Biotech Outsourcing To China

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Biotech Outsourcing To China

china.seekingalpha.com

Posted on Dec 18th, 2006

 

Centient Biotech Investor submits: At one point in our illustrious history, the

US famously needed a good nickel cigar. Now it needs less expensive healthcare.

 

Bridge Pharmaceuticals has moved to fill that latter need. Bridge was formed in

2004 as a spin-out from Menlo Park-based SRI International [which was once known

as Stanford Research Institute]. It has opened an animal testing lab in Beijing

that aims to lower the costs of drug development. In fact, Bridge says it can

cut the costs of animal testing in half, which should be an easy enough task to

accomplish, since drug development costs in China are usually thought to be

about 80% lower than in the US.

 

Plus, Bridge points out, animal testing does not raise the same political

problems in China that it does in the US, primarily because dissent is not

tolerated.

 

Bridge is headquartered in the US, but it has created from scratch a lab in the

Zhongguancun Life Science Park of Beijing that should be fully compliant with US

standards. Bridge expects to get GLP and AAALAC certifications so that it can

take a drug candidate through its IND submission. Because Bridge is

headquartered in the US, a drug discovery company with an attractive candidate

does not need to deal with cross-cultural differences.

 

Glenn Rice, CEO and founder of Bridge, first alternated between living in the US

and living in China, but now intends to make China his main base of operations.

 

The FDA generally requires animal testing to be performed on two species: rats

first and then either dogs or monkeys. Although animal testing causes moral

qualms for some people, there is no drug development without it.

 

China already supplies most of the dogs [usually beagles] and monkeys that US

labs use in their animal testing. Bridge has contracted with a US firm, which

already raises the animals in China, to supply the lab.

 

In its B round of venture capital, Bridge raised $22 million from a combination

of new and existing investors. The company will use the money to carry out its

basic business plan, but it also expects, in a twist, to look for future

acquisitions in Asia.

 

Bridge got its start with an A round led by WI Harper, the venture capital

company that has led biomedical venture capital investing in Asia. Although

venture capital is becoming increasingly interested in China, the majority of

the money is invested in IT rather than biotech. WI Harper has partially

redressed that imbalance.

 

Big pharma has quietly opened their own labs in China. Pfizer (PFE), Novartis

(NVS), Lilly (LLY) and Roche (RHHBY) have labs there already or they are

building them. But that leaves smaller biotechs, who ironically lack the deep

pockets, from enjoying the same cost advantages. Bridge fills that niche. MDS

Pharma (MDZ), a Canadian contract research organization with labs around the

world, opened its first lab in China in 1996.

 

To move into the Zhongguancun Life Science Park, Bridge was given a five-year

tax holiday plus other benefits.

 

Outsourced preclinical testing is already a $2 billion business. With more

biotechs going " virtual, " outsourcing will become more important. And with a

profoundly less expensive alternative to in-house testing, a company like Bridge

has an extremely compelling business plan.

 

Among other implications, a less-expensive drug development pathway makes it

financially feasible to develop drugs that will never become blockbusters, the

so-called orphan drugs.

 

http://china.seekingalpha.com/article/22598