WuXi Biologics To Be ‘World’s No.1’ Biologics Maker
Executive Summary
WuXi Biologics is aiming high to become the world’s biggest biologics manufacturer within five years after seeing strong confidence from capital markets in its growth potential and a boost from its new biologics manufacturing facility. The Chinese company plans on more investment in early 2018 to prepare for an expected biologics surge in China, its chief executive tells Scrip.
Providing greatly increased manufacturing capacities, WuXi Biologics expects its new biologics facility in Wuxi city could contribute up to 30-40% of the company’s revenues from its commercial production business in the next three to five years, the company’s CEO Chris Chen said in an interview with Scrip.
“Our commercial production business is expected to achieve a breakthrough, and will become one of the important driving forces for the company growth," Chen expressed his hope in the new plant’s future capabilities. “In three to five years, the revenue generated from biologics commercial manufacturing could reach around $100m annually, accounting for more than 20% of the [company’s] net profits.”
The new facility, claimed to be the world’s largest biologics manufacturing facility using “disposable” bioreactors, officially kicked off operations in December. Built with an investment of $150m in 2015, the plant houses two 1,000 liter bioreactors for perfusion processes, and 14 2,000 liter bioreactors for fed-batch cell culture on a 500,000 sq. ft. site. (Also see "WuXi Eyes Growing Biologics Business With New Integrated Center" - Scrip, 20 Jan, 2016.) (Also see "Asia Attracts Manufacturing Capital As Companies Eye Expanding Needs" - Scrip, 3 Nov, 2016.)
Currently, there are 134 projects undergoing commercial production at the new site. The leading product manufactured here - TaiMed Biologics Inc.’ ibalizumab - has already passed a Pre-License Inspection (PLI) by the US FDA in Aug 2017. The product for treating multi-drug resistant HIV, which is expected to be launched in the US soon this year, could be the first biologic approved in the US that is manufactured in China. (Also see "Election Boost For Taiwan Biopharma Industry?" - Scrip, 26 Jan, 2016.)
For other products, six have entered Phase III clinical trials, 35 are at Phase I/II stages, and 92 are under preclinical development. Among these projects, 60% are in the oncology and immunology areas. As for client base, up to 60% is foreign pharmas, while only 40% is domestic companies, according to Chen.
Overseas Clients
WuXi Biologics has seen a trend of more business coming from overseas clients compared to three years ago, when there was only 30% of revenue from multinational pharma firms, which has now doubles to 60%, Chen said.
The company also saw increasing clients among small to medium size companies, while its top ten biggest pharma clients have remained stable, he added.
“Right now the global market for biologics is bigger than the domestic, so we are having more clients from overseas after they got to know our advantages. But this figure could be changed in five years, as Chinese companies are developing more and more biologics.”
Currently WuXi Biologics has 20 to 30 products under manufacturing contracts from domestic clients, which are getting ready for filing investigational new drug (IND) applications with the US FDA.
“In five to ten years, China might need the biologics production capacity in hundreds of thousands of liters to support the local market,” he added.
“The current 30,000 liters production capacity [of WuXi] can only meet the demands of commercial manufacturing for two to three projects simultaneously, and we have already had six products in Phase III. As long as there are needs, we will further expand our production capacity,” Chen emphasized.
“In the first quarter of 2018, we will announce more investments in WuXi and Shanghai for the next three years.”
The capital market has echoed Wuxi Biologics’ ambition of seizing more market share in providing commercial manufacturing to support its growth. Its stock rose close to a historic high of HKD55 within a month of the company announcing the manufacturing operations; it went public in Hong Kong in June last year and now has a market cap of around HKD63.97bn ($8.18bn).
WuXi’s Competitiveness
The confidence of the capital market and clients lies in WuXi Biologics’ new technologies and know-how in developing biologics.
Its disposable bioreactors are easy to replicate for larger volume production, and only need 12 to 18 months to build a new facility using the same quality system, operation design and training program with relatively smaller investment. Traditional manufacturing methods often take up to 25 months to upgrade production capacities, Chen explained.
Using traditional stainless-steel bioreactors, a company can only produce 20 batches in one year, but disposable bioreactors - with 10 to 15% higher production capacity and efficiency - can manufacture 22 to 25 batches annually, Chen said.
“WuXi Biologics’ technology can provide higher productivity, which can yield up to 10 grams of product per liter in reactors with average production of 3 to 5 grams per liter, and the next generation of our technology is expected to produce 20 grams or more.”
WuXi’s competitive expertise also lies in developing new cell lines. The company currently has created 200 such lines and is developing 80 new lines every year with an R&D team of 1,200.
“We can develop and optimize a cell line in three to six months with lower cost, so our gross profit margin has achieved 40%,” Chen emphasized.
Conducting a “follow-the-molecule” strategy, the company also has the largest molecule pool within the 134 ongoing integrated projects that require WuXi’s services across different stages of the biologics development process.
“We have 134 different molecules, while Lonza Biologics has 40 to 50 molecules and Samsung Biologics only has 5 to 10,” Chen noted.
He stressed that ensuring high quality remains a core concern of the management team. “The quality of talent is essential. So we have established a training center to provide six to 12 months training for new comers, as well as constant opportunities for career development.”
Additionally, the company plans to recruit 100 skilled people from the US every year with experience in working at multinational pharmas. At present, it has 200 “returnees” and 2,500 employees, and soon the number is expected to increase to 5,000, Chen said.
Business Model For Partnering
WuXi Biologics is no stranger to active deal-making and it has already announced a string of high profile co-development partnerships to help Chinese pharma to develop novel drugs, some results of which have been out-licensed to more global pharma firms, such as Harbin Gloria Pharmaceuticals Co. Ltd.. (Also see "WuXi To Lead ‘China First’ Strategy For Lilly’s Novel Cholesterol Drug" - Scrip, 22 Mar, 2016.)
“Many Chinese pharmas still lack technology and know-how in developing biologics, such as Gloria. Our business model is to use WuXi’s proprietary technologies to help pharmas discover and develop new drugs based on development milestone payments plus 5% of future product sales,” Chen explained.
“We use a lot of our own IPs [intellectual properties]; and in the future, the company will also contract us to manufacture the products,” he said. “This is a very mature business model in the US [which] domestic companies are willing to accept.”
In 2015, Gloria and WuXi Biologics entered multiple partnership agreements to develop new chemical entities and biologics, including GLS-101, a novel anti-PD-1 antibody. In August last year, Gloria and WuXi out-licensed the exclusive development and commercialization rights of GLS-010 in North America, Europe, Japan and certain other territories to Arcus Biosciences Inc., a deal that could amount to $816m.
WuXi Biologics also will be the exclusive manufacturer for GLS-010 in the licensed territories for a specified period of time.
Chen emphasized that the agreement with Gloria was an ideal model elaborating how the company collaborates with Chinese partners, under which WuXi Biologics can continue to make profits after contracted R&D.
The trend of forming more local partnerships in innovative drugs is continuing to ride high, and the latest deal was signed in November 2017 between Gloria and WuXi Biologics to discover and develop new anti-LAG3 antibodies. Currently no domestic pharma firms are involved in the research of this new antibody, only big multinationals such as Novartis and Bristol-Myers Squibb are doing clinical studies.
Other high-profile local partnerships have included CANbridge Life Sciences Ltd. for the preclinical development, technology transfer, optimization and commercial production of CAN-008, a first-in-class CD95 ligand inhibitor to treat glioblastoma multiforme, and Zhejiang Medicine Co. Ltd. (ZMC) for the co-development of ARX788 with Ambrx Inc. from cloning to filing an investigational new drug (IND) application with FDA.
Other local partners include public companies to start-ups, such as Anhui Anke Biotechnology (Group) Co., Ltd., EpimAb Biotherapeutics, Adagene (Suzhou) Limited, I-MAB Biopharma and Celfuture.
“Now more and more small and medium-sized biopharmas are emerging in developing innovative biologics, who usually do not have sufficient funds and resources to build production capacity at the beginning of establishment, and they will need the help of our technology platform,” Chen explained, saying the business opportunities he sees are increasing from emerging companies and companies transforming from developing generics to novel drugs.
MAH Bolstering Biologic CMOs
Regulatory changes are also helping. China’s State Council rolled out a pilot program for a Drug Marketing Authorization Holder (MAH) system in May 2016 in 10 provinces. After the one-year trial, the policy seems to be attracting and inspiring returnees to bring home innovative products, as well as encouraging more filings for new drugs with independent intellectual property rights, including some for global novel drugs.
The program is now expected to be fully implemented nationwide in near future. (Also see "Authorization Holder Scheme To Shake Up China R&D, Production" - Scrip, 5 Nov, 2015.) (Also see "Beigene/Boehringer Biomanufacturing Bond Tests China MAH System" - Scrip, 10 Mar, 2016.)
Staying in business as a leader requires immense skill and foresight, and WuXi Biologics had built three plants even before the MAH system was implemented, said Chen.
“We are promoting China’s biopharmaceutical development, nowadays we have established 30 projects under the MAH system, mostly from small to mid-sized companies,” he said. “Our opportunities are from innovative drugs before the approval.”
Another potential opportunity could come from global pharmas that may need less expensive supplies for the local Chinese market, such as Roche.
In July 2017, four targeted drugs from the Swiss firm - Tarceva (erlotinib), Avastin (bevacizumab), Mabthera (rituximab), and Herceptin (trastuzumab) - entered China’s National Reimbursement Drug List (NRDL).
Back in 2012, Roche had handed out the manufacturing and marketing of trastuzumab and rituximab to India’s Emcure Pharmaceuticals Ltd. for the local market.
Chen noted this could be a “potential business model” for WuXi Biologics, as the drugs listed on the NRDL would have larger market.
From the editors of PharmAsia News.
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