NATURE BIOTECHNOLOGY VOLUME 23 NUMBER 7 JULY 2005 765

Teva to acquire Chinese biogenerics manufacturer

With follow-on biologics in the United States still stuck in regulatory purgatory, Israeli gener-ics giant Teva Pharmaceuticals is forging ahead in biogenerics through a Chinese acquisition. By tackling less strictly regulated markets first, Teva could gain more experience in manu-facturing biogenerics and profit from those markets directly. But skeptics point out that the gap in approval standards between China and Western countries is no guarantee of an easier entry into the more lucrative European and US markets.

In May, Teva of Petach Tikva announced informal plans to fully acquire Chinese bio-generics manufacturer Tianjin Hualida Biotechnology Pharmaceutical Co. Formal announcement of the acquisition will be made in the next months, says Amir Elstein, Teva’s senior group vice president for biologics. Teva inherited 45% ownership of the Chinese com-pany through its acquisition of Sicor last year. The move adds on to its existing biogenerics portfolio in Lithuania and Mexico. The attrac-tion for Teva is that Hualida is well-established in biogenerics, and reportedly a key interferon α-2b provider. There are about ten big players in the local biogenerics manufacturing mar-ket, including Kexing Biotech and Shenyang Sunshine, both in Shenzhen.

“I think Teva is following the perfect strat-egy,” says David Shoemaker, managing direc-tor of consultancy Cato Research in Durham, North Carolina, adding: “You’re not going to be able to come to the US [with biogenerics] for some years to come.” Susan Capie, president of PharmaVantage, a US consultancy special-izing in Chinese pharmaceuticals located in N. Babylon, New York, agrees that China has a strong advantage. “Because the approval pro-cess in China for the Chinese market seems easier, there is much more of a drive behind the industry,” she says.

Despite over two years of assurances from the US Food and Drug Administration (FDA) that creating a regulatory pathway for bioge-nerics is a top priority, little resolution on the issue has been reached (Nat. Biotechnol. 22, 1343, 2004). In Europe, the regulatory frame-work to approve such products is in place. But

kinks remain to be ironed out, and the first biogeneric human growth hormone, Sandoz’s Omnitrope, did not gain approval last year (Nat. Biotechnol. 22, 1493–1494, 2004). Sandoz, the generic subsidiary of Novartis of Basel, has since filed a new application.

The FDA is expected to clarify its position on biogenerics in a concept paper slated for publication after August 2005. But its reaction-ary approach has not inspired confidence in the generics industry of late. “RA used to mean regulatory affairs, but now it means risk aver-sion,” says Alan Liss, senior director of biotech at Duramed Research in Pennsylvania. “While we’re talking, China and India will be supplying the rest of the world with products,” he adds.

Even in light of Western regulatory foot-dragging, some experts note that Teva’s deci-sion to step into China is a bold move. “Several mutlinationals have looked into China, but few have done what Teva did,” says PharmaVantage’s Capie. Most Western companies have chosen to bide their time and ready themselves for fil-ings with the FDA and the European Medicines Agency (Nat. Biotechnol. 19, 117–120, 2001). “Most companies are thinking that if [the agencies] haven’t allowed Western product approvals, the process will take even longer for a Chinese product,” she says.

Numerous practicalities make entering the biogenerics market via China a high-risk

proposition, says Peter Kalinka, former head of biologics at Novartis Generics (now Sandoz) and CEO of Accelsiors, a German biotech con-sultancy and international contract research organization based in Garmisch-Partenkirchen. The first problem is that products made in China are arguably unlikely to be approvable in Western countries [by the FDA and EMEA]. “Standards in the US are so much higher that there’s just no comparison,” he says.

Getting non-Western facilities up to produc-tion standards is a long and expensive process, Kalinka adds. For example, requirements for manufacturing specifics such as water purity may not be important clinically, but the FDA is likely to insist on them. And the FDA is also unlikely to budge from its insistence on full clin-ical trials to demonstrate safety, he says. “That could only change if you find an in vitro assay for immunogenicity, and that’s science fiction.”

Most experts agree that Teva’s is a long-term strategy, but they remain optimistic. In the present standoff, any chance to gain experience in manufacturing and selling biogenerics can only be positive, says Cato Research’s Shoemaker.

It may also be time to challenge the assump-tion that the United States and Europe are the only markets worth pursuing. “China has large number of people who can pay $2,000 to $3,000 a year for drugs,” says David Haselkorn, former CEO of the Israeli company Clal Biotechnology in Tel Aviv and now an independent consultant. “The market is large enough to be attractive to every player.” The situation is analogous to the development of pharma and biotech in India, he adds. “Everyone that was clever enough to look to India saw local companies developing drugs and building manufacturing centers,” Haselkorn says, and eventually these folded into the Western regulatory framework.

As a similar process unfolds in China, Elstein says “[China] will align to global markets and accede to global standards – there’s no magic here.” He adds: “In ten years, companies will use China not only as a local market but as a spring-board for global opportunities —providingtalent and infrastructure at a good price.”

Alla Katsnelson, New York

Generics company Teva recently acquired a manufacturing facility in China to produce biogeneric versions of brand protein products, such as those manufactured by Serono (the Swiss giant’s Vevey facility is pictured here).

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