Clinical Trial Costs in Emerging Geographies - Stephen Porter

Clinical Trial Costs in Emerging Geographies: China

R. Stephen Porter, Pharm.DPresident, CEO and Chairman VDDI Pharmaceuticals

Director & Co-founderDragon Bio-Consultants, Ltd.

Hong Kong, SAR

VDDI Pharmaceuticals

• As its name suggests, VDDI Pharmaceuticals utilizes a virtual business model.

• Virtual drug development entails: (i) a small core group of employees responsible for strategic management, regulatory strategy, and financial control, (ii) outsourcing all non-core business functions, including preclinical and clinical drug development, and (iii) electronic data capture and data submission to regulatory authorities.

PROPRIETARY 3

Xemilofiban Summary

• Product has already been studied in both Phase II and Phase III clinical trials 12K patient experiences

• Proven safety and efficacy

• Advantages over existing products

• Growing total market flattening sales with expanded indications

• Advantage of IV to oral conversion

Strategy for Development

• Secure Local Operating Company agreement• Meet with sFDA for Guidance

– Translation key documents

• CMC tech transfer– PO and IV Formulation

• Phase II III Multi-Center Trials China and Then US

PROPRIETARY 4

Dragon Bio-consulting:Services Currently Being Provided

• Clinical Trial Management Services - MASH™• Preclinical translational and toxicology services• Bioprocessing & Engineering Consulting • Inspection and diligence services for cGCP, cGLP, and cGMP • Business and commercial development services in the Asia-

Pacific pharmaceutical and biotechnology sectors• Regulatory and resource mobilization services in the Asia-

Pacific markets• Partnering and M&A• Import Export services for Branded and Generic

Pharmaceuticals ( Green Channel Logistics)

Why ChinaMarket:

China is expected to become the world's 3rd-largest prescription drug market in 2011, and the market in China may be doubled by 2013 (IMS data)

Special SFDA Regulations: • Clinical trials are required for all imported drugs before marketing.

So, trials for marketing registration will be greatly increase

• Data generated from Chinese sites in a global trial can be used for an import drug registration, so that the clinical trial can be exempted if the data comply with SFDA’s requirements. This may save 2-4 years for a new drug to be marketed in China. More global trials are anticipated as more and more pharmaceutical companies

become aware of this regulatory strategy.

Why China

Trends of Drug Development :

There have been increasing number of R&D centers set up by major global pharmaceutical companies in China in the last three years. As a consequence, more and more global trials for new drugs are predicted to be led from China

CRO’s – clinical developmentASIA

• Mainland China– Local; Kendle, TigerMed ,– MNC or JV; Accelovance, Covance, Excel (PPD), ICON (Fountain Medical), Quintiles

• Taiwan – DCB

• India– Local; Biocon (Clinigene), – MNC

• Singapore (Malaysia, Thailand, Vietnam)– Local; Gleneagle (pan-Asian and Australia) – MNC; Covance, Parexcel, etc

• South Korea– MNC and local

Business environment - China• Perceived market – true market

– Pharma market expected to grow 17% in 2010, becoming 3rd largest in 2015.– Resources needed to penetrate the many diverse markets– Pricing; Biologics 50 – 90% below west, so far sub-standard drugs– Ability/Inability to pay for a treatment– Public health insurance, pricing practices and change!

• Hidden / “Unaccounted” costs – HR; turn-over, training, efficiency, foreign staff as local employees (rent, schools,

corporate credit cards, foreign currency exchange …)– Unpredictable and changing regulations– Corruption– State sponsored industrial espionage

Business environment - China Tax incentive for new and high tech R&D

o Exempt of import duty and VAT for equipment and reagents.o 1000 Talents programo 5.85 B USD investment by PRC in Biotech and HC and Pharmaceuticals

Price pressure on pharmaceuticals.o New “Measures for the Administration of Drug prices” announced June 2010, off-patented

originator pricing will go down Legal and Regulatory hurdles:

o Product registration 6-9 months minimum for approvals to begin trials often 1 year of more

o Clinical trial data acceptance, 1601 trials have been conducted in China by MNCs since 2008. Mostly Phase III-IV

o Levies and import dutieso Competition watchdog ; M&A (In 2010 Pfizer forced to sell animal vaccine to local

company) Force foreign business to set-up manufacturing

and operations in China.

Regulatory environment• Formal regulatory frame work

– SFDA moving towards PIC/S– KFDA moving towards USFDA– ASEAN’s mutual recognition scheme 2012– Central Drugs Standard Control Organization (CDSCO), India,

Directorate General of Health Services, Ministry of Health and Family Welfare, Government of India (WHO CGMP)

• 200 Reviewers at SFDA, 2000 at USFDA• Enforcement/Graft• Generic- & TCM-traditions Vs. NCE & NBE • CRO/CMO; Mindset and level of understanding

N o r t h A m e r i c a • E u r o p e • A s i a / P a c i f i c • L a t i n A m e r i c a • A f r i c aN o r t h A m e r i c a • E u r o p e • A s i a / P a c i f i c • L a t i n A m e r i c a • A f r i c a

Market Attractiveness Matrix for Asia

Country Patient

Access

Cost Market

Opportunity

Regulatory Approval

timelines

Australia ++ + +++ 2 - 3 months

India +++++ ++++ ++ 3 -4 months

China +++++ +++ +++++ 10 - 12 months

Korea +++ ++ ++++ 3 - 4 months

Taiwan ++ ++ ++ 3 – 4 months

Singapore + ++ + 1- 2 months

Indonesia +++ ++++ + 3 – 4 months

Malaysia ++ +++ ++ 3 – 4 months

Thailand +++ +++ + 3 – 4 months

Philippines +++ ++++ + 3 - 4 months

Vietnam +++ +++++ + 4 – 5 months

12

Business environment

The herd mentality in Pharma industry:

China

India

AstraZeneca $100 M investment, R&D Center

May06 Apr07Mar07Feb07Jan07Dec06Nov06

Novartis $100 M investment, R&D Center in shanghai, 400 FTEs

Merck / Advinus risk sharing deal on metabolic disease target

Amgen sets up clinical development center in Mumbai

Eli Lilly / Nicholas Piramal $100M risk sharing partnership

AstraZeneca sets up process R&D lab in Bangalore

Roche plans to expand R&D center in Shanghai

GSK plans to establish a fully integrated R&D center

GSK / Ranbaxy $100 M risk sharing partnership

AstraZeneca China R&D center will be located in Shanghai

Lilly $100M investment in 5 years

BMS/ Biocon / Accenture $300M partnership

GSK / Tata Consultancy Service partnership

Jun07

GSK sets up a R&D center (CEDD) in neurodegenerative disease in Shanghai

2nd Tier Cities•Changchun•Chengdu •Hangzhou •Hefei •Kunming •Taizhou •Tianjin •Xian •Zhenghou

Recommended Second Tier Cities

Blood DrawProcedure Country Flag Low (USD) Medium (USD) High (USD)

Blood Draw USA 22 26 33

China 5 6 7

Hong Kong 7 7 10

Korea 5 6 7

Thailand 2 3 4

Taiwan 10 11 12

Source: GrantPlan® (www.ttc-llc.com)

ECGProcedure Country Flag Low (USD) Medium (USD) High (USD)

EC G USA 99 103 128

China 38 42 56

Hong Kong 32 47 49

Korea 14 21 34

Thailand 17 23 30

Taiwan 32 47 49

Source: GrantPlan® (www.ttc-llc.com)

Initial Physical Exam (~60 min.)Procedure Country Flag Low (USD) Medium (USD) High (USD)

Initial Physical Exam

USA 202 239 260

China 61 97 151

Hong Kong 111 162 204

Korea 87 91 108

Thailand 53 67 80

Taiwan 55 98 101

Source: GrantPlan® (www.ttc-llc.com)

Physical Exam (~15 min.)Procedure Country Flag Low (USD) Medium (USD) High (USD)

Physical Exam

USA 130 151 152

China 36 50 60

Hong Kong 63 88 105

Korea 40 48 55

Thailand 39 56 89

Taiwan 51 73 94

Source: GrantPlan® (www.ttc-llc.com)

Keys to Success Factors : China• Talent – “Hai Gui”

– Leadership – recruitment and retention– Technical expertise – Clinical, industrial R&D, and regulatory experience– Communication with international sponsors

• Regulatory and compliance– GLP and cGMP training and practice enforcement– IND, NDA, ANDA experience

• Communication and client interface– Working language – English and Chinese, notebook, verbal and written communication– Recognizing culture differences on both sides (“fee for service” and “guaranteed

results”)• Supporting mechanism – infrastructure and funding

– Need greater support – Ease of procuring patients, sample shipping and etc.• Training – start with a clean slate

– cGCP, cGLP, cGMP– Technical training ( Cato, Beckloff Associates etc….)– Compliance training needs time

Risks: China• Dynamic / fluid Environment

– Economics, work force training & retention• (high cost of living & poaching in 1st Tier Cities)

– SFDA regulatory uncertainties • leading to reluctant clients• Delayed programs

– Governmental oversight / monitoring (Internet)• Repatriating monies out of country• Internet privacy data corruption

• Conflicts between different cultures, traditions, as well as value systems.– Goal mis-alignment between partners – Moral Hazard Situations

• Ethical concerns & corruption is endemic– There are “no secrets” in China– Contract law– “Red Envelop mentality”

Contact Information

Steve斯蒂夫R. Stephen Porter, CSODragon Bio-Consultants, Ltd.Suite 55, 5/F New Henry House, 10 Ice House

StreetCentral, Hong Kong SARHK Registered Company No.: 1429099SKYPE: virtualdoc77+86.15021242314 (Cell China)+1(615)445-5761 (Cell USA)http://dragonbio-consultants.com

香港中環雪廠街 10 號新顯利大廈 5 樓 55 室香港公司註冊號碼： 1429099

Dragon Bio-Consultants, Ltd.Suite 55, 5/F New Henry House, 10 Ice House StreetCentral, Hong Kong SARHK Registered Company No.: 1429099SKYPE: virtualdoc77+86.15021242314 (Cell China)+1(615)445-5761 (Cell USA)[email protected]://dragonbio-consultants.com

香港中環雪廠街 10 號新顯利大廈 5 樓 55 室香港公司註冊號碼： 1429099

VDDI PharmaceuticalsChairman, President and CEO115 Penn Warren Drive Suite 300-389 Brentwood, TN 37027 (615)445-5761 (cell)+86.15021242314 (Cell China)[email protected] http://www.virtualdrugdevelopment.com

R. Stephen Porter, Pharm.D., FCP MRCP