HONG KONG (Reuters Breakingviews) - Move over, connected exercise bikes. There’s a new, more serious healthcare fad for investors: Chinese drugs. U.S. regulators in November approved the first-ever cancer therapy from the People’s Republic. For global pharmaceutical companies, a made-in-China blockbuster drug may be within reach.
The world’s most populous country is aging quickly. Despite overwhelming demand for treatments against cancer, diabetes, and cardiovascular disease, Chinese drugmakers have produced few innovative medicines so far. But there’s a new breed of biotechnology upstarts inspired by friendly policies, government research incentives, and the prospect of grabbing a slice of the world’s second-largest drugs market, at $137 billion in 2018 according to healthcare analytics group IQVIA.
Leading the charge is BeiGene. The Beijing-based company, valued at $12 billion as of early December, focuses on oncology treatments. China now accounts for more than a fifth of new cancer cases, according to the International Agency for Research on Cancer. And BeiGene’s co-founders, John Oyler and Xiaodong Wang, have global ambitions. In November its lymphoma treatment won an accelerated approval from the U.S. Food and Drug Administration – a first for a Chinese company.
More such breakthroughs are probably on the way. One reason is the country’s 2017 entry into the International Council for Harmonisation, which sets standards for developing new drugs. For China, a key benefit of adopting ICH guidelines is that other members of the coalition, including American and European regulators, will more readily accept local clinical trial results. BeiGene’s landmark U.S. approval was also the first to be based partly on data from Chinese patients.
Big Pharma is noticing. Just weeks before the United States approved BeiGene’s cancer drug, biotechnology giant Amgen splashed out $2.7 billion for a 20.5% stake in the company. The same month, AstraZeneca unveiled plans to partner with investment bank China International Capital Corp to launch a $1 billion healthcare fund in the country. These big-name endorsements will attract other potential investors.
Unfortunately, as with many health crazes, this one comes with small-print warnings. Most Chinese biotech firms don’t have a long record, so it’s difficult to tell good from bad. BeiGene itself was subject to a short-seller attack earlier in 2019. Moreover, clinical trials in developing countries have often been plagued with fraud and other issues. Some unexpected side-effects are inevitable.
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