Investors and Media


The Right Prescription

Keeping the world healthy is a costly business. The global pharmaceuticals market is worth US$300 billion a year and rising, according to the World Health Organization. To keep up with demand, the industry spends an estimated US$50 billion each year on R&D.

A growing slice of that investment is channelled into Hong Kong. Reputable clinical trial centres at the University of Hong Kong and the Chinese University of Hong Kong, coupled with regulatory changes to expedite the approval of clinical trials make the city increasingly attractive for pharmaceutical companies looking to accelerate the development of new drugs.

Hong Kong also prepares drug companies for entry into the Chinese mainland. Already, both universities have obtained approval to carry out clinical trials for mainland registration in a number of disciplines.

The Hong Kong Association of the Pharmaceutical Industry (HKAPI) represents 40 multinational companies engaged in the research and development of pharmaceuticals, including the world's top 20. The city’s biggest area of expertise is oncology, which accounts for 28 per cent of trials at the University of Hong Kong, and 24 per cent at Chinese University.

China Platform
Roee Shahar, Vice President of HKAPI, said Hong Kong is a great starting point for preparing a China strategy. “Hong Kong’s drug registration system is easy and efficient; it takes about 10 weeks to get clinical trial certificates by which the trade is facilitated,” Mr Shahar said. “As a communication hub, Hong Kong acts as a pilot test, with the spill-over effect being that the message is easily conveyed to bigger markets, such as the Chinese mainland and other parts of Asia.”

He added that Hong Kong has a solid trademark and patent system compared to other Asian markets. “Clinical trials in Hong Kong can be recognised on the mainland and worldwide, if properly filed with the China Food and Drug Administration,” he noted.

Mr Shahar is also General Manager of Eli Lilly Asia Inc (Hong Kong, Macau), the local arm of Eli Lilly, a global, research-based company founded in Indiana, United States, in 1876.

Lilly’s pharmaceutical development largely concentrates on therapeutic areas, including diabetes, neuroscience, cardiovascular diseases and oncology. But it is also generating potential biotech solutions – using therapeutic proteins or antibodies to treat disease – alongside more traditional chemistry-based work, to deliver innovative treatments for such diseases as cancer, multiple sclerosis, diabetes, osteoporosis, rheumatoid arthritis and Alzheimer's disease.

Strategic Location
Set up in 1984, Lilly’s Hong Kong office serves as the company’s regional headquarters. Eli Lilly Asian Operations serves more than two billion people in over 20 countries. Mr Shahar said Hong Kong has been pivotal to Lilly’s growth in the region.
“Hong Kong has served as both a local affiliate and as the Asian regional hub for many years. Its strategic location, excellent rule of law and staff with strong capabilities has helped Lilly with its expansion in Asia and the overall emerging markets strategy.”

Lilly also has a special relationship with local business partner YC Woo, which has been distributing its products for more than 60 years.

“Further, Hong Kong is a great place to do business because of the clear regulation and simplicity of its business channels. The cost involved in running a local affiliate is significantly less than other markets, offering a relatively lower investment with higher potential returns,” he said.

International Expertise
Hong Kong’s advantages “start with its location,” Mr Shahar said, noting that it seldom takes more than a few hours to fly anywhere in Asia. He added that Hong Kong has highly reputable medical schools in two universities, and that they often organise large-scale medical conferences, bringing many international experts to Hong Kong.

“In terms of R&D, the universities also have high competence in performing clinical trials. Some medical professors act as the principal investigator in regional or global studies.”

With its high medical reputation, Hong Kong can act as a bridge between Asia, Europe and the United States to bring innovative products and treatment to China, according to Mr Shahar. “Hong Kong can play an important role for pharmaceutical companies both for its local industry and as the gateway to China and Asia,” Mr Shahar said. “The pharmaceutical industry benefits from a climate of business, which is unlike anywhere in the world, and the local industry has grown at near double-digit levels for nearly 10 years now. The local market itself is not an endless pool of opportunity given the relatively small and stable population, but with a profitable local business and big opportunities in Asia, Hong Kong can be very useful.”

Gateway Advantage
Another company successfully using Hong Kong’s proximity to the mainland is RHEI Pharmaceuticals HK Ltd. The Hong Kong-based company focuses on bringing core medicine from the United States, Europe and Japan into the fast-growing Chinese marketplace.
“RHEI in-licenses approved and late-stage pharmaceutical products and medical devices from these reference countries and applies its development and regulatory expertise to bring these important therapies to China,” said CEO Sven De Backer. “RHEI’s internal capabilities encompass business development, regulatory approval and clinical development, combining a Western approach to pharmaceuticals with Chinese professionals, who are highly experienced in the region. We use our development capabilities and network of preferred commercial partners to help other pharmaceutical companies introduce their products into specific niche markets.”

Established in 2008, RHEI chose Hong Kong as its hub for business development on the mainland due to the city’s access to the Chinese market, and its “well-established and internationally recognised business, banking, legal and tax environment,” Mr De Backer said. “The latter is of the utmost importance to both our Chinese and Western licensing partners.”

The results “speak for themselves,” he said. Since its incorporation in 2008, RHEI has signed three large licensing deals with two mainland pharmaceutical companies: a 15-year licensing agreement with Jian’An Pharmaceuticals Ltd of Shenzhen for two proprietary products used by oncology patients; and another supplying Beijing King Health Investment Co Ltd with a diaper rash prevention and treatment.

“In all cases, RHEI has provided the Chinese companies with access to novel, innovative products on the market in Europe or the US and helped them with the regulatory approval process in China,” Mr De Backer said. “The advantage to the Western partners is that they get access to the large Chinese market through a well-known business development company without having to make the investments in the Chinese market themselves.”

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