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Clinical Trial Costs in Emerging Geographies: China R. Stephen Porter, Pharm.D President, CEO and Chairman VDDI Pharmaceuticals Director & Co-founder Dragon.

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Presentation on theme: "Clinical Trial Costs in Emerging Geographies: China R. Stephen Porter, Pharm.D President, CEO and Chairman VDDI Pharmaceuticals Director & Co-founder Dragon."— Presentation transcript:

1 Clinical Trial Costs in Emerging Geographies: China R. Stephen Porter, Pharm.D President, CEO and Chairman VDDI Pharmaceuticals Director & Co-founder Dragon Bio-Consultants, Ltd. Hong Kong, SAR

2 VDDI Pharmaceuticals As its name suggests, VDDI Pharmaceuticals utilizes a virtual business model. Virtual drug development entails: (i) a small core group of employees responsible for strategic management, regulatory strategy, and financial control, (ii) outsourcing all non-core business functions, including preclinical and clinical drug development, and (iii) electronic data capture and data submission to regulatory authorities.

3 PROPRIETARY3 Xemilofiban Summary Product has already been studied in both Phase II and Phase III clinical trials 12K patient experiences Proven safety and efficacy Advantages over existing products Growing total market flattening sales with expanded indications Advantage of IV to oral conversion

4 Strategy for Development Secure Local Operating Company agreement Meet with sFDA for Guidance – Translation key documents CMC tech transfer – PO and IV Formulation Phase II III Multi-Center Trials China and Then US PROPRIETARY4

5 Dragon Bio-consulting: Services Currently Being Provided Clinical Trial Management Services - MASH™ Preclinical translational and toxicology services Bioprocessing & Engineering Consulting Inspection and diligence services for cGCP, cGLP, and cGMP Business and commercial development services in the Asia- Pacific pharmaceutical and biotechnology sectors Regulatory and resource mobilization services in the Asia- Pacific markets Partnering and M&A Import Export services for Branded and Generic Pharmaceuticals ( Green Channel Logistics)

6 Why China Market: China is expected to become the world's 3rd-largest prescription drug market in 2011, and the market in China may be doubled by 2013 (IMS data) Special SFDA Regulations: Clinical trials are required for all imported drugs before marketing. So, trials for marketing registration will be greatly increase Data generated from Chinese sites in a global trial can be used for an import drug registration, so that the clinical trial can be exempted if the data comply with SFDA’s requirements. This may save 2-4 years for a new drug to be marketed in China. More global trials are anticipated as more and more pharmaceutical companies become aware of this regulatory strategy.

7 Why China Trends of Drug Development : There have been increasing number of R&D centers set up by major global pharmaceutical companies in China in the last three years. As a consequence, more and more global trials for new drugs are predicted to be led from China

8 CRO’s – clinical development ASIA Mainland China – Local; Kendle, TigerMed, – MNC or JV; Accelovance, Covance, Excel (PPD), ICON (Fountain Medical), Quintiles Taiwan – DCB India – Local; Biocon (Clinigene), – MNC Singapore (Malaysia, Thailand, Vietnam) – Local; Gleneagle (pan-Asian and Australia) – MNC; Covance, Parexcel, etc South Korea – MNC and local

9 Business environment - China Perceived market – true market – Pharma market expected to grow 17% in 2010, becoming 3 rd largest in – Resources needed to penetrate the many diverse markets – Pricing; Biologics 50 – 90% below west, so far sub-standard drugs – Ability/Inability to pay for a treatment – Public health insurance, pricing practices and change! Hidden / “Unaccounted” costs – HR; turn-over, training, efficiency, foreign staff as local employees (rent, schools, corporate credit cards, foreign currency exchange …) – Unpredictable and changing regulations – Corruption – State sponsored industrial espionage

10 Business environment - China  Tax incentive for new and high tech R&D o Exempt of import duty and VAT for equipment and reagents. o 1000 Talents program o 5.85 B USD investment by PRC in Biotech and HC and Pharmaceuticals  Price pressure on pharmaceuticals. o New “Measures for the Administration of Drug prices” announced June 2010, off- patented originator pricing will go down  Legal and Regulatory hurdles: o Product registration 6-9 months minimum for approvals to begin trials often 1 year of more o Clinical trial data acceptance, 1601 trials have been conducted in China by MNCs since Mostly Phase III-IV o Levies and import duties o Competition watchdog ; M&A (In 2010 Pfizer forced to sell animal vaccine to local company)  Force foreign business to set-up manufacturing and operations in China.

11 Regulatory environment Formal regulatory frame work – SFDA moving towards PIC/S – KFDA moving towards USFDA – ASEAN’s mutual recognition scheme 2012 – Central Drugs Standard Control Organization (CDSCO), India, Directorate General of Health Services, Ministry of Health and Family Welfare, Government of India (WHO CGMP) 200 Reviewers at SFDA, 2000 at USFDA Enforcement/Graft Generic- & TCM-traditions Vs. NCE & NBE CRO/CMO; Mindset and level of understanding

12 N o r t h A m e r i c a E u r o p e A s i a / P a c i f i c L a t i n A m e r i c a A f r i c a Market Attractiveness Matrix for Asia Country Patient Access Cost Market Opportunity Regulatory Approval timelines Australia months India months China months Korea months Taiwan++ 3 – 4 months Singapore months Indonesia – 4 months Malaysia – 4 months Thailand – 4 months Philippines months Vietnam – 5 months 12

13 Business environment The herd mentality in Pharma industry: China India AstraZeneca $100 M investment, R&D Center May06Apr07Mar07Feb07 Jan07 Dec06 Nov06 Novartis $100 M investment, R&D Center in shanghai, 400 FTEs Merck / Advinus risk sharing deal on metabolic disease target Amgen sets up clinical development center in Mumbai Eli Lilly / Nicholas Piramal $100M risk sharing partnership AstraZeneca sets up process R&D lab in Bangalore Roche plans to expand R&D center in Shanghai GSK plans to establish a fully integrated R&D center GSK / Ranbaxy $100 M risk sharing partnership AstraZeneca China R&D center will be located in Shanghai Lilly $100M investment in 5 years BMS/ Biocon / Accenture $300M partnership GSK / Tata Consultancy Service partnership Jun07 GSK sets up a R&D center (CEDD) in neurodegenerative disease in Shanghai

14 2 nd Tier Cities Changchun Chengdu Hangzhou Hefei Kunming Taizhou Tianjin Xian Zhenghou Recommended Second Tier Cities

15 Blood Draw ProcedureCountryFlagLow (USD)Medium (USD)High (USD) Blood DrawUSA China567 Hong Kong7710 Korea567 Thailand234 Taiwan Source: GrantPlan® (www.ttc-llc.com)www.ttc-llc.com

16 ECG ProcedureCountryFlagLow (USD)Medium (USD)High (USD) EC GUSA China Hong Kong Korea Thailand Taiwan Source: GrantPlan® (www.ttc-llc.com)www.ttc-llc.com

17 Initial Physical Exam (~60 min.) ProcedureCountryFlagLow (USD)Medium (USD)High (USD) Initial Physical Exam USA China Hong Kong Korea Thailand Taiwan Source: GrantPlan® (www.ttc-llc.com)www.ttc-llc.com

18 Physical Exam (~15 min.) ProcedureCountryFlagLow (USD)Medium (USD)High (USD) Physical Exam USA China Hong Kong Korea Thailand Taiwan Source: GrantPlan® (www.ttc-llc.com)www.ttc-llc.com

19 Keys to Success Factors : China Talent – “Hai Gui” – Leadership – recruitment and retention – Technical expertise – Clinical, industrial R&D, and regulatory experience – Communication with international sponsors Regulatory and compliance – GLP and cGMP training and practice enforcement – IND, NDA, ANDA experience Communication and client interface – Working language – English and Chinese, notebook, verbal and written communication – Recognizing culture differences on both sides (“fee for service” and “guaranteed results”) Supporting mechanism – infrastructure and funding – Need greater support – Ease of procuring patients, sample shipping and etc. Training – start with a clean slate – cGCP, cGLP, cGMP – Technical training ( Cato, Beckloff Associates etc….) – Compliance training needs time

20 Risks: China Dynamic / fluid Environment – Economics, work force training & retention (high cost of living & poaching in 1 st Tier Cities) – SFDA regulatory uncertainties leading to reluctant clients Delayed programs – Governmental oversight / monitoring (Internet) Repatriating monies out of country Internet privacy data corruption Conflicts between different cultures, traditions, as well as value systems. – Goal mis-alignment between partners – Moral Hazard Situations Ethical concerns & corruption is endemic – There are “no secrets” in China – Contract law – “Red Envelop mentality”

21 Contact Information Steve 斯蒂夫 R. Stephen Porter, CSO Dragon Bio-Consultants, Ltd. Suite 55, 5/F New Henry House, 10 Ice House Street Central, Hong Kong SAR HK Registered Company No.: SKYPE: virtualdoc (Cell China) +1(615) (Cell USA) 香港中環 雪廠街 10 號 新顯利大廈 5 樓 55 室 香港公司註冊號碼:

22 Dragon Bio-Consultants, Ltd. Suite 55, 5/F New Henry House, 10 Ice House Street Central, Hong Kong SAR HK Registered Company No.: SKYPE: virtualdoc (Cell China) +1(615) (Cell USA) 香港中環 雪廠街 10 號 新顯利大廈 5 樓 55 室 香港公司註冊號碼: VDDI Pharmaceuticals Chairman, President and CEO 115 Penn Warren Drive Suite Brentwood, TN (615) (cell) (Cell China) R. Stephen Porter, Pharm.D., FCP MRCP


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