Eli Lilly's China R&D Head Tony Zhang On Looking At The Universe Of Possibilities In China: An Interview With PharmAsia News

Eli Lilly was the first to coin the term FIPNET, which brings the focus of becoming a fully integrated pharmaceutical network on partnerships rather than doing it all as a fully integrated pharmaceutical company, or FIPCO. Eli Lilly's Head of China R&D Tony Zhang sat down with PharmAsia News along the sidelines of the recent Shanghai R&D Summit to discuss Lilly's approach to R&D in China. Much of doing R&D in China is about building up a local ecosystem for innovation and, according to Zhang, it is about being a "sower and a grower," rather than just a "seeker and a picker."

"What we are trying to do here is to build a China portal to our global organizations," Tony Zhang told PharmAsia News. "Traditionally, other than licensing activities, we were pretty much doing everything ourselves within the walls of Lilly. Right now not only more of the work is carried out through partners, but emerging external capacities and capabilities are also changing the nature of our work."

"Before, if we saw a technology or new capability, we would buy the instrument, license the technology or acquire the company," Zhang continued. "But we recognize that is not necessarily the best way to leverage the resources and the wisdom of the entire universe, so we have moved our focus from owning to accessing it, be it a technology, capability or additional capacity."

China's landscape is changing so rapidly, Zhang said, that pharma companies need to stay agile and dynamic rather than being stuck in one paradigm of drug discovery. He said that a large portion of the drug discovery process is really not competitive - and companies should find ways to collaborate and share the available resources.

"There have been a lot of discussions on how to improve the probability of success," Zhang said, "and some progress has been made. However, it is probably easier to lower your cost of failure than to raise your probability of success."

In today's drug development market, companies are taking a hard look at their pipelines and developing candidates closer to the clinic, he said. But when asked whether there was more development and less research in China, he said it really depends on "how you define R&D."

"If you define D as starting from clinical candidate selection, then I don't think we have enough data to say there is less R and more D in China." For example, capabilities for in vivo biology and toxicology are improving rapidly, and API manufacturing typically starts much earlier than the actual first human dose, he said. In addition, much of the development cost goes to clinical trials, and China's potential in that segment has not been fully tapped.

But he agreed that most companies are looking more at the country in terms of identifying and developing drug candidates rather than early-stage research such as target identification at the moment.

Still, he said, it is better to "have an open mind to see what is out there and envision what can be done, the first derivative, than focusing on the area under the curve - the AUC." He explained that the AUC represents what has already been accomplished, while the first derivative shows the trend of where things are heading toward, a sort of leading indicator for potential and possibilities.

Building Up Local Resources

"A lot of people are coming to China with a set of predefined criteria to license a compound and they go away disappointed, but instead of being seekers and pickers, they could be sowers and growers, [and] that is what we are doing in China."

He explained that the networking organization BayHelix has helped a number of entrepreneurs to start up successful businesses in China (Also see "Network Group BayHelix Links Life Sciences Leaders To Blaze New Trail In China – An Interview With PharmAsia News (Part 2 of 2)" - Scrip, 2 Feb, 2009.).

When Zhang returned to China from the U.S. in 2000, he said there were no local contract research organizations to meet Lilly's need, so the company worked with local entrepreneurs to found ChemExplorer for discovery chemistry services. When the need arose for chemistry, manufacturing and control development and toxicology, PharmExplorer and BioExplorer were set up in a similar fashion, with the latter being acquired by Wilmington, Mass.-based CRO Charles River Laboratories.

All of Lilly's R&D work in China is done through partners, he said, noting that Lilly does not have any wet labs. "We don't own a single test tube," he said, "so Lilly's investment goes to provide employment opportunities for local scientists and building up business here."

ChemExplorer was founded exclusively for Lilly's R&D. When ChemPartner was set up later by the same Chinese partner to meet demand from other clients and build more capabilities, Zhang explained, "our work spilled over for ChemPartner as well."

ShangPharma, parent of ChemExplorer, PharmExplorer, and ChemPartners, was established in 2003 at Shanghai's Zhangjiang Hi-Tech Park, and today it is one of the leading R&D outsourcing providers in China (Also see "Shanghai ChemPartner CEO Michael Hui On Finding A Niche In China Amidst Increasing Foreign Competition: An Interview With PharmAsia News (Part 2 of 2)" - Scrip, 16 Apr, 2008.)

"Once we have a critical mass here, we don't have to tell people what capabilities to add. Smart entrepreneurs figure that out quickly," Zhang said, "A quicker feedback look guarantees efficiency and this is the beauty of having a drug R&D ecosystem."

Courting India, FOBs Next?

When asked about Lilly's recent courtship with India, and whether there were synergies between China and India for R&D, Zhang was positive but did not want to generalize, saying the two Asian giants are very diverse, with landscapes evolving rapidly.

Still, he said, "The two countries share a lot of similarities. People try to match the work according to what each country can offer advantageously from a resource-efficiency perspective, and India at the moment has an edge on clinical and drug products development."

He said China has a stronger infrastructure and a more established chemistry and in vivo biology base, but Lilly also has a number of chemistry collaboration projects in India.

Lilly and India's Jubilant Organosys created a joint venture last year to develop molecules for cancer and diabetes indications, with the two companies set to invest a combined $8 million over the next three years (PharmAsia News, Oct. 06, 2008).

Lilly also struck collaborative research deals with India's Piramal Life Sciences, Suven and Zydus Cadila for drug discovery and development of new cardiovascular treatments (Also see "Excited By Unique Capabilities Of Zydus Cadila, Eli Lilly Partners For Research In Cardiovascular Drugs" - Scrip, 30 Mar, 2009.)

Zhang said follow-on biologics could be quite strong in China: "There is a burgeoning biotech industry and the hurdle for biotech entry is not as high as some people initially thought."

He also said the global financial crisis is creating doubts about the sustainability of the existing funding models, and added he worries about investment fleeing from biomedical innovation.

"It forces the industry to ask the hard questions," he said. "Ultimately it boils down to how to add value to the society, such as what problem does your drug solve for the patients, and is it good value compared to the alternatives?"

The regulatory hurdles set up by China's State FDA for innovative products are tough, though not insurmountable, he said, noting that there have been several new chemical entities approved in China, along with some vaccines, proteins and even monoclonal antibodies.

"China is becoming the second-largest market, so it naturally should also be the second-biggest contributor of new drugs," Zhang said. "To achieve that, there needs to be considerable improvement on the regulatory environment and focused R&D investment."

Despite the global financial crisis, Lilly is planning on major growth in China, Zhang said. This year, Lilly will double its China sales force from 800 people to 1,600 people, as it aims to further penetrate smaller cities and rural areas (PharmAsia News, March 30, 2008).

"So, if you look at China, it is one of the bright spots."

- Tamra Sami ([email protected])

[Editor's note: Tony Zhang will be participating in a China rountable discussion with other China R&D leaders at EBI's PharmAsia Summit in San Francisco Oct. 26-28. For more information, and to register for the conference, visit http://www.windhover.com/windhover/content/conferences/PharmAsia.aspx. Tony Zhang is also a member of the networking group BayHelix.]