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SDBJ News Report 1
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| Date: |
Nov 20, 2006 |
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SABPA in Media |
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SABPA |
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SDBJ News |
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U.S. Taps Sleeping Giant in Asia’s Life Sciences Realm Executives Are Waking Up to Savings, Research Potential By Joining Forces Across the Pacific
Posted date: 11/20/2006
Link: http://www.sdbj.com/article.asp?aID=107427&link=perm
By KATIE WEEKS
SAN DIEGO BUSINESS JOURNAL STAFF
While Ascenta Therapeutics Inc. executives in San Diego are fast asleep, their counterparts in the firm’s Shanghai, China, office are working through the night.
“They are just starting when we go home,” Ming Guo, vice president of pharmaceutical sciences and manufacturing at San Diego-based Ascenta, said of the 16-hour time difference. “If I send an e-mail before I go home, the answer is there waiting for me as soon as I wake up.”
But the company’s ability to speed development of cancer drugs by working around the clock, around the globe isn’t its main reason for starting the wholly owned subsidiary in China in April.
Life science firms are saving up to 75 percent on projects by completing them in Asia, industry reports say. For life science companies, outsourcing and other partnerships with companies in Asian countries, including China, India, Japan, Korea, Taiwan and Singapore, are becoming more the rule than the exception, industry members say.
Joe Panetta, chief executive officer of Biocom, which represents 500 life science firms in San Diego County, said there is a growing interest in doing business in Asia among local life science companies. But like other industry members, he said it’s difficult to quantify just how many local life science firms have one foot in the East.
Panetta said these companies include Althea Technologies, Cambridge, Mass.-based Biogen-Idec, Invitrogen Corp., BioDuro and Arena Pharmaceuticals Inc. — just for starters.
Shaving Payroll Costs
Laura Shawver, chief executive officer of Phenomix Corp., said her firm saves more than 50 percent by employing a contract research firm in China. Phenomix uses 10-15 scientists there to synthesize compounds.
“They make starting materials or building blocks,” Shawver said, adding that her firm is considering holding some clinical trials in India. “We finish it.”
Peng Chen, a partner at San Diego’s Morrison & Foerster office who has focused his law practice on the biotechnology industry, said more than half of major pharmaceutical companies have facilities or agreements with Chinese companies.
Partnerships with companies in China and India, where labor costs are low, tend to be for outsourcing of research and development, and some manufacturing, industry experts said. Chen said outsourced research is now more likely to include pharmacology and toxicology, not just chemical research.
Industry members point to the highly educated work force in China and low cost of doing business there as the country’s strengths in the area of life sciences. “They don’t have as much strong intellectual property yet,” Guo said. “But that’s changing.”
Partnerships with Japanese companies are more likely to be centered on licensing rights to a drugSingapore and Taiwan are also gaining popularity in life science communities. Both governments are pushing life sciences, and Singapore’s mature legal system is helping the industry to grow there, said Guo..
Ed Holmes, former vice chancellor of health sciences and dean of the medical school at UC San Diego, recently moved to Singapore to take a job overseeing translational medicine at National University of Singapore and the Agency for Science, Technology and Research, or A*STAR. He is also a medical professor at the university there.
Holmes said Singapore’s work force is highly educated with some of the “best in the world in science and math.”
“Singapore, unlike some of the less developed countries in this region, respects (intellectual property) as much as we do in the U.S., and their regulatory policies are rational while protecting the public interests at the same time,” Holmes wrote from Singapore in an e-mail interview for this story. “For example, their internal review boards are quite similar to those in the U.S. so a company can be assured that they will not encounter issues related to protection of human subjects when they do clinical research here.”
On a lighter note, Holmes said Singapore is becoming such a popular place to do life sciences business that he “almost always” sees at least one person he knows from a biotechnology firm or big pharmaceutical company on the nonstop flight he takes between Singapore and Los Angeles.
Eyes On China
Although the Taiwanese government is pouring money into life sciences as well, Guo said the island will have a tough time competing with China because he said the cost of labor there is twice as high as in China. He also said for clinical trials, a life science firm could have access to a population of 20 million people in Taiwan, versus 1.3 billion in China.
Panetta said Korea is another country that is gaining popularity for partnerships among San Diego’s life science firms. A delegation of more than a dozen Korean technology transfer and academic professionals toured San Diego’s life sciences research institutions this month. The group, sponsored partly by international trade group Global Connect, toured The Scripps Research Institute, UCSD and met with officials from local trade group NanoBioNexus.
Drew Senyei, a managing director at La Jolla’s Enterprise Partners Venture Capital, said having a global strategy is “absolutely essential” for life science firms today, but that business partnerships in Asia are less common among early-stage firms.
“It really comes down to the most efficient way to work,” Senyei said.
Senyei agreed there are some who might call outsourcing Anti-American, but he says, “My view is that in the short run, we lose jobs, but in the long run, it forces us to create higher value jobs here.
“You’re in a global market,” he continued. “You can’t let short-sighted concerns get in your way.”
Senyei said consumers buying lower-priced drugs over the Internet from Canada make it difficult for American drug companies to compete, and he said outsourcing is one way to level the playing field.
Matching East-West Partners
Zhu Shen, senior director of business development at San Diego’s Immusol Inc. which develops drugs to treat cancer and other diseases, started a consulting company four and a half years ago that helps companies find partners for licensing, partnerships and financing in Asia.
Shen said different laws and standards in other countries make it difficult for life science companies to know what contract research organizations to select or which companies to partner with in Asia. She said there is much competition among these organizations in China, and so reputation and price are large factors.
“Standards are lacking,” Shen said. “There is no database for this. You really have to have the right connections. You have to know their track record … Ones that don’t do quality work will not survive.”
San Diego has contract research groups, too, like Explora BioLabs, founded by its Taiwan-born President Richard Lin in 2004, who said that at the time, the pharmaceutical company for which he worked was having difficulty finding a local outsourcing option.
Shen, who is also a board member for the Sino-American Biotechnologyand Pharmaceutical Professionals Association, estimates that 30 percent to 50 percent of life science firms in San Diego County have some type of partnership or contract with Asian companies.
Immusol has been outsourcing in Beijing and Shanghai since 2005. Immusol also collaborates with Peking University and has used the institution’s library of natural compounds, including Chinese herbs, to screen for useful compounds.
Shen said that Immusol has not yet found a financially viable deal for co-developing drugs with a Chinese firm.
“We’ve met with a number of Chinese pharmaceutical companies in the last year,” Shen said. “There are companies that are interesting but don’t have a lot of money to make deals with us. As a small biotech, we need the cash to keep going and to progress. They’re still at a different level. They cannot commit to developing a novel drug under the kind of terms we are used to in the Western world.”
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