Our BiotechPharma BOOM

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Our Biotech/Pharma BOOM

• Dr H M Pang
• Senior consultant, HK UST
• Technology transfer
• June 2005, Shanghai,PRC

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Booming statistics-West

• 500 biotech companies employing gt50K people,
  mostly established over the last 5 years
• genetically engineered products launched
• gt150 in clinical stages, more in preclinical
• Many INDs filed since 1999 of bio origin
• Sales increased by 30, profit 20

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Biotech boom- China

• Over 4 billion sales in 2004
• Companies listing
• Biopharma generics
• A few new drugs ??
• Drug spending increased 6 fold in 15 years
• 5th ranking in 2010
• 2nd ranking in 2020
• .. Lots of headache for now ?

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Biotech boom Asia

• Singapores massive investment getting results
  MNC head quarters, RD, export
• Taiwans gradual strengthening of its bio tech on
  its strong pharma infra structure
• Korea excellence in stem cell research
• Hong Kong direction unclear, good Unis.

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Drivers of growth

• Growing economy healthcare expense
• Huge and aging population
• Internal marketgtgtcritical mass for drug
• Maturing consumers
• Hunger for new drugs
• Cost advantages, skilled work force
• Returnees with excellent expertise, drive
• Excellent universities
• Post genomic applications
• Regulatory, ethical and legal considerations
  stem cell

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Government commitment

• Science parks and clusters
• Clear priority and focus areas
• Technology innovation, and incentives
• Respect for IP ? .improving ?
• Modernizing SFDA
• Quality of science, talent pool
• Industrial players, and mega players
• Funding govt, VC, and other industries

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Industry sub sectors

• Bio pharma DDS, gene therapy, biochips,
  diagnostics
• TCM, and functional food
• Agro biotech and transgenic animals
• Stem cells, tissue engineering, and cloning
• Plant bio
• Medical device and bio reagents

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Focus areas

• DDS / chemical drugs
• Stem cell and clinical applications
• Bio protein drugs recombinant technology
• Medical devices, and genetic screening
• GMP upgrade
• GLP/GCP upgrade
• APIs

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Achievements

• Centre for rD, pre/clinical studies (dog)
• Contract rD centre for MNCs small cos.
• Creation of clusters and science parks
• Stem cell banks and application
• Approval of engineered human tissue
• mAB facility
• Export of biotech to India and Cuba
• API and finish dosages for export

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Cruel reality the truth

• Few really success stories
• No world class players, small sales in global
  terms
• Below standard products
• Me-too products only
• Lack significant VCs
• No window in equity market
• General depression of the pharma industry
• FDA under pressure from consumers and industry
• Virtual companies need short term success to
  justify survival, coming to China
• Major failures of big companiesFE and 999

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Success stories ???

• Many biotech companies making losses
• Few break even or small profit
• No real players, no exciting news
• No real export to sophisticated market
• Why????????????????????????????
• Gross underestimation of the Drug Development
  cycle, not ready for World

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Development hurdles

• No real significant stars
• Fierce competition, price wars, tenders
• Formulary control ( Good time over , soon )
• IP issues still not clear
• Poor healthcare infrastructure to justify
  investment and return, very few VCs
• Short, cheap, and fast philosophy prevails
• Lack ROBUSTNESS quality and performance
• Lack INNOVATION
• Not SUSTAINABLE
• Insignificance in world market sales
• Social out cry for change in healthcare provision

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Part 2 INNOVATION new fishes

• The HK Science Park Biotech initiatives ( attempt
  )

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HKSTP bio road map

• Biomedical research output audit
• SWOT analysis of criteria for
• Cluster formation
• Total technology management
• Seasoned executives entrepreneurs
• Others industry, regulatory, funding

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Technology transfer Biomedical research in
HKSAR

• Basic questions
• 1. Innovation/knowledge tradable?
• 2. Tech transfer definition and skills?
• 3. Commercialization capability?
• 4. Future?

Dr H M Pang, HKUST, March16,05
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Value from Cluster Formation
Knowledge Creation
Technology Transfer
Patents
Proof of Concept
Business Planning
Licences
Testing
Incubation/
Research Parks
Universities
Research Institutions
Venture Capital
Public Private
Job Creation
Funding
Conception
Formation
Industry R D
Regulatory
Environment
Collaboration/
Partnerships
Industry
Maturity
Growth
Partnerships
Clinical Trials
MA Activity
Regulatory
Economics
Approval
of Scale
IPOs
/gazelles
Product Pipeline
Labour Market
Commercialisation
Clusters Networks
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Biomedical Science Strength
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Hong Kong and Mainland China
BEI Beijing University FUD Fudan University,
Shanghai GUZ Guangzhou University MMG First
Military Medical College, Guangzhou PEK Peking
Union Medical College
SHA Shantou University SJT Shanghai Jiao Tong
University SYS Sun Yat Sen University,
Guangzhou THB Tsing Hua University, Beijing ZSG
Zhongshan University, Guangzhou
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Hong Kong and Mainland China
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Basic Conditions for a Biotech Cluster
Upstream
Midstream
Downstream
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Summary of Analysis
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Recommendations

• Organize a cluster
• Introduce TTM
• Proper funding pre seed fund
• Cooperation between Industry Research
• Regional cooperation
• Further exploit CEPA, and clinical trial
• Stimulate research
• Draw up road map for implementation

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Recommendation 2Improve Total Technology
Management
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Technology transfer

• Answers to questions
• 1. Innovation/knowledge yes. Tradable?
• 2. Tech transfer to be re-modeled.
• 3. Commercialization can be done!
• 4. Future lets TALK
• Dr H M Pang , HKUST, March16,05

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Part 3 commercialization

• Find the fish
• Catch the fish, irrespective of size
• Grow that fish live, multiply, and more
• Return in the shortest time, cost quick
• Lack long term vision, diligence, and often
  ethics and professionalism
• Result poor robustness, quality and performance

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Elements of the Product Development Process
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Total Tech ManagementTTM

• Complex, lengthy process
• Resource/talent intensive, integrated skills
• Need pharma industry expertise
• IP and legal management
• Regulatory and clinical component
• Market intelligence / post marketing skills
• Supply and logistics management
• Financial skills
• Critical mass

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The 2nd pharma revolution

• New products, technology and services
• New market, customers, payment terms
• New sales and marketing approaches
• New team and culture
• Entry into new horizon, with good players
• Go international
• Sustainable model

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New challenges

• Survival, MA, consolidation
• Formulary, Rx, and price control
• IP and regulatory who stole my cream
• Product and technology
• Core competency
• Focus
• sustainability
• Dancing with capital, to finance upgrade

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New business models

• Integrated company or core strength
• Work with universities and institutions
• Work with virtual co, contract out research
• Collaboration with the west, virtual cos.
• Collaboration with the West, medium size
• MNCs
• Develop new drugs, at huge cost / risks

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Cases a Zhangjiang co.

• Set up 1996
• HK Gem board 2002
• One diagnostic launched, contract selling
• Quality issue, broke contract
• Robustness???
• Money being spent, no real revenue
• Huge pipe line hype
• Lack real execution plan

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Case 2 a TCM company, HK

• Run by famous professor from Canada
• Gem listing in HK 2001
• Lack operational and business acumen
• Unreal forecast, lack execution experience
• Picked gingko for formulation improvement
• Burnt out and sold in 2004

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Case 3 a local medium pharma

• 800M Yuan sales
• Vision to become top 5 in 10 years
• International involvement, courted with
• Many international companies from India and
  Europe
• Product introduction slow,
• Alliance never realized
• Failed to capture chances from capital market
• Lack clear mid term strategy, team and culture
• Fire fight in current hostile market
• Uncertainty with future, lack sense of urgency /
  fear
• Just received substantial investment for growth
• Towards a potential world class company

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Case 4 stem cell in South

• A few cases as basis for business plan
• No clear strategy, direction, IP, team and
  financial models. Doing everything.
• Obtained some finance , but insufficient for the
  expected burnt rate
• Sustainability?

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Case 5 biochip diagnostics

• Multi genetic assay for cancer
• Well received by investors, and supported by
  insurance companies
• Company run by non business professionals, and
  scientist engage in more than one company
• Short term apparent success
• Issues robustness, validation and marketing

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Key success factors

• Product quality, robustness, IP
• Market user friendly, entry barrier
• Team integrated skills, international
• Finance good start up, and profit/loss
• Strategic investors
• Execution timely, and correctly
• Sustainable business model

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Sustainable company

• Not too dependent on Allah ( GOD )
• Ready to face competition
• Continuous favorable performance ( no blip)
• Not affected by cycles
• Good pipeline portfolio
• Not dependent on one Hero, holistic governance
• Evergreen, stable, long term team , execution
  capability
• Anticipation and Management of change
• International link
• Tomorrow driven

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Thank you

• mingpang_at_ust.hk