Life Sciences Biotechnology CRO [China - East China] Sector Report Life Sciences: Biotechnology - CRO China (East China) Produced by: Paul Wills Consul Trade & Investment Jing Li Trade & Investment Officer British Consulate-General Shanghai Last revised April 2008 Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Enterprise & Regulatory Reform, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published Mar 2008 by UK Trade & Investment. Crown Copyright www.uktradeinvest.gov.uk
Table of Contents OVERVIEW 3 CHARACTERISTICS OF MARKET 3 OPPORTUNITIES 5 KEY METHODS OF DOING BUSINESS 5 EVENTS 6 CONTACT LISTS 6 www.uktradeinvest.gov.uk Page 2 of 2
OVERVIEW See Chinawide Biotechnology report for overview of the sector, and East China biotechnology report. The Consular area of the British Consulate-General Shanghai covers the Shanghai Municipality, and Zhejiang, Jiangsu and Anhui provinces in East China. The Yangtze Delta Region (YRD) comprises Shanghai, South Jiangsu and North Zhejiang with a cluster of 16 medium-large cities. Along with the Bohai Rim (Beijing/Tianjin); and Pearl River Delta (the region including Guangzhou and Shenzhen neighbouring Hong Kong) the YRD is one of the wealthiest economic hubs of China, accounting for around 1/3 of China s imports and exports. Snapshot A proliferation of Chinese CROs has set up in response to multinational interest in the Chinese market. CROs are mainly based in Beijing and Shanghai. Those based in Shanghai are mainly located in Zhangjiang High Tech Park www.zjbpb.com in the new east side of Shanghai, Pudong. Most are set up by Mainland Chinese returnees from the US, with extensive multinational experience, utilising a combination of international and local government supported finance. Most, if not all, have ambitions to IPO. Achieving GLP and Association for Assessment and Accreditation of Laboratory Animal Care (AAALAC) compliance is challenging. However domestic companies are using both their own resources, usually including extensive international experience, and those of international partners to become fully compliant, and the pool of potential partners for multinationals is therefore likely to increase. Perhaps the largest risk is of a bubble developing in the CRO industry through excess capacity. This report will be updated in summer 2008 following a programme of visits to CROs. CHARACTERISTICS OF MARKET Major domestic CROs in Shanghai WuXi PharmaTech www.wuxipharmatech.com, was established in December 2000, listed on NYSE in August 2007, and has a market capitalisation of around USD1,421m. It acquired US-based AppTec Laboratory Services Inc for USD151m 1 WuXi PharmaTech offers a portfolio of laboratory and research manufacturing services ranging from discovery chemistry to biological services and manufacturing of APIs for R&D use. It has over 2,100 scientific staff members, a 630,000 sq. ft. Shanghai Waigaoqiao Free Trade Zone research facility, a 220,000 sq. ft. cgmpquality manufacturing plant in Jinshan District, Shanghai, a new 130,000 sq. ft. Tianjin research facility (near Beijing), and a 267,000 sq. ft. Suzhou pre-clinical service facility under construction. In 2007, its 80 customers included nine of the world's top ten pharmaceutical companies by revenue. WuXi CEO Ge Li co-founded Princeton-based Pharmacopeia before returning to found WuXi Pharmatech. 1 sources:www.wuxipharmatech.com, www.ipohome.com/common/ipoprofile.asp?ticker=wx http://www.bizchina-update.com/content/view/456/2/ www.uktradeinvest.gov.uk Page 3 of 3
ShangPharma http://www.shangpharma.com/ ShangPharma is the holding company of Shanghai ChemPartner Co., Ltd. www.chempartner.cn and Shanghai ChemExplorer Company Ltd. www.chemexplorer.com.cn ShangPharma provides customized services to international pharmaceutical, biotech, agrochemical and chemical companies. ShangPharma currently has a team of more than 1,100 professionals, and more than 40% of employees have post-graduate educational experience of Master or Ph.D. degrees. US private equity firm TPG invested USD30 million in ShangPharma in October 2007. Eli Lilly (www.lilly.com) entered into a novel research arrangement with Shanghai ChemPartner to establish Shanghai ChemExplorer (www.chemexplorer.com.cn) using a BOT model. ChemPartner had initial responsibility for setting up ChemExplorer's laboratories, hiring staff, and managing operations. Over time, management of the scientific operations has been transferred to Lilly, which appoints the senior scientific staff, although administrative responsibilities have remained with ChemPartner. In 2007 Charles River Laboratories invested in a 75 percent-owned joint venture with Shanghai BioExplorer, another affiliate of ShangPharma, to open a 50,000-sq. ft. facility. Shanghai Medicilon www.medicilon.com was founded in 2003 and has an 85,000 square feet R&D facility with 300 scientists. Medicilon also maintains lab space in the Chicago Technology Park in Chicago. The company is managed by a team with extensive experience in drug discovery and development in US pharmaceutical and biotech companies. US-based MPI Research and Shanghai Medicilon announced in mid-december 2007 a joint venture Medicilon- MPI Pre-clinical Research LLP. Expected to open early this year, the new 50,000-square-foot facility will provide customers with important pre-clinical testing and development services, with an eye toward achieving GLP status in early 2009. MPI is making an undisclosed investment in the joint venture, while Medicilon is providing the facilities and access to the labour pool through its existing company 2 ShanghaiBio Corp http://www.shanghaibio.com was founded in 2001 with USD45 million in investments from several Chinese venture capital groups and universities, including Shanghai Venture Capital, Shanghai Zhangjiang Group, and the Shanghai Institutes of Biological Science. It has over 200,000 square feet of research space in Shanghai s Zhangjiang Hi-Tech Park offering GLP/GMP-compliant services, and a business development and customer service support centre in New Brunswick, US. The company currently offers pre-clinical research, array manufacturing, clinical trials, clinical data management, and other services. The company serves as the National Engineering Center for Biochips, and is supported by prominent scientific institutes including the Shanghai Institutes for Biological Sciences (SIBS), Shanghai Institute of Microsystem and Information Technology, both affiliated with Chinese Academy of Sciences (CAS), and the Chinese National Human Genome Centre. It is looking to file an initial public offering in the United States sometime in 2008 to support its transformation from an array services provider to a CRO. ChinaBio Therapeutics, Inc. www.chinabiothera.com is a near-virtual U.S.-based drug development company with headquarters in San Diego, California and R&D operations in Shanghai. ChinaBio s business model is to in-license promising, early stage drug candidates, move them to human proof-of-concept in China, then out-license the drugs to major pharma or biotechs or spin them out to VC-backed ventures. ChinaBio Therapeutics is a spin-out from 2 http://www.drugdiscoverynews.com/index.php?newsarticle=1907 www.uktradeinvest.gov.uk Page 4 of 4
ChinaBio Accelerator (www.chinabio.biz), an organisation funding, mentoring and connecting early stage China biotechnology companies with the West. ChinaBio Therapeutics has received initial seed funding from its founders and Life Science Angels (www.lifescienceangels.com) and is now seeking institutional funding. Shanghai Genomics, Inc, www.shanghaigenomics.com was founded in August 2001, by returnees Dr. Ying Luo and Dr. Jun Wu, with funding of RMB43 million RMB from Shanghai Venture Capital Company and Shanghai Zhangjiang Hi-Tech Park Corp. In 2005, the company merged with GNI. The company currently employs more than 100 people with about 80% in R&D, including 17 Ph.D. scientists. Shanghai Genomics occupies 40,000-square-foot buildings. The company went public on the Tokyo Stock Exchange on August 31, 2007. OPPORTUNITIES - For UK biotechnology companies, partnering with Chinese universities and larger CROs on trials, development, commercialisation, talent, etc. - For UK suppliers of high tech instruments, market entry through distributors or Wholly Foreign Owned Enterprises (WFOEs) focusing on supplying multinational R&D centres, larger domestic companies, and larger CROs. - For UK financial and advisory services, opportunities for strategic investment and, subject to regulatory barriers, advisory services related to overseas listings. UKTI publishes international business opportunities gathered by our network of British Embassies, High Commissions and Consulates worldwide. These opportunities appear in the Opportunities portlet on the relevant sector and country pages on the UKTI website. By setting up a profile you can be alerted by email when relevant new opportunities are published. New or updated alert profiles can be set in My Account on the website. KEY METHODS OF DOING BUSINESS See China pages for the China Business Guide and Chinawide Biotechnology report on www.uktradeinvest.gov.uk for overview of key methods of doing business. Many common market entry problems are avoidable through sound research and making use of existing sources of advice such as UKTI, China Britain Business Council and the British Chambers of Commerce in China. When considering doing business in China, it is essential to obtain professional advice. A useful contact list of lawyers and other relevant professional bodies as is available from the Embassy and Consulates. In order to make the most of opportunities, consider using UK Trade and Investment s heavily subsidised Overseas Market Introduction Service (OMIS). Available at different service levels, OMIS can be tailored to your individual needs, from research and meeting programmes to advice on market entry and in-market business development. Contact your local International Trade Advisor if you are interested in accessing this services, or for general advice in developing your export strategy. Other background information on doing business in China can be found on UKTI s website. Simply go to the China country page where you will find information on: www.uktradeinvest.gov.uk Page 5 of 5
Economic background and geography Customs & regulations Selling & communications Contacts & setting up Visiting and social hints and tips EVENTS March 2008 - UK-China Innovation in Biotechnology Chinese media visit to UK 16 June 2008 - UK-China Innovation in Biotechnology seminar, Shanghai September 2008 Analytica China biennial international event, Shanghai see www.analyticachina.com CONTACT LISTS UKTI Shanghai & UK PARTNERS Paul Wills Consul, Trade & Investment British Consulate-General Shanghai Address: Suite 301, Shanghai Centre, 1376 Nanjing Xi Lu, Shanghai, 200040 Tel: +86 21 6279-8025 Fax: +86 21 6279-7388 Email: paul.wills@fco.gov.uk www.uk.cn/shanghai Jing Li Trade & Investment Officer British Consulate-General Shanghai Address: Suite 301, Shanghai Centre, 1376 Nanjing Xi Lu, Shanghai, 200040 Tel: +86 21 6279-7650, ext. 4824 Fax: +86 21 6279-7388 Email: jing.li@fco.gov.uk Life Sciences Sector Group - Biotechnology Mina Joshi Sector Manager Life Science Team UK Trade and Investment Tel: 44 1223 484 670 Fax: 44 1223 200 853 Email: mina.joshi@uktibiotech.org.uk China-Britain Business Council (CBBC) CBBC has regional offices in Shanghai, Nanjing and Hangzhou. CBBC is UKTI s partner in delivering OMIS services in China Website: www.cbbc.org.cn The British Chamber of Commerce, Shanghai Brit Cham in Shanghai has over a thousand members. Website: www.britcham.org www.uktradeinvest.gov.uk Page 6 of 6
UKTI s International Trade Advisers can provide you with essential and impartial advice on all aspects of international trade. Every UK region also has dedicated sector specialists who can provide advice tailored to your industry. You can trace your nearest advisor by entering your postcode into the Local Office Database on the homepage of our website. For new and inexperienced exporters, our Passport to Export process will take you through the mechanics of exporting. An International Trade Adviser will provide professional advice on a range of services, including financial subsidies, export documentation, contacts in overseas markets, overseas visits, translating marketing material, e-commerce, subsidised export training and market research. www.uktradeinvest.gov.uk Page 7 of 7