Fortune sat down with Brad Loncar, a biotech investor who specializes in cancer immunotherapy, at our offices last week. Loncar runs both a U.S.-based index fund for cancer drug companies and, more recently, launched another one focused on China.
It was a fascinating conversation that covered everything from the U.S. oncology field to the shifting global dynamics of cancer drug development.
It would be difficult to capture the entire conversation in a single missive. But I want to highlight one particularly interesting part—the evolving nature of China’s biotech industry, especially when it comes to the “biologic” drugs which have become a hotbed of cancer therapy innovation.
“The Chinese FDA is trying to replicate the U.S. FDA,” Loncar tells Fortune, noting that about half of the biggest, global biopharma IPOs last year occurred in China.
This presents a major shift for China. Brand name biologic drugs (the kind that are derived from biological, rather than chemical, material and are therefore much more difficult to produce) make up nearly 80% of the top-sellers in the U.S.; China, traditionally, has been much more focused on the generic market.
That’s changing. “They want to go from becoming just a manufacturer to a true innovator,” says Loncar.
The Chinese government is trying to make that happen through a series of policy shifts, including more stringent drug development standards in line with other nations (including the U.S.), new trade policies, and revamped stock market rules meant to fuel funds to early-stage drug companies.
Just how effective could these efforts prove? WuXi Biologics, a Chinese company whose technology platforms help produce a staggering 12% of the world’s biologic drugs, is aggressively expanding into American and European markets.
And here’s the kicker: Chinese companies could very well undercut American firms on pricing if their products pass muster and reach the U.S. market. If that’s really the wave of the future, U.S. drug makers are on notice.
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