MassBio Forum: Doing Business in China, Trade Friction or Pharma Fusion?

By: John Hession

JMH Headshot Photo 2015 (M0846571xB1386)This week I attended a MassBio Forum Panel on Doing Business With China: Changing Regulatory Reforms and BD Opportunities in China. The panel members were Kate Haviland, Chief Business Officer at Blueprint Bio; Wei Zhao, Vice President at VP 6 Dimensions (Wuxi Ventures); and Kenneth Zhou, Partner at WilmerHale. The moderator was Ryan Roller, Vice President, Life Science & Healthcare, at Silicon Valley Bank.

Despite the trade frictions due to the current trade policies towards China, all of the speakers were bullish and optimistic about the pace of regulatory reform, accelerated drug discovery, and strengthening IP protection in the Middle Kingdom.

The speakers noted that due to staffing increases and the influx of capital, the Chinese equivalent of the FDA was expediting the new drug review process, sometimes shortening this regulatory review from a customary 18-20 months for a revised review cycle of 8-10 months. Furthermore, new CDA regulations afoot would further accelerate the once protracted pathways for regulatory approval.  Indeed, there was a new “priority approval” process of 60 days for an imported new drug application (rather than a generic drug). The speakers also observed that the CDA had implemented a Chinese version of the FDA’s “Orange Book.” Commenting on deal structures, the speakers universally observed that licensing agreements were the preferred method for executing and implementing collaboration programs and strategic alliances, and that the U.S. contract style for more comprehensive licensing agreements had become the market norm – rather than the two-page, less informal term sheet that Chinese business people preferred.

Additionally, the speakers explained that joint ventures in China were more complex to structure, required a local facility presence and local government review, required an entity to be formed in China, and were difficult to extricate if the commercial arrangements soured. Nonetheless, the panelists commented favorably that there was a renewed “positive reception” by local Chinese governmental authorities to offer advice and assistance, build relationships, and encourage the deployment of capital and personnel.

In summary, despite the “doom and gloom” of what you might read and hear in the national press, there is a sustained spirit of entrepreneurship in China, encouragement of foreign capital, and accelerating regulatory reform for launching drugs to Chinese markets. All of these developments and reforms augur new opportunities for Boston-based life science companies seeking open frontiers in the Middle Kingdom.

For more information, please contact John Hession.