"China is no longer a competitor but a subject of analysis."
Jung Hoe-ryang, director of business development at Roche, said on the 28th at the "4th Samsung Medical Center·Aimed Bio Antibody-Drug Conjugate (ADC) Conference" at the Westin Seoul Josun in Gangnam-gu, Seoul, that Korea's bio corporations must first change how they compete with China in the ADC market.
Before viewing China as a competitor and giving chase, corporations must first analyze what strategies Chinese corporations use, how fast they move, and at what expense they develop new drugs. Only then, the explanation went, can they pinpoint their exact position in the global market and craft differentiation strategies.
China's presence in the global ADC market is already overwhelming. Analyses say development expense is about one-third that of the United States, and development speed is roughly twice as fast. More than 80% of meaningful ADC technology-transfer transactions in the global market over the past four years also came from Chinese corporations.
◇ Korea must first grasp "where we stand"… China is already setting up the next round faster
Jung pointed to competitor analysis as the biggest shortcoming of Korean corporations. Jung said, "When I meet Korean corporations, many say, 'We are first,' or 'We are the second fastest,'" adding, "But when we actually checked the competitive landscape, there were cases where they were 15th."
There is a side to this where it is hard to assess the real competitive situation because Chinese corporations do not disclose enough development information. However, even accounting for these limits, Jung said they must leverage global drug development information networks and continuously track competitors' candidate development status.
Jung also presented "target selection," deciding what to attack, as a core task. Jung said, "Korea has strong technical capabilities in designing and optimizing new drugs, but there were cases that fell short in the process of deciding which disease or cancer cell characteristics to aim at," adding, "Going forward, corporations with strong translational medicine capabilities will become more important."
Translational medicine refers to research that connects basic research results from the laboratory to actual patient treatment and, conversely, takes newly discovered medical problems from the treatment process back to the lab to find solutions.
Global pharmaceutical companies are turning to Chinese ADC corporations not just because development expense is cheap.
Chinese corporations do not rely on a single payload (the cytotoxic drug an ADC delivers into cancer cells). They have secured various types of "loaded drugs," from drugs that block cancer cell division to drugs that damage cancer cell DNA and drugs that cut off cancer cell growth signals. Like a toolbox stocked with needed tools in advance, they have built a structure that can quickly combine and test various drugs according to the cancer treatment target.
They also accumulate clinical trial data quickly. Jung said, "There is a difference between securing data that 3 out of 5 patients responded and quickly securing data that 30 out of 50 responded," adding, "Chinese corporations are producing more reliable clinical data at a faster pace by targeting more patients."
Expense competitiveness is also high. According to an analysis Jung cited, from hit identification to entry into phase 1, the first-in-human early clinical trial, it costs $55 million to $90 million in the United States, versus $15 million to $35 million in China. Development expense is about one-third while speed is twice as fast, the explanation said.
Jung said, "If the success rate of ADC development is similar in the United States and China, global pharmaceutical companies have strong incentives to choose Chinese corporations, which can develop faster at lower expense."
Jung also viewed Chinese corporations as excellent at finding new therapeutic targets first. They discuss with clinicians in advance and use artificial intelligence (AI) and genomic analysis to identify early on the targets with higher chances of success.
◇Clinical funding is also a bottleneck… "Still, there are opportunities for innovative compounds"
Han Jin-hwan, LigaChem Biosciences(141080) chief technology officer who led ADC new drug development at Merck, pointed to fundraising as a structural bottleneck for Korean bio corporations.
While many global pharmaceutical companies place importance on clinical data from actual patients, a considerable number of domestic bio corporations lack the funds to put into clinical trials.
One CTO said, "Investors urge quick out-licensing for a corporate initial public offering (IPO), and corporations cannot enter clinical trials because they lack money," adding, "Because there are no clinical data, they cannot out-license again, and this vicious cycle keeps repeating."
The CTO said, "The bio industry is not one where you put money in and recoup it overnight," adding, "We need a long-term big picture for how the state will support it, how much risk capital will share, and what strategies corporations will choose."
The CTO said, "China's greatest strength is that corporations created an environment where they can enter clinical trials quickly," adding, "The government, corporations, and capital rapidly built a system that broadly supports this."
However, not all global pharmaceutical companies look only for clinical-stage candidates.
Han Jeong-hyun, executive director of business development and technology transfer at C. H. Boehringer Sohn AG & Co. KG, said that if innovation is sufficient, they actively consider co-development or in-licensing even before clinical trials.
Han said, "What matters is how rigorous and consistent your scientific data are by global standards," adding, "Results confirmed at the in vitro or cell level and animal experiments must be consistent with each other, and you need data that connect how the drug moves in the body, what its toxicity is, and what human dose can be administered."
Han added, "Compared to 7–8 years ago, the level of Korean bio corporations has risen a lot," and said, "If you have sufficiently innovative drug candidates, there are opportunities to find global partners even before clinical trials."
◇ The ADC market has begun to separate the wheat from the chaff… "Time for Korea to set up a 'new board'"
At the conference, analysts also said that while the ADC market is still growing, the bar for global pharmaceutical companies to decide on corporate acquisitions or in-licensing has risen further.
CEO Heo Nam-gu of Aimed Bio(0009K0) viewed 2022 as the inflection point for the global ADC market. After Daiichi Sankyo and AstraZeneca's jointly developed "Enhertu" proved strong efficacy in breast cancer trials, global pharmaceutical companies began securing ADCs as next-generation growth engines.
Heo said, "In the past, accumulated ADC failures led global pharmaceutical companies to watch the market from the sidelines, but after Enhertu emerged in 2022, the situation changed completely," adding, "They started by buying bio corporations with approved ADCs."
This year, the number of ADC transactions has declined somewhat. But as the pool of differentiated candidates on the market has shrunk, the size of individual transactions and acquisition criteria have actually gone up, analysts said.
Heo said, "Transactions have fallen simply because there are no competitive, differentiated clinical-stage candidates; if there are good candidates, global pharmaceutical companies are ready to buy immediately," adding, "The market hasn't turned down; the sorting of the wheat from the chaff has begun."
In fact, the global ADC technology-transfer market is moving quickly toward next-generation technologies such as new loaded drugs, the "dual loading" approach that carries two types of drugs together, and ADCs that simultaneously target two different cancer cell targets.
The CTO said, "If it has become difficult to enter and compete on an already set board, then setting an entirely new board is also a way," adding, "ADC is not a perfect treatment modality, so from now on we must think about what technology after ADC can vault over the walls of competition."
The CTO added, "In the end, the way to save Korea's bio sector is innovation," and said, "We must precisely grasp what the global market wants, and on that basis compete with new technology."