quiz: When was the last time China produced a new drug for the global pharmaceutical industry? The answer: The early 1970s. The product was artemisinin and it treated malaria. Times, they are a changin’. According to a New York Times article, “20 or 30 Chinese-made drugs could seek Phase 3 trials in the United States within the next five years.”  If you think about the R&D and early clinical development needed to get ~25 compounds into Phase III, you can see that Chinese drug developers have been working hard for a while. A little perspective: Jiangsu Hengrui has the largest research budget of all Chinese drug firms, but its $180M annual outlay pales in comparison with the $7.8B Pfizer spent in 2016. True, but a journey of a thousand miles begins with a single step (and other deep thoughts from Lao-Tzu).

Made in China, with a twist

At InsightCity, we consider ourselves fairly knowledgeable about the pharmaceutical market. That said, we were a bit taken aback to learn that until July 2016 if you wanted to hold a commercial drug license in China, you had to manufacture the product using only in-house facilities. Yep, no outsourcing of drug manufacturing. In case you didn’t know, using a Contract Manufacturing Organization (CMO) is big business in the US and Europe. China has started a 3-year pilot program called the Marketing Authorization Holder (MAH) System. There was a recent summit to discuss MAH progress and as one might expect, Chinese CMOs are considering themselves quite fortune-ate (too much?). Look for homegrown Chinese CMOs and established western CMOs to start down the joint venture path. Also, 2018 is the year of the Earth Dog in China. Now you know.

2. A shake up for the opioid epidemic

One of the best ways to solve a problem is to remove the source. While the opioid epidemic will not be solved in one fell swoop (here’s where the term “fell swoop” came from), China is attempting to do its part, effective March 1. According to CNN, the country will ban four variations of the synthetic drug fentanyl, which can be “25 to 50 times stronger than heroin and up to 100 times more potent than morphine.” DEA officials have labeled this a “game-changer” as China is a primary supplier of illegal imports of the drug to the US. Another idea to stop illegal drug imports – we could just build a wa…never mind.