Fierce competition in China’s nascent immuno-therapy cancer drugs market could compromise safety, say analysts

As the market grows it will inevitably fragment into tiers of treatments with varying degrees of effectiveness and safety, according to a report by Nomura

PUBLISHED : Monday, 13 August, 2018, 6:30am
UPDATED : Monday, 13 August, 2018, 6:30am

China’s huge cancer-treatment market is a potential gold mine for drug developers.

But fierce competition to get a new group of medicines approved could see prices fall rapidly and the market fragment into tiers of products with varying efficacy and safety, analysts say.

Anti-PD-1 drugs and T-cell engineering, types of immuno-therapy treatments that use the body’s own immune system to fight tumours, have seen a surge in research and development investment globally.

In China, the world’s second largest pharmaceuticals market, anti-PD-1 treatments could grow from virtually nothing this year to US$5.8 billion in the next four years, and to US$12.1 billion by 2025, based on projections by industry consultant Frost and Sullivan.

The nascent market, in which at least 15 companies are developing products, will end up splintered into overseas and domestic firms at different stages of development, according to analysts at Nomura.

“The [anti] PD-1 market in China will be like a typical generic drug market in China – with foreign original drug makers taking a 20 to 40 per cent market share serving relatively wealthier patients, while several domestic players split the rest of the market, mainly competing on price and distribution channels,” said analysts Stella Xing and Joyce Yang in a report.

“The efficacy [of the competing drugs] could be similar, yet domestic drugs will lag behind in terms of safety due to less advanced antibody-manufacturing technology and impurity-treatment technology”.

BeiGene, a Beijing-based drug maker that went public in Hong Kong this month, is targeting approval from the China Drug Administration (CDA) to bring to market its PD-1 antibody for treating classical Hodgkin’s lymphoma before the end of the year.

Rival firms that have also applied to the regulator to market their own PD-1 drugs include Shanghai-listed Jiangsu Hengrui Medicine, and Shanghai Junshi Biosciences and Jiangsu-based Innovent Biologics, both of which have submitted initial public offering applications to Hong Kong’s bourse.

Junshi’s drug is for skin cancer while those of Innovent and Hengrui are for classical Hodgkin’s lymphoma.

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US pharmaceutical giant Bristol-Myers Squibb (BMS) received CDA approval in June this year to launch its PD-1 antibody for lung cancer, while rival Merck last month got the green light to market its own, for skin cancer.

Nomura’s analysts expected BMS and Merck to price their products in China’s private healthcare market at 500,000 yuan to 600,000 yuan (US$73,000 to US$88,000) per year of treatment, roughly half what they charge in the US.

Chinese firms are likely to price theirs at 200,000 to 300,000 yuan. And if they want to sell to the public health market, major discounts will need to be offered on top of that, the report predicts.

Anti-PD-1 treatments deploy antibodies not to kill cancer cells directly, but to block a pathway that shields tumour cells from immune system components capable of killing them.

T-cells therapies involve changing the white blood cells genetically so they will bind to cancer cells and kill them.

The global immuno-therapy market could mushroom sevenfold, from US$7 billion in 2016 to US$48 billion by 2022, according to estimates by LEK Consulting. It could make up more than a quarter of the US$180 billion cancer treatment market by 2022.

BeiGene ranks among the “first-tier” group of anti-PD-1 developers that can potentially treat a wide range of solid tumours and blood cancers, said Wang Xiaodong, a co-founder and non-executive director.

The eight year-old Nasdaq-listed company has clinical trial facilities and staff in the United States, Australia and Switzerland, besides China. Its “global approach” to drug development could give it an edge in the long run, said Wang in an interview after the company’s shares made their debut in Hong Kong on August 8.

“BeiGene has always followed a global strategy,” Wang said. “Why? In light of China’s vaccine and baby milk formula scandals, we want BeiGene to be able to thrive for 100 years by achieving the highest industry quality and global standards.”

BeiGene has more than 50 ongoing and planned clinical trials, including 16 that are deemed to have good potential to lead to marketable drugs, involving over 3,000 patients and healthy subjects.

Chinese-made drugs must meet the highest standards

Its has clinical sites in the US, Australia, New Zealand, Europe, China and elsewhere in Asia, and its investment in research and development of US$269 million last year was the largest in China’s oncology drugs industry, according to its listing prospectus.

Wang said that unlike some of its rivals, BeiGene’s target is not to be the first to launch a PD-1 product in China, but rather to come up with quality products that can be sold to a large number of patients.

He noted that so far, the products on which trials have been completed and pending CDA approval for marketing are mostly for cancers that only affect a relatively small number of patients in China, such as skin cancer and classical Hodgkin’s lymphoma.

“There are over 20 types of cancers on which PD-1 therapy can potentially be applied,” he said. “In China, the big markets are in lung, gastric, liver and nasopharyngeal cancers.”

In the past four years, New Jersey-based Merck has received US regulators’ approval to launch PD-1 treatments for skin, gastric, cervical, head, neck, lung and blood cancers.