BEIJING - Some of China's leading innovators in drug development are laying the groundwork to become major producers of biopharmaceuticals, including reverse-engineered biosimilars, and sales of biologics have expanded speedily over the last decade.

Statistics compiled by the National Development and Reform Commission indicate that biologics now account for about 10.7 percent of overall sales of drugs, compared with 5.3 percent in 2001, according to Ding Ding, a senior equity analyst who covers China's healthcare sector at Susquehanna International Group's office in New York.

"The growth in sales of biologics as a category has been much more significant than that of chemical drugs or traditional Chinese medicines," explained Ding Ding, who holds a doctorate in pharmacology/neuroscience from the State University of New York and an MBA from the University of Pennsylvania.

Revenues on sales of biologics inside China skyrocketed by 40.5 percent in the first quarter of 2010 compared with the corresponding period of last year, she added. Chinese exports of biologic products rose by an even steeper level - 49.5 percent - during the first quarter of this year.

"There has been huge growth overall for biologics, both for domestic consumption and for export," she said. "As a percentage of overall drugs, we have seen a significant increase over the last few years for biologics, and especially in the last few months."

The explosion in biologics use and revenues, in turn, is impelling some of China's most innovative producers of drugs to adapt their operations to benefit from and bolster the new trend.

The Nanjing-headquartered Simcere Pharmaceutical Group, which already produces the innovative biopharmaceutical Endu (recombinant human endostatin) and a range of first-to-market drugs, last spring unveiled an agreement to acquire part of Shanghai Celgen, which Simcere's leadership said holds one of China's most promising research centers and production facilities for therapeutic antibodies.

Shanghai Celgen has developed a follow-on biologic medicine patterned after Wyeth's blockbuster drug Enbrel (etanercept), which is used in the treatment of arthritis. Celgen's biosimilar etanercept has completed clinical trials and is currently awaiting approval from China's State FDA, and the Shanghai outfit has six more biopharmaceutical products in its pipeline. In an interview at the time, Simcere's chief financial officer, Frank Zhao, said: "Simcere's future acquisitions could focus on biosimilars." (Also see "While Cementing Partnership With U.S. Biotech Firm, Cash-rich Simcere Launches Twin Acquisitions Targeting Biosimilar, Vaccine Outfits In China" - Scrip, 26 May, 2009.)

Simcere's Zhao also said the firm had signed a co-development deal with the San Francisco biotech firm Epitomics on a monoclonal antibody treatment for cancer.

Simcere and Epitomics are set to collaborate on preclinical and clinical trials, on manufacturing the biologic, and on distribution worldwide, he said. Inside China, Simcere will have exclusive rights to produce and distribute the biopharmaceutical (Also see "Simcere Enters Co-development Partnership With San Francisco Biotech Outfit On Monoclonal Antibody Treatment, Scans China For Takeover Targets" - Scrip, 13 March, 2009.).

Simcere's move to acquire Shanghai Celgen, said SIG's Ding Ding, "is a pure biologics play." Same with the Epitomics partnership, she added.

Meanwhile, she added, "China in the last year or two has really stepped up its support for innovative drug development, including biologics."

In one of the latest examples of the Chinese government's strengthening recognition of the biotech revolution and potential benefits ahead, the city of Beijing recently put up part of the $100 million in seed money to fund the building of a biologics contract manufacturing operation on the outskirts of the capital.

The operation, headed by the U.S.-based AutekBio, "represents the most serious effort ever in the area of biologics manufacturing in China," said Ding Ding.

The SIG analyst cautioned that "it will take awhile for China to become a trusted biologics manufacturing destination."

Yet she added: "The trend toward increased growth of biologics is going to continue this year and in the years ahead."

- Kevin Holden (k.platt@elsevier.com)

China's Leading Drug Outfits Gear Up To Push Development Of Biologics, Biosimilars

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