3 Trends in pharma globalization
Nearly 60% to 70% of the healthcare market is still dominated by North America, and many smaller biopharma companies are reluctant to move beyond the established markets of the U.S., Europe and Japan.
Yet, increasing pricing pressures in all of those areas of the world — and a rapidly growing (and aging) population — means big pharma companies are looking toward untapped markets. These markets not only offer opportunity, but are also increasingly becoming wealthier, allowing for the rise of more healthcare infrastructure and more demand for high-innovation medicines.
But peddling drugs beyond the borders of a single geography has become a substantially more difficult task, as each of these places have different regulatory frameworks, wildly varying payer systems and require distinct styles of marketing.
The rise in wealth around the world is not only creating more patients, but also more investors and even more foreign-based innovative biotechs. Even with all of the challenges and hurdles that are presented, this is increasingly becoming a global economy.
1) Investment to and from the East
While China has some significant hurdles to overcome, the Asian nation is looking to be a powerhouse in biotech, and investments have been increasing. Ironically, according to EY Global Life Science Industry Leader Pamela Spence, the money is not going as much into into China as it is flowing out.
"The amount of private capital being invested in the U.S. from China is increasing," she said in an interview with BioPharma Dive. "Private capital is flowing from the East to the West."
In fact, according to investment bank China Renaissance, there were 37 biotech and pharma deals conducted in 2016 involving China-based companies, worth a total value of $6.8 billion — including deals where a China-based acquirer bought out a U.S.- or European-based biopharma company.
Spence noted that public markets are becoming more difficult and demanding for companies, resulting in many healthcare companies turning to private capital with longer-term investment horizons. The money is largely coming from private equity funds and sovereign wealth funds into companies that are advancing personalized medicine agendas as well as those that have a strong focus on technology.
The EY 2017 Beyond Borders report notes that the $260 million venture round that Innovent Biologics raised was the largest ever conducted by a Chinese biotech, and it was overwhelmingly supported by private equity and venture capital.
And Chinese biotech companies are increasingly debuting on the U.S. markets. Zai Lab Limited closed its offering on the Nasdaq in late-September, bringing in $172.5 million, while BeiGene was one of the first companies to debut on the market in 2016, earning more than $150 million with its offering.
"As a Chinese company without revenue, it's very difficult to get capital out of China," said Sean Cao, managing director of private equity firm C-Bridge Capital during a panel at the BioPharm America conference in Boston in late-September, speaking about past experiences. "The time it took us to get capital out is usually a few months, sometimes even half a year."
Restriction on capital isn't the only challenge, though. China has notoriously favored its own domestic companies, and regulatory frameworks have been largely geared to Chinese-based entities. Although, things are starting to change in China — the Chinese Food and Drug Administration recently introduced sweeping guidelines that will make it easier for outsiders to develop medicines in the country. Previously, only drugs that had already been tested in humans elsewhere could be tested in China. This change also meant that a second set of trials had to be conducted in China to eventually seek approval there.
Now, companies have the option of conducting Phase 1 trials in the locale, as well as using data from studies conducted elsewhere in the world toward a Chinese approval (as long as the studies fit China’s technical guidelines).
2) A new level of clinical trial transparency
Pursuing approvals in several different geographies means pharma companies have to conduct clinical trials across populations in different countries at the same time. Nearly all of those countries have their own clinical trial disclosure site — such as clinicaltrials.gov — and their own regulations on how data should be reported on those sites.
These registries were once just places for pharma companies and researchers to be held accountable, posting abstracts of the research they were conducting, and protocols so that they could be revisited once results were later published in scientific journals. But the need for more comprehensive and transparent disclosures surrounding clinical trials has led to more of these sites popping up, with nearly 90 around the world today.
Now, these sites include things such as abstracts, trial protocols, and ultimately, trial results, as well as statistical analysis. So much information is required that most large pharma companies have an in-house, full-time staff of 15 to 20 people whose job is devoted to filling in disclosure sites.
"The challenge from a global data perspective is that the [regulation of these sites] is generally the same, but specifically different," said TrialScope Chief Strategy Officer Thomas Wicks. "They are not comparable on a one-to-one basis."
Wicks explained that the sites all have a similar makeup as far as the sorts of information that needs to be included in a report, but the specific data for each site can vary by country regulation. He noted that there is currently no standardization for data across disclosure sites, making this a difficult endeavor for pharma companies and an even more complex task for a "lay-person" visiting the site.
In hopes to address part of this problem, the industry has been moving toward including a basic language summary of data with each entry that is easy for a non-medical professional to read, while also being "meaningful, accurate and not promotional," said Wicks in an interview.
This is increasingly important since patients now often use these types of sites to find clinical trials that they can participate in. Beyond that, this has become an important tool for pharma companies to convey the results of clinical trials to participants. "It's the right thing to do from a patient engagement perspective," added Wicks, who also pointed out that previously about 90% of clinical trial participants were never informed of the trial results after the study period ended.
3) Challenges of commercialization
With nearly 200 countries in the world, pharmaceutical companies face difficulties in launching a drug in a number of markets at the same time due to the wildly different regulations and needs that exist across the globe.
For these reasons, pharma companies usually lump countries into different baskets based on four or five criteria, said Pratap Khedkar, managing principal of the biopharma practice at ZS Associates.
The simplest of those criteria is the size and sophistication of the drug market — a more advanced market like the U.S., the U.K. or Japan is going to function very differently than one of the burgeoning markets in the Middle East or Latin America.
Another factor that plays into how a drug is launched in a market is who the most powerful stakeholders are. For instance, in some markets such as India or China, physicians play a huge role in deciding a course of therapy, whereas in the U.S., that decision-making power — while still high — is waning as patients become more sophisticated.
The role of DTC advertising (which is only allowed in two countries in the world) has allowed U.S. patients to be more aware of what their options for treatment are and what the drug is meant to do. Consumer power in the U.S. is much higher than many other markets.
But the greatest stakeholder in any market is the payer. There are a number of different payment systems around the world. In the U.S., the system is largely dependent on private insurers, whereas the UK is a single payer system. Meanwhile, payer systems in places such as China are government regulated. Other markets including India have a cash model where patients pay out-of-pocket.
The type of payer system, the power of the consumer and the influence of physicians can vary from country-to-country, even in Europe.
Khedkar said the biggest concerns in markets like the U.S. are how to invest more in digital, while spending less on sales representatives, as well as keeping payers happy and gaining placement on their formulary.
On the other hand, exploiting similarities between markets in Europe can be advantageous, but a lack of physician-level data in many of these markets makes it hard for pharma companies to know exactly where and who to target.
Yet, India and China present still other challenges due to the unreliability of digital in these countries. Many companies are still trying to figure out how best to engage with patients in these geographies.
Editor's Note: A previous version of this article incorrectly referred to TrialScope's Thomas Wicks as Thomas Wick.
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