Can cheaper drugs help home-grown labs turn the table on foreign Big Pharma in China’s cancer treatment market?

Nearly a quarter of the world’s newly diagnosed cancer cases in 2015 were in China

Lung cancer tops the list of China’s tumours, with the number of cases expected to grow by 40 per cent to 1.26 million by 2030

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A scientist transfers fluids into a tube at the Driver Inc. laboratory in Shantou, China, on Wednesday, August 29, 2018. A pair of Harvard-trained American oncologists behind the startup Driver, backed by Hong Kong billionaire†Li Ka-shing, are attempting to harness technology to revamp cancer care. They're taking some of their earliest steps in China -- cancer's ground zero. Photo: Bloomberg

Published: 8:15am, 6 Apr 2019Updated: 10:46pm, 8 Apr 2019

A war is being waged in China’s market for cancer drugs, where home-grown laboratories must strike a delicate balance between social responsibility and cash flow in a long-term strategy to occupy the lion’s share of sales of immuno-oncology treatments.

The most ferocious battle front is in the category of immunotherapy drugs called PD-1 and PD-L1 inhibitors, which activate patients’ own immune systems to fight cancer tumours. The payback can be enormous in a market where annual sales of cancer drugs may rise by 90 per cent to 262 billion yuan (US$39 billion) by 2022, according to market research consultancy Frost & Sullivan.

That is drawing billions of dollars of investments into the industry, making health care one of the hottest sectors for private equity funds and venture capitalists last year. Already, 40 clinical trials of PD-1 drugs were ongoing since 2018 – at up to 200 million yuan for the third phase of a presale drug trial for up to 500 patients – and there is room for more.

“The market is large enough to accommodate five to six, or more players,” said Li Ning, chief executive of Shanghai Junshi Biosciences, during an interview last week. “Unlike drugs for chronic diseases, oncology treatment is very expensive, and hence efficacy is king. Whoever can demonstrate their drug has superior effectiveness and can meet the safety requirements will win.”

However, the prohibitive costs of research and development run up against a ceiling over the retail prices of cancer drugs, a very pertinent concern in China, where the Communist Party-led government is anxious to keep treatment costs affordable and avoid accusations of price gouging in keeping with its socialist principle of governance. Nearly half of the world’s newly diagnosed cancers – oesophagus, gastric, liver and colorectal – were found in China in 2015, GF Securities said.