The U.S. market is typically the market of choice for most Chinese drugmakers when it comes to expanding business overseas.
But changes could be looming as China continues to carry on with its sweeping infrastructure project known as the Belt and Road Initiative (BRI). Introduced in 2013, the project aims to export China’s technologies and infrastructure abroad. The focus is largely on physical connectivity — new ports, roads, railways, airports and the like for countries that are are still developing, mainly in Central Asia, Southeast Asia and Africa.
But for China’s rapidly maturing drugs industry, the BRI could also offer opportunities to expand in high-growth emerging markets.
Not just generics
One example is Henlius Biotech, a subsidiary of Fosun Pharma. The Shanghai-based company, which adopts EMA biosimilar guidelines, has HLX02, a biosimilar of Roche’s Herceptin (trastuzumab), in Phase III studies in China, Poland, Ukraine and the Philippines.
The company is in active talks with local partners in several Southeast Asian countries about introducing HLX02 and HLX01, the biosimilar of Roche’s MabThera (rituximab), to their markets.
“The demand for high quality, affordable drugs in emerging markets is huge. We are well positioned to meet the demand,” Henlius CEO Scott Liu said in an interview with BioPharma Dive. In Ukraine, for example, Henlius initially planned to recruit only dozens of patients for clinical studies. To its surprise, over 100 patients enrolled.
Branded Herceptin is not covered by the Ukrainian medicine reimbursement scheme, so few patients could afford it. A recent survey funded by USAID, for example, showed 43% of Ukrainians borrowed money or sold assets to pay medical treatments.
“This is probably why they were enthusiastic about a potential affordable option,” Liu said.
With mounting rhetoric between the U.S. and China over trade, it would be easy to assume that Henlius’ move is somewhat of a forced choice. But Liu said the company actually had the strategy around 2010, when it decided to focus on biosimilars.
“At the beginning, we did consider the U.S. market, but the act passed in the U.S. in 2009 completely changed our mind,” he said, referring to the Biologics Price Competition and Innovation Act, which Liu characterizes as “unfair and risky” to biosimilar manufacturers.
“So we decided to go for emerging markets, where you see few local biotech companies and a much less intense competition landscape,” he said.
More to come?
Henlius is so far one of the only Chinese developers of monoclonal antibodies that is expanding in BRI countries. Whether its Chinese counterparts will follow suit is unclear, but multinationals should be on the alert, noted John Lin, partner with Roland Berger, a management consultancy.
“Multinationals will face severe competition from Chinese pharmas in emerging markets in the near future,” Lin said, adding the first battlefield would be in the generics sector.