Pullan's Pieces #148                                    
Pullan's Pieces #148
May 2019
BD News and Analysis for  Biotech and Pharma
Dear --FNAME--,

Lots going on. 

May 30th is my webinar  with BPI on China biologics deals.  https://bioprocessintl.com/sponsored-content/chinas-emergence-in-global-biopharma-manufacturing-trends-in-chinese-biopharma-industry/  

The Sachs IO conference, ASCO, BIO, and planning a webinar for June 20th.  

And still helping get deals done :).  Here is the latest in an announcement by Viela Bio.  https://vielabio.com/hansohpharma/



1. How many companies should there be?
2.  Infographic:  Cancer 
3. Jessica:  Emerging technologies in emerging markets
4.  Trevor: Market bounced, now what?

How many companies should there be?  
Each newsletter, I ask myself a question and attempt to answer it.  This time, I thought the question was simple.  

After a trip to ChinaBio and then to Australia, I was thinking about the rapid growth of biotech companies in China and fostering a biotechnology culture in Australia.    But what does the data say?  How does the number of companies vary by country?   

1.  Population.  Let's start with the population comparison.  China and India are huge, the US is about the same size as the big 5 markets of Europe (France, Germany, Italy, Spain and the UK), Japan is roughly half the US, and Australia is pretty small.  
2.  Companies.  Australia has more biotech and pharma companies in GlobalData than proportional to its population.  And China and India are under-represented, despite my perceptions of the China biotech boom.  

3.  Pharmaceutical sales.  The chart for pharmaceutical sales within each country seems fairly similar to the chart for number of companies.  But India  Rx sales are smaller slice than is true for number of companies.    Maybe India has fewer but really big companies?  
4.  Big Companies.  In GlobalData, there are ZERO companies with HQ in India and pharmaceutical revenues of $5 billion or more.  Sun Pharmaceuticals comes in with $3.8B in revenue.  
6.  Rx Exports.  Australia has a bigger share of companies because it has a bigger share of exports than it has of population.  Switzerland comes up in this analysis with a huge share of exports, and if I had done the analysis, would come up with a huge share of big companies too!

Conclusions:  The number of companies is not proportional to population or the local market size.   Revenues need not be proportional to local population because of exports.   Fun but inefficient exploration of a simple question.  
Infographic:  Cancer
Jessica:  Emerging technologies in emerging markets
The trend toward developing therapies that address rare diseases and/or high unmet medical need has presented some unique challenges for developers of cell and gene therapies.  Because the diseases are so rare, identifying patient pools for market launch, or for enrollment for clinical trials even, can be challenging. During Alliance for Regenerative Medicine’s (ARM’s) Meeting on the Med meeting last month, Matt Patterson (Chairman & CEO of Audentes; Chairman of the ARM) summarized the market authorizations for cell and gene therapies to date: 

This list of top markets for cell and gene therapies is very helpful, but what if there aren’t enough patients in these countries, or if the disease being treated has a high prevalence in another country?  The act of identifying “addressable markets” has led some developers into interesting unchartered waters – contemplating clinical trials and/or product launches of cell or gene therapies in emerging markets. 

The E7 and others

The two most common acronyms, BRIC (Brazil, Russia, India, China – sometimes BRICS with South Africa) and MIST (Mexico, Indonesia, South Korea, Turkey – sometimes MINT with Nigeria instead), have now merged into a new term:  the Emerging 7 (aka the E7 or BRIC-MIT, with South Korea now a developed market by some standards).  Certainly, other countries in Latin America (Latam), Eastern Europe, and the Middle East and Northern Africa (MENA) could also qualify as emerging markets for cell and gene therapies.  Surely the benefits to the country seem clear, to help their people attain access to life-changing (life-saving?) medicines.  However, with the high price tag of approved cell and gene therapies so far, and the general trend of emerging markets to seek low-cost treatments (i.e. generics, biosimilars) how can a mutually beneficial arrangement be found?

What would a developer need if contemplating partnering or launching a cell or gene therapy in one of these countries?  Certainly, a local partner whom speaks the language and understands the culture would be critical.  But what other processes and procedures would be necessary to get these therapies to those patients?  Here we’ll discuss some strategies and basic infrastructure considerations that the target country should have in order for a developer to enable a successful partnership and/or launch.

Clinical capabilities

For most of these products, patient samples must be collected and shipped to the manufacturing site. 

  •  Travel for sample collection.  With zero support in country, patients would need to travel to regions with access to these therapies in order to have their samples collected and to have the final product administered back to them.  In the absence of both market authorization and certified clinical sites - bringing the patient to the treatment is the only solution.

  •  In country sample collection.  Even if the patient can, or the government is willing to, pay it is not always feasible as some patients will be too fragile for the journey.  Therefore, patient sample collection in country will be critical for broader access to these treatments. 

  • Clinical intensive care.  Furthermore, for many of these treatments (particularly CAR-T type therapies) patients will need intensive care in order to be closely monitored after administration because of the risk of intense side effects such as CRS (Cytokine Release Syndrome). 

Oversight by national regulatory authorities (NRAs) is essential to ensure safe and effective treatment of patients.  Reliance-based approvals, where the local authority uses the reports of the trusted authority along with local knowledge, are the springboard for inexperienced regulatory agencies to deem an innovative product worthy of market authorization.  In the absence of exposure and experience, reviewing the dossier of products already approved by stringent regulatory authorities (SRAs, such as the EMA or the US FDA), is the WHO-recommended approach to begin making innovative new products available in-country.  For some gene therapies and/or autologous cell therapies, additional testing in country may be required to ensure that the product is effective in a population pool different from that of the original clinical trial(s).  Additionally, products approved by an stringent regulatory authority  may have been through an expedited path with postmarked authorization criterion.  Any product approved in an emerging market through a reliance-based approval should also follow suit under the local national regulatory authority  as well.  The EFPIA Nov2017 White Paper on Reliance Registration Pathways includes an table of countries with reliance-based approvals pathways.

Expedited pathways for the evaluation of medicines targeting high unmet need, and not yet approved by an stringent regulatory authority, is also recommended for improving access in emerging markets.  In time, the national regulatory authority  in these countries will begin to oversee these products, engage with stringent regulatory authorities  directly, and possibly bring some experienced expats with experience at an stringent regulatory authority to run the departments that cover these products.  This will ultimately help enable the hospitals and universities in country to host (or even initiate) trials at earlier phases.


The ability to manufacture in-country, particularly for autologous cell therapies, will significantly help the ability to address patients, especially those in more remote or rural areas.  It is not a long-term strategy to send patients, or even patient samples, to other countries for sample processing and/or treatment.  A manufacturing capability in country will drive down costs while increasing patient access.  A “hub and spoke” type model, with centralized capabilities in major population centers and minor sites that feed in from the remote locations, will allow for access to remote sites.  This approach can also enable the country to leverage infrastructure that likely exists in larger population centers with university hospitals by building capabilities onto existing facilities.

Business Models

Commercial success in emerging markets will likely require unique business models.  So far here, we’ve contemplated strategies for addressing cost and access, but what about pricing?  Once all of the logistical challenges have been addressed, and access is made feasible, there is then the challenge of payment.  For less developed countries, or countries with a larger percentage of people below the poverty line, lower pricing will be necessary.  This is especially important as most medicines are paid for out-of-pocket by the patient or through tight-budgeted government healthcare agencies. 

High costs to patients (US) will not work in emerging markets

The WHO recommends “affordable and fair” pricing which they describe as prices that can be reasonably absorbed by patients and/or healthcare organizations and also sustain developer innovation while covering manufacturing and distribution costs.  This is specifically with regard to patented medicines, not generics or biosimilars.  One alternative strategy is that of differentiated pricing in emerging markets, which is not uncommon.  For instance, pricing could be based on the gross domestic product (GDP) of the country.  This is not flawless, but it may be a fair approach.  It can also be a viable strategy to help address potential disparities of revenue streams from different regions.  This would be akin to certain tools and technology providers having unique academic/education pricing, for example, software companies offering lower cost licensing of their software to students and faculty.  Understanding the anticipated markets, and associated pricing strategies, will help inform the overall commercial approach for developers of these therapies.
Trevor: Market bounced, now what?
The stock markets have bounced from their drop in 2018’s fourth quarter.    Between the beginning of Oct 3rd to Christmas Eve of last year, the Nasdaq Biotechnology Index (NBI) had fallen 26%.  But with the turn of the year, the NBI retraced its fall and climbed back to within 5% of its 2018 high, hitting 3619 in early March.  We’ve since slipped back a bit and are hovering around the 3,200 handle, 10% below the bounce high. 


Where to from here?  Perhaps more importantly, will we see any impact on deal-making given a market that appears to want to consolidate downward (perhaps for many months) before thinking about another run at all-time highs?  We wondered aloud in these pages back in January 2019 what might the impact be from a market that shaved more than 25% off its value in 3 months.  While a much more detailed analysis of multiple factors would be required to fully answer that question (including a review of credit markets, global interest rates, balance sheets, and more), a look at Preclinical to Phase II Licensing Deals that have closed in the first three months of each of the last four years shows that 2019 has – so far – been a down year.  Whether this is attributable or not to confidence getting a good shake at the end of 2018, the numbers would suggest that a trend (down) is at work, not just a one-time shock to the system.

www.Pullan Consulting.com

Pullan Consulting (www.PullanConsulting) provides advice and execution for biotech partnering and fund raising, with outreach to partners and investors, help with shaping of presentations, evaluations and market analysis, preliminary valuations and deal models, and negotiations from deal prep to term sheets to final agreements. 
We have extensive scientific and financial experience, with many deals signed. 

Send us an email or set up a call if you want to explore how Pullan Consulting might be of help!

Linda Pullan                     Linda@pullanconsulting.com 
Trevor Thompson             Trevor @pullanconsulting.com 
Jessica Carmen               Jessica@pullanconsulting.com 
9360 W. Flamingo Road, Suite 110-554 Las Vegas, NV 89147