Replies to post #36893 on Biotech Values

[DewDiligence]

NVS has been talking about this publicly for more than a year (#msg-8300091).

[DewDiligence]

NVS Seeks Drugs from Ancient Chinese Cures

http://online.wsj.com/article/SB116354914377323235.html

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By NICHOLAS ZAMISKA
November 15, 2006

SHANGHAI -- On an afternoon in Xinjiang province in China's remote and mountainous west, botanist Shen Jingui was searching for a snow lotus, a grayish-white flower used for centuries in Chinese medicine to alleviate the symptoms of premenstrual syndrome. He spotted the plant on a rock ledge and shimmied across to pick it. He slipped and plunged some 30 yards, slamming into rocks on the way down.

When he regained consciousness, local farmers were putting him on a horse to take him to the nearest health clinic, several hours away. "I was very scared," he recalls of the incident, "but I was happy to collect the material."

Mr. Shen, head botanist for the Shanghai Institute of Materia Medica, a government-funded laboratory, has spent three decades trekking across China and going to great lengths to ferret out rare plants and herbs traditionally used in treatments for ailments ranging from aches and pains to cancer.

His bag of plants has captured the interest of Swiss drug giant Novartis AG, which since 2000 has invested several million dollars in a venture with SIMM. Last month, Novartis struck a similar deal with the Kunming Institute of Botany, an organization that works with traditional remedies in the country's southwestern Yunnan province. Earlier this month, Novartis announced it will invest about $100 million in its own pharmaceutical research-and-development center in Shanghai [#msg-14550550].

Facing soaring costs in developing new drugs and a limited pipeline of promising candidates, Novartis hopes that traditional Chinese medicines will hold the secrets for a new generation of blockbusters to fight diseases such as Alzheimer's. While Novartis isn't the only multinational drug company seeking to tap traditional Chinese cures -- French drug maker Servier also has a collaboration with SIMM -- Rachel Lee, a senior manager at Boston Consulting Group in Shanghai, says "no other major pharma has gone further than Novartis" in this area.

The collaboration between East and West on drug development is in many ways an unlikely one. Chinese and Western specialists approach pharmacology from very different angles. For centuries, Chinese doctors have tinkered with different mixtures of medicines, guided in part by trial and error, to see which ones are most effective. Working with that body of knowledge, they operate on the assumption that the traditional remedies work, even if by Western scientific standards it's not completely clear why. Chinese doctors "know it will cure people, but they don't know what target it hits," says Shen Jingkang, a professor at SIMM.

In contrast, researchers at Western pharmaceutical companies often begin the search for a drug by identifying a target, and then look for a chemical compound that has the desired effect. If they do find a drug that works, they usually understand the mechanism behind it. That helps in refining the compound to make it more effective and in convincing regulatory authorities such as the U.S. Food and Drug Administration that the medicine is safe and effective.

Novartis hopes to isolate the particular compounds active in the Chinese traditional medicines by testing the raw extracts from plants collected by Mr. Shen and fellow botanists.

"There are so many compounds in nature, from the seas to the jungles, it's very difficult to know where to start," says Paul Herrling, the head of corporate research at Novartis. "China has thousands of years' experience of using plants in Chinese traditional medicines. The idea was, why not use the Chinese experience as a kind of filter?"

Novartis has experienced the potential of Chinese traditional medicines firsthand. The company's malaria drug Coartem stems from a traditional Chinese cure for fever. Mention of the plant, Artemisia annua L. or sweet wormwood, was found in a Chinese medicine book written on silk, unearthed from a tomb of the West Han Dynasty, which began around 200 B.C. Chinese military scientists developed the drug from the plant in the 1970s to treat Chinese soldiers suffering from malaria in Vietnam. In the early 1990s, Novartis struck a deal with the Chinese to purchase the rights to Coartem, a combination of a derivative of the plant and another antimalarial treatment, paying a few million dollars up front and royalties on future sales. Novartis declined to reveal the revenue it makes on the drug, most of which it sells to developing countries at $1 per treatment.

Since the venture began, Novartis says SIMM has provided around 1,000 natural products to the Swiss drug company's laboratories in Basel. In return, Novartis has agreed to pay SIMM royalties and fees if certain plants yield marketable pharmaceuticals.

So far, nine of the compounds have shown particular promise against specific disease targets, and two have been selected for further study, according to Dr. Herrling. While those numbers may seem small, the search for drugs using conventional methods is far less fruitful, he says. The investment is also small when stacked up against Novartis's typical research-and-development outlays.

In this particular project, it all goes back to a small group of botanists led by Mr. Shen -- before any research can begin in the lab, they must venture out in the field and find the plant.

On a recent afternoon at the laboratory in Shanghai, Mr. Shen dried lily bulbs and snow pine branches in small, neat piles on the floor of a sun-soaked hallway. He says he decided on this line of work when, as a student at a Shanghai university, he saw a film about the life of a Chinese botanist. The movie had a sad ending: The botanist dies after an accident collecting plants in a remote area and is carried home on the back of a horse. Nevertheless, Mr. Shen found the story inspiring.

"I love this career," says Mr. Shen, whose forearms and legs are covered with scars from his arduous trips to collect rare plants.

One of his most memorable finds was in spring 1999. Shortly after the snows melted, he set out on a weeklong journey to western China's remote Qinghai plateau. He was searching for a certain type of Aweto, an exceedingly rare fungus that Chinese-medicine doctors believe helps strengthen the immune system and fend off cancers. When dried, it looks like a small light-brown caterpillar.

Mr. Shen hired a guide and set off on horseback into the mountains, armed with descriptions from old Chinese texts. Deep in the forest, he spotted something, and got off his horse for a closer look.

"We won! We finally got it!" he recalls shouting as he jumped up and down. "I was screaming, 'I found it -- I found it!'" Gathering hundreds of bunches, he put them in his bag for the journey back to Shanghai.
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[DewDiligence]

Outsourcing Animal Testing

http://www.boston.com/business/technology/biotechnology/articles/2006/11/25

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By Jehangir S. Pocha
November 25, 2006

BEIJING -- Glenn Rice wants to turn China's dogs into global economic assets. Because animal rights groups make it difficult for drug companies to build or expand animal-testing laboratories in the United States, Europe, and India, Rice, chief executive of Bridge Pharmaceuticals Inc., is outsourcing the work to China, where scientists are cheap and plentiful and animal-rights activists are muffled by an authoritarian state.

"This is a country with a large number of canines and primates, and if we establish pre-clinical testing facilities here, we can change the dynamics of the industry," said Rice, who in 2004 created his San Francisco-based company out of the life sciences department at the Stanford Research Institute in Menlo Park, Calif. "Animal testing also does not have the political issues it has in the US or Europe or even India, where there are religious issues as well," he said. "So now big pharma is looking to move to China in a big way."

Beijing is fast becoming China's leading biotechnology center, and Bridge, located in the lush sprawl of the city's Zhongguancun Life Science Park, was given "big benefits and a 5-year tax holiday" for choosing the capital as its home, Rice said.

"But beyond that, it's the whole menu of advantages that attracted us," said Rice, who now alternates weekly between Beijing and San Francisco. "In terms of animal supply, China is a good place to be, as it is the world's largest supplier of lab monkeys and canines -- mostly beagles."

Large drug companies such as Novartis, Pfizer, Eli Lilly, and Roche have disclosed plans to set up research and development centers in China. But the real growth is likely to come from mid-sized companies that outsource their animal testing or pre-clinical trials to companies such as Bridge, which can offer them prices that are about half of those charged by US-based competitors. By 2008, that could double the size of the pre-clinical outsourcing industry, which was worth $2 billion last year, Rice said.

Outsourcing research to China will also benefit people suffering from so-called orphan diseases, illnesses that afflict small numbers of people.

Given the steep cost of drug development and the steeper rates of failure, "unless there is a market of about $500 million a year for a drug, big pharma companies will not invest in it," Rice said. With China's lower costs, he said, "it becomes feasible to develop drugs for orphan diseases."

Despite such benefits, the subject of animal testing is a difficult one. US regulations generally require that all drugs be tested on at least two species, usually rats and then dogs or monkeys, before being submitted for approval by the Food and Drug Administration. Bridge's Beijing facilities have been designed to meet US standards on animal care, and it expects to be certified as such by the end of the year. Air and water quality are carefully monitored, and the cages are regularly cleaned.

But there is no avoiding the reality of the work done here: The beagles in Bridge's cages are infected with diseases, operated on, and fed substances that can severely affect their health. Eventually, their organs are removed and examined.

"Unfortunately, there is no substitute to testing on live animals," said Rice. "If we stopped animal testing, new drug development would stop short in its tracks."

While animal rights are discussed in China, advocates are not openly militant -- the government wouldn't allow it.

"We believe in engagement rather than protest," said Lu Di, 75, director of the Chinese Association for the Protection of Small Animals in Beijing. "Animal testing is inevitable, and we want to focus on advocating companies and universities use the best standards and processes they can to minimize any pain caused to the animals," she said.

But it's unclear how well China's animal testing industry will be regulated. Beijing didn't enact any animal welfare regulations until 2004, and they are ineffective and inconsistently implemented, said Lu, whose organization is the largest animal welfare group in China. The track record of Chinese companies that conduct animal testing is not well documented, mostly because neither the government nor the industry has studied it.

"We are very aware and very concerned about this recent and disturbing trend of companies to contract with laboratories in countries in which animal welfare oversight is poor and public awareness is low," said Jason Baker, Asia-Pacific director for People for the Ethical Treatment of Animals. "There is no doubt this is intended to circumvent American animal welfare laws, as minimal and unenforced as those may be."

Baker said PETA attempts to "hold companies accountable for the actions of their contractors" and publicizes any abuse of animals by firms operating overseas. The group has an office in Hong Kong and hopes to one day open an office in mainland China.

Rice said that when Bridge considered doing business in China, it realized it could not rely on local companies because they lacked rigid standards and quality control. "We've built our own organization so we can control every aspect of it, and we spend a lot on hiring the best people and training them," he said.

For example, Bridge's Beijing operations are headed by Ada Kung, a Taiwanese national who studied and worked in the United States. Without Kung and a core team of US-educated and experienced managers, Bridge would not be able to maintain international standards on quality and intellectual property rights protection, Rice said. But the company's Chinese staff is learning fast, he said.

"Today, it may seem like it's too early to do much more than we are doing in China," he said. "But tomorrow, or the day after, it'll be a different story."
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[DewDiligence]

Novartis Aims to Make China a Top Market

[I’ve inserted a few hyperlinks to posts on related topics.]

http://tinyurl.com/2u6x7q

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February 29, 2008

According to China Central TV, Novartis (NVS) produced 2.5 billion RMB ($342 million) of revenue in China during 2007, an increase of 20%. The company has been the fourth biggest supplier of medications to hospitals in the country. Although its China sales are still modest relative to its overall revenues, Novartis aims to make China one of its top 10 markets by 2010.

So far, Novartis has invested over $400 million in building facilities in China. Most spectacularly, it put $100 million into a Shanghai R&D center that is one of eight Novartis Centers for Biomedical Research worldwide [#msg-14550550]. It also recently constructed a manufacturing and development center in Changshu. Novartis has 2,044 full-time China employees.

In March 2007, Novartis received approval from the SFDA for Sebivo (telbivudine), a treatment for chronic hepatitis B [#msg-17536458]. Hepatitis B is the second leading cause of death in China, affecting some 100 million people. Sebivo was developed in a collaboration with Idenix (IDIX), though Novartis has sole marketing responsibilities in China.

Hepatitis B often leads to liver cancer, an example of a preventable infectious disease as a root cause of cancer. The new Shanghai R&D center, which employs 400 scientists, will explore this field further [#msg-16892647], looking at both Western and traditional Chinese medicines as sources for new drugs that could prevent cancer from occurring. In China, Novartis also collaborates with the Shanghai Institute of Materia Medica, WuXi PharmaTech (WX), the Chinese University of Hong Kong National Institutes of Biological Sciences, and the Kunming Institute of Botany. Novartis has already been able to mine traditional Chinese medicine [#msg-14798856] to produce a treatment for malaria, called Coartem, made from sweet wormwood plants. That product is made in an enlarged plant near Beijing, where it is produced for the World Health Organization.

The recently built plant in Changshu, an $83 million endeavor, will produce and analyze drugs for leukemia, epilepsy, hypertension and other diseases. It combines a manufacturing facility with R&D labs for greater efficiency.

The only major setback for Novartis in China recently has been Zelnorm, a treatment for irritable bowel syndrome that was withdrawn because of side effects in early 2007. It was made in China, mostly for sale in the U.S. Its China revenues were small.

A few years ago, Novartis was investing in both China and India. However, when India refused to uphold the patent on Gleevec, the blockbuster cancer drug for Novartis, Novartis stopped further development of its infrastructure in India.
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[DewDiligence]

Novartis Mounts Ambitious Push Into China

[See #msg-27259204 for background material.]

http://online.wsj.com/article/SB20001424052748703740004574512952401305912.html

›Pharmaceutical Giant Commits $1 Billion, Citing Rapidly Growing Market Driven by Health-Care Reform

NOVEMBER 4, 2009
By IAN JOHNSON and JEANNE WHALEN

Novartis AG has become the latest pharmaceutical giant to pour resources into China, announcing Tuesday that it will spend $1 billion to make China a third global pillar for its research and development.

In an interview, Chief Executive Daniel Vasella said China's rapid growth is one key reason for the expansion. China could become one of Novartis's three biggest markets by 2014, he said. Revenue in the country has been growing at an annual rate of 30% in the last few years and will do so again this year, he said. He didn't give a total figure.

Partly driving this growth is China's health-care reform, which will expand health-care coverage beyond the relatively wealthy cities to the countryside. "Health-care reform in China will expand our business," Dr. Vasella said.

Increase in Staff

Dr. Vasella said the $1 billion investment, to be spread over five years, will boost to 1,000 the number of employees at the Swiss pharmaceutical giant's R&D center in Shanghai, from 160 now. That will put it on a par with Novartis's research headquarters in Cambridge, Mass., which is second-biggest after the company's headquarters in Basel.

"I think it will be a signal of China's rising importance in the pharmaceutical industry," Dr. Vasella said during a visit to Beijing, where the investment was announced. "You have to ask yourself where do you need to be down the road, and clearly it is here."

Dr. Vasella said the investment was made possible because of the rapid development of scientific talent in China. He said China's improving protection of intellectual property made the investment less risky.

Many big pharmaceutical companies have invested in Chinese research in recent years. The companies seek not only access to talented, low-cost scientists, but also better relations with doctors and government officials, who decide which drugs get prescribed and paid for.

More Studies in China

Drug companies are also carrying out more of their clinical studies in China these days because the cost of running trials is lower there and because it is easier to find patients to participate.

Swiss drug maker Roche Holding AG opened a research lab in Shanghai in 2004 and a center for running clinical trials in 2007. AstraZeneca PLC, of the U.K., opened a research center in Shanghai in 2006 and is building another $100 million site in Zhangjiang. [Also GSK (#msg-20969948).]‹