Merck's Licensing & External Research Director Jennifer Hu On Choosing Partners In China: An Interview With PharmAsia News

Big pharma's rush into emerging markets is bringing more R&D to these markets, and as one of the key emerging markets China has attracted most multinational companies to set their R&D and licensing footprint here. Jennifer Hu, Merck's director of licensing and external research, recently shared her thoughts with PharmAsia News' Shanghai bureau about Merck's partnering and licensing strategy in China.

PharmAsia News: Can you tell us about Merck's licensing strategy in Greater China and what therapies you are focusing on here?

Jennifer Hu: We recognize that most of the world's biomedical research is happening outside MSD's [Merck Sharp & Dohme or Merck & Co. in the U.S.] labs, so partnerships are an essential and integral part of our long-term business strategy. As such, in Greater China, as in other parts of the world, we are seeking innovative compounds and technologies for drug discovery, development and delivery for all major therapeutic areas and modalities.

Due to the cost advantage in China, risk-sharing partnerships for compound optimization and development of preclinical or clinical candidates are of particular interest to us. In addition, we are developing a regional strategy for in-licensing late-stage products suitable for the Chinese market.

[ Editor's Note: Merck opened its Asia Pacific headquarters in Singapore in 2007 to strengthen its focus on emerging markets, particularly Asia (Also see "Merck Opens Asia Pacific Headquarters In Singapore" - Scrip, 22 Aug, 2007.).]

PharmAsia News: How is it different licensing products in China than in more developed markets?

Hu: Since we are interested in licensing and partnering opportunities for our global R&D needs, we use the same high standards to evaluate opportunities from China as the rest of the world. Although most current opportunities are much less mature in China than in Western countries, more and more early-stage opportunities are emerging and developing in China.

PharmAsia News: How is conducting business and seeking partners different in China versus the rest of the world?

Hu: Because those involved in biotech/pharma licensing and partnerships in China are often facing new terrain, it appears that the sooner companies and investigators can interact with licensing and partnership professionals, the more beneficial it is to all parties involved in the licensing opportunity.

We also find that companies and institutions in China, like in many other parts of the world, place a high priority on getting to know their potential partners through a series of face-to-face interactions. This isn't always the case in other countries, such as the U.S., so Merck welcomes the opportunity to build our relationships with companies in China "in-person".

PharmAsia News: Which kind of partnerships are Merck most interested in right now in China?

Hu: Collaborations with companies and institutions worldwide discovering novel and innovative approaches to treating diseases with unmet medical needs have been part of Merck's strategic vision for the past 10 years.

Partnership with Merck covers the R&D continuum -- from early drug discovery through late stage development, so we are seeking a wide variety of possibilities in partnerships. It could be either a novel target or pathway for a disease with an unmet medical need, such as Alzheimer's disease; discovery of biomarkers for patient response in clinical development; or optimization of a compound from the lead stage to completion of preclinical or Phase IIb clinical studies.

PharmAsia News: Who are you currently partnered with in China and how are those deals typically structured? Are you partnered with mainly Chinese companies or universities?

Hu: Merck is currently partnered with Wuxi AppTech on synthetic chemistry and compound optimization via a full-time employment-based contract research organization. We also collaborate with Shanghai BioChip/ShanghaiBio Corporation and cancer hospitals/institutes for cancer biomarker discovery on a fee-for-service basis.

Merck has other FFS-based CRO partnerships. We are interested in all types of strategic partnerships with both companies and universities in China and encourage them to visit our website at www.merck.com/licensing to read more about our areas of interest and how to contact us.

PharmAsia News: What's your biggest concern, when you are licensing in China?

Hu: Some opportunities may not have filed for IP protection in Western countries or may not have solid IP protection. Occasionally, the ownership or source of the intellectual property is not clear.

PharmAsia News: What's the future plan for Merck in China? What are you expecting in China?

Hu: We have no plans to build a "brick-and-mortar" R&D facility in China, as some larger European pharmaceutical companies have done. At Merck, we charge our scientists with building a "virtual lab" - the blending of the best scientific programs from internal research and external collaborations.

We are focusing on externalizing our R&D activities in China through our partnerships and collaborations with companies and research organizations in China. We hope this will provide us with a flexible and open approach to partner with the best people at any time.

This external R&D model will also allow Merck to contribute to the growth of biotech/pharma R&D innovation in China by sharing our experience, expertise and programs with our partners and collaborators in China.

PharmAsia News: As you know, the global financial crisis is affecting small and mid-sized biotech companies. Do you see opportunities in China to acquire well-established biotech companies? What other types of opportunities or changes in strategies are you seeing as a result of the present financial situation?

Hu: We are primarily focused on securing partnerships at this stage. One concern is that the financial crisis will drastically decrease funding for small and mid-sized biotech companies. This could prevent these companies from making progress as desired and indirectly may slow the development of licensing and partnership opportunities in China.

PharmAsia News: Are you also partnering with local CROs and, if so, which kinds of R&D work are you delivering to them? What are the advantages and disadvantages of outsourcing R&D work to local CROs?

Hu: Merck has a number of partnerships with Chinese companies. One significant partnership is with Wuxi AppTec in China on synthetic chemistry and compound optimization to deliver candidates to our pipeline. The advantages for us include faster delivery, cost-effectiveness, and flexibility for the same high-quality work. Like any R&D outsourcing, communication across sites - and continents - has its challenges. However, as a global company, this is an issue that we have experience with and are confident can be well-managed

PharmAsia News: What's the impact of the merger with Schering-Plough in China?

Hu: The proposed merger with Schering-Plough is due to be completed by the end of 2009. The combination of the two companies is being overseen by an integration management committee. We believe that the pending merger with Schering-Plough will increase the potential opportunities for partnerships.

With greater resources, the combined company will have the financial flexibility to invest in internal candidates as well as external R&D opportunities. With a significantly broader portfolio of medicines and an expanded presence in key international markets, the efficiencies we gain will allow us to continue to invest in strategic opportunities.

[Editor's Note: The U.S. Federal Trade Commission requested that Merck and Schering-Plough provide additional information regarding their proposed $40 billion merger. Merck expects to bring more than $2 billion in annual revenue from emerging markets and to meet its goal of reaching the top-five market share in targeted emerging markets following its merger with Schering-Plough (Also see "Merck, Schering-Plough Aim To Be Among Top-Five Players In Emerging Markets" - Scrip, 24 Apr, 2009.)].

PharmAsia News: It seems that Pfizer is looking to expand into the generics field by the deal with Indian generic company Aurobindo and looks to integrate generic departments under Wyeth to Pfizer. Are you also keeping an eye on the generics opportunities worldwide and in China?

Hu: Follow-on biologics represents a significant market opportunity due to extensive patent expiries through 2017. Our GlycoFi Pichia technology is a superior platform for biologics that provides us potentially competitive advantages in the biosimilars business.

This technology potentially enables the production of high-quality homogeneous human glycosylation forms of monoclonal antibodies and protein therapeutics; increases the speed with which we can move from target selection to clinical trials; and decreases cycle time and cost for development and manufacturing.

Merck BioVentures has been established as a separate business unit designed to leverage Merck's unique protein therapeutic manufacturing capabilities and become the world's leading provider of follow-on biologics.

- Dai Jialing ([email protected])