Foreign biopharmaceutical companies will have to cooperate with local companies if they enter the mainland market, says the chairman of the Hong Kong-listed 3SBio. Dr Lou Jing, the boss of the mainland’s leading drug producer, said he was confident of winning over foreign competitors in the domestic market, adding that “if they choose not to cooperate with local companies, they won’t have a chance”. His company, based in Shenyang, has the second-highest revenue of mainland biopharmaceutical producers, according to the consulting firm Frost & Sullivan. READ MORE: Biotech firm 3SBio rises in Hong Kong debut One of its signature products – recombinant human thrombopoietin (rhTPO) Tpiao – has no rival in China, and another – recombinant human erythropoietin (EPO) Epiao – has captured half the domestic market share. In June the company listed in Hong Kong by raising US$710 million, two years after it retreated from the Nasdaq. The manufacturer was established in 1993 by Lou Jing’s father Lou Dan, a biotechnology specialist who had been working in a military medical research institute for three decades. The junior Lou, now 52, joined the company in the late 1990s after receiving his PhD degree in cytobiology from New York’s Fordham University and finishing his post-doctoral study at the National Institutes of Health. The enterprise’s baton was handed to him from his father several years later. More than 90 per cent of the company’s revenue comes from Tpiao and Epiao. Tpiao, researched by 3SBio itself, is used to treat platelet deficiencies, including the symptoms caused by chemotherapy or immunity malfunctions. Epiao, a generic version of the American biopharmaceutical giant Amgen’s drug, treats anaemia. Both are injected. “The market has not been completely penetrated and the demand for these two products remains huge,” Lou said, adding that no copycat of Tpiao had emerged and that while some small producers had imitated Epiao they had made little impact. For example, Tpiao is sold in 700 Class-A hospitals across the country. There are about 1,500 Class-A hospitals – defined as those with at least 500 beds. “We are building the [sales] network, hoping that our products can be distributed in more hospitals,” said Lou. The funds raised from the stock market will be spent on acquisitions and more staff, he said. The biggest problem the company faces is that recruiting can not catch up with the fast growth of its business. 3SBio plans to expand its sales team by 15 per cent this year, while the headcount at its research and development sector won’t increase significantly. The mainland’s biopharmaceutical industry has been growing at 20 per cent annually since 2010, according to Xu Lingni, an analyst at Shenzhen-based consulting firm CIConsulting. Although these companies’ sales had risen rapidly, their combined revenue – over 10 billion yuan (HK$12 billion) a year – was only equal to that of a single foreign giant in the industry, and the total revenue of the mainland’s top five companies accounted for only 4 per cent of the entire drug market, she said. Few foreign biopharmaceutical companies have presence in China. Amgen, the world’s largest biopharmaceutical producer, opened its first China office in Shanghai in 2012. One year later, it acquired a drug manufacturer in Zhejiang and announced it was establishing an R&D centre in Shanghai. Its Greater China general manager Li Yiping told the Science and Technology Daily that it was the best time to enter the mainland market, given it was widely believed China would soon surpass Japan to become the world’s second largest pharmaceutical market. The mainland environment for innovation in drugs had progressed as the state government listed biotechnology as one of seven national strategic sectors in its twelfth five-year plan governing the period of 2011-2015, Li said. But Lou said there was a high cost for foreign companies to start from scratch because they did not understand China’s drug pricing mechanism or medical insurance system and they were not familiar with how drugs were sold on the mainland. I think we should adopt a ‘down-to-earth’ method and do every small thing well 3SBio chairman and CEO Dr Lou Jing A major hurdle for the industry is the time-costing process of gaining approval for new drugs from the China Food and Drug Administration. In Lou’s eyes, the problem was due to a manpower shortage at the authority, which had to sift through numerous drug applications. Two years ago the Chinese government accused the British pharmaceutical giant GlaxoSmithKline of spending billions of yuan to bribe health officials and doctors. Lou said the incident had not affected his company since it used distributors – rather than drug representatives – to sell products to hospitals. “[The incident] was a good thing for regulating the industry. We drug companies have been improving our practices year by year in order to reach the compliance standards,” he said. In his spare time Lou likes walking, playing poker, reading novels and watching movies. “I can’t live without books or movies. They are part of my life,” he said. 3SBio does not have a specific goal for its development apart from becoming a global biopharmaceutical producer. “I think we should adopt a ‘down-to-earth’ method and do every small thing well,” said Lou.