Changes Encourage Celltrion And Nan Fung To Bet On China Biosimilars Opportunity
Executive Summary
Despite increasing competition, Celltrion has leapt into China's growing biosimilar market through a joint venture with Nan Fung, and another draw could lie in the biologics contract manufacturing potential in the country’s developing Greater Bay Area.
Celltrion Inc.'s recent decision to link with the Hong Kong-based Nan Fung Group to set up a joint venture, Vcell Healthcare Ltd., to develop and commercialize biosimilars in China reflects the growing attractions of the country as a market for such products, despite rising competition.
South Korea-based Celltrion granted the new JV exclusive rights in mainland China to develop, manufacture and commercialize three of its biosimilars: Remsima (infliximab; CT-P13), Truxima (rituximab; CT-P10) and Herzuma (trastuzumab; CT-P6). All three have already been approved in the US and EU, and Remsima gained IND approval in China in 2017.
The two partners will also explore establishing a biologics manufacturing facility somewhere in China, and while a site has yet to be decided, a fast-developing area in the south of the country may prove to be attractive.
Eyeing large market potential in China, where only a few domestic firms are developing biosimilars and there are no major international players in the space, Celltrion is vowing to capture the opportunity via the new joint venture with its Chinese partner.
Nan Fung is a relatively new biologics player in China, although the group was founded back in 1954. It is a diversified conglomerate with global interests in real estate, life sciences and financial investments, hotels and shipping. Its life sciences investments are made through Pivotal BioVenture Partners in both the US and China.
Supportive Policies
The expanding opportunity for biosimilars in China is being reinforced by favorable policy tailwinds. Entering 2019, regulators have prioritized increased use of generics and biosimilar products as a way to expand patient access to treatments with large outstanding clinical needs. (Also see "Biosimilar Boom in China Heralded By First Approval " - Pink Sheet, 27 Feb, 2019.)
The State Council in January issued a decree encouraging the production and supply of generics, in which the government said it intends to compile and issue a formal catalog listing selected generics currently in short supply that would be eligible for priority reviews. The government will also support underlying technologies to develop both chemical and biologic generics.
Since then, major domestic biologics firms have seen speedier approvals for their biosimilars, including Shanghai-based Henlius, which obtained the first approval for a biosimilar under the new regulatory pathway. China’s National Medical Products Administration announced on 22 February the approval of Henlius’s HLX-01, a biosimilar to Roche’s Mabthera (rituximab), for non-Hodgkin’s lymphoma.
Meanwhile, Suzhou-based Innovent Biologics Inc. has approvals pending for two biosimilars, IBI303 (adalimumab) and IBI-305 (bevacizumab).
While the market potential is large, the China biosimilar sector is becoming more crowded and the country now has the highest number of such products in development globally, with 200 said to be in various stages. As of February, at least five other biosimilars were either awaiting an approval green light or in late-stage development.
For its part, major local player Henlius has two more in Phase III development, HLX02 (trastuzumab) and HLX03 (adalimumab).
Lure Of 'Greater Bay Area'
Although the new Vcell joint venture has yet to choose a location for its planned manufacturing facility in China, the central government is creating a "Central Bay Area" conurbation that links and accelerates development in the southern cities of Guangzhou, Zhuhai, Hong Kong and Macau.
This is expected to create one of the largest regional markets in China, and the increasing level of income and middle-class consumers in the area may make the area particularly attractive for corporate investment. (Also see "China 'Bay Area' Calling: Merck KgAA Chooses Guangzhou For New Innovation Center" - Scrip, 15 Nov, 2018.)
“China has huge unmet medical needs for high-quality drugs with affordable prices,” noted Anthony Leung, chairman of Nan Fung, in relation to the new Celltrion JV.
A potential contract manufacturing facility would qualify for Guangzhou government support and would help meet increasing demand for biologic contract development and manufacturing organizations in China, he added.
(With contributions from Jung Won Shin in Seoul.)