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Nov 17, 2020

Pfizer seeks deals with Chinese biotechs to offset lost revenue

Most important differences for COVID vaccines will be efficacy and safety: Healthcare analyst

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Pfizer Inc. is on the hunt for partnerships with Chinese biotech firms developing novel drugs, as the American pharmaceutical giant regroups after Beijing’s aggressive price-cutting campaign eroded profit margins in its mainstay blockbusters.

The Lipitor and Viagra maker is embarking on a strategic shift to maintain growth in the world’s second-largest drug market after China slashed prices for off-patent medicines by more than 90 per cent in some instances.

Some of that growth will come from licensing promising drug and vaccine candidates from local up-and-comers, rather than from its own pipeline, said Christopher Hickey, Pfizer’s Beijing-based senior director for global policy.

“The Chinese biotech sector has significantly expanded in the last several years,” Hickey said in an interview in Beijing on Monday. “The opportunities are simply growing in leaps and bounds in China for those types of partnerships.”

In July, Pfizer entered a deal with vaccine-maker CanSino Biologics Inc. to promote its meningitis vaccine in China, which has yet to secure regulatory approval. Then in September, it invested US$200 million in another Chinese biotech, CStone Pharmaceuticals, for a 9.9 per cent stake and licensed its experimental cancer therapy for the mainland market.

Such tie-ups are becoming increasingly common between local drug startups and established western pharmaceutical firms, as China’s nurturing of its biotech sector starts to bear fruit. Last year, Amgen Inc. paid US$2.7 billion for a 20.5 per cent stake in Beijing-based BeiGene Ltd., whose cancer therapy Brukinsa later became the first Chinese cancer drug approved for sale in the U.S.

Eli Lilly & Co. has also licensed cancer therapies from local firms, and is co-developing a Covid-19 antibody cocktail with Shanghai Junshi Biosciences Co.

This pivot to local partnerships has taken on increasing urgency as western pharmaceutical firms become all but shut out of China’s generic drugs market.

Pfizer’s off-patent drugs like lipid-lowering Lipitor and hypertension medicine Norvasc previously underpinned growth, making it the biggest foreign drugmaker in China.

Those plans have been upended since Beijing started driving down the prices of generic drugs through a fierce bidding process for supply contracts to public hospitals. With local makers bidding at prices up to 90 per cent lower for drugs that treat everything from diabetes to schizophrenia, western pharmaceutical firms have little hope of securing any agreements.

The policy was cited by the company as a major contributor to the 15 per cent -- US$307 million -- drop in Pfizer’s off-patent drugs unit Upjohn’s revenue from emerging markets in the first half of 2020. Upjohn is being combined with Mylan NV to form a new company called Viatris Inc.

Growing replacement by local generic makers, the aging population and a national epidemic of cancer and chronic diseases makes China “more and more like a developed market,” said Hickey.

“In the context of the challenges that we see here, the value for us and the area of greatest emphasis for us is new medicines that we can bring to China,” he said. “Partnering with local biotechs can help us in that respect.”