on China's Changing R&D Landscape and Future Reforms
GBI: Thank you very much for giving GBI the time today. Why don't we start by allowing you to introduce yourself and your career?
SL: I started my career with the regulatory authorities in China many, many years ago – the predecessor of today's CFDA. Also I have worked with the U.S. FDA, but I have spent most of my time so far in the pharmaceutical industry, both in the US and China, in the drug development area. I've been responsible for medical department, clinical operations, regulatory affairs, safety and other functions in drug development in China or Asia, and epidemiology research and regulatory affairs in the U.S. I have spent about 16 years in industry.
My last job was as senior vice-president for Novartis in charge of China pharmaceutical development – late-stage development, across all functions. I joined Sidley almost two years ago now as a strategy advisor. I advise clients on regulatory and product development strategies, particularly for China, but also the other way round for products from China going to Europe or the US. The areas I focus on include product development strategy, looking at portfolio, looking at the regulatory environment, advising on which regulatory pathway would be the most appropriate or efficient for a company or portfolio or particular products, and advising on clinical trial designs and regulatory interactions. For whatever company big or small, for whatever reason, we can help them to interact with the reviewers, and also withCRO assessment, and work on regulatory policy. At the same time, I also do a lot of volunteer work for non-profit organizations, and professional associations like the Drug Information Association, and I teach at university. I was the president of DIA last year, and this year I am still sitting on the board until the next month before rotating off.
GBI: You have been working with MNCs in the R&D field for more than 15 years, during which time China has rapidly evolved and been transformed from one where very little innovative R&D activity was taking place, to being a global R&D centre. How do you view the landscape has changed in China during this time, in terms of MNCs' activities in China, and what challenges have been faced?
SL: I've moved back to Shanghai for 10 years now, during which time MNCs have gone through different evolutionary stages.
Initially, in the early 2000s, the MNCs' R&D work was mostly limited to what was required for product registration in China, so involving limited clinical work. Since mid-2000 we began to see a lot more global clinical activities occurring in China - when I was with Roche China I oversaw global clinical studies in China and the region.
A lot of R&D facilities – MNC research institutes – have now been set up in China. This has involved two major components: one is on discovery and early development, the chemical, biologic research, DMPK, or biomarker research – the industry tried to leverage the scientific capability and talents in China to discover drugs, possibly for China or for the global market. So a lot of original research and early development now takes place in China.
The other component is all of the companies, the major pharmas, have been investing more in late-stage development. So in clinical development they try to do parallel development at the clinical trial stage for the China market, in the way of conducting regional studies or involving China in global studies, to accelerate product development for the Chinese market.
Multinationals now conduct global clinical studies in China for global purposes, using the data for China if appropriate, but also for global regulatory dossiers and submissions. This has helped to build confidence regarding the quality and GCP compliance of clinical trials in China. For Chinese investigators and clinical study sites, this continues to be a learning process. The industry will need to put in a lot of effort in training, and monitoring to ensure study integrity and data quality.
At the same time, another model we see in the R&D space is offshoring. Some companies have taken that approach, to set up an operations center, even global hubs. Pfizer does statistics, data management, safety processing and other functions in China. Another similar approach at a different level is that taken by AstraZeneca, where they have a study management hub in China, one of its global hubs. That I can see is the next step. Now they are doing more original research, discovery, leveraging scientific capability and doing more late-stage development, plus these offshoring activities.
Most recently, over the last two or three years, another trend is for partnering, co-development or co-collaboration, you see a lot of reports on deals with local companies or research institutes to develop a drug or certain technology, so it's not just a one-way street but more a collaboration. These are the three or four steps in China's R&D evolution.
GBI: Can you identify whether there is a specific strategy, or specific MNCs, which have been more successful than others in terms of successfully establishing China-based R&D?
SL: It is hard to say which one is doing better at this time, because I think the timeframe is still quite limited. But overall, there are two types of R&D. One is they put in clinical, regulatory, biomarker research, and also discovery – they try to discover new drugs for the Chinese market, or to develop compounds that were discovered overseas. That is what most of the MNCs are doing. But others are using China more or less as an offshoring center in order to create a synergy of efficiency for the operations, which at the end of the day benefits the industry and the company, as in Pfizer's case. That has been very successful. I think it is too early to say which company is doing better. But I think they are facing the same challenges, which is the need for greater regulatory talent, for more seasoned drug developers, to build scientific capability locally, because all of these take time to build up.
GBI: How would you assess the China marketplace for MNCs carrying out clinical trials, in terms of R&D talent pool and competition for clinical trial sites?
SL: The talent pool can be put into two categories, one is internal, one is external. Externally, we see a lot of movement in terms of collaborations with academic institutions to develop clinical trial sites, and that has been very significant. I used to run clinical studies, and I know that developing a site is not an easy task. Because of the clustering in the big cities along coastal areas, you find you are competing with peers, and even within yourselves.
In terms of clinical trial talents, over the last 10 to 15 years, with the increase of clinical trial activity we do see a lot more experienced investigators that can really deliver high quality GCP-compliant clinical data. But at the same time, I see that China, in the clinical trial space, is still in the stage of development. You still have to put a lot of effort into training, development and monitoring, it is still on a learning curve, it is not yet quite up there yet.
With regard to internal talents, again, we see a lot of improvement over the last 5 or 6 years, which means that if you look as I described earlier at the R&D evolution, a lot of people in China grew up in the R&D space by doing things, running a clinical trial, filing a submission, but these are now being upgraded by the work they do, by the learning and training to become more strategic.
For example the ability to develop a desired clinical program, perhaps based on what is happening in other countries for the same compound in terms of global development and translating that to meet China's needs. This can mean looking into the epidemiology of a disease, looking at clinical practice, looking at a concomitant treatment, particularly a traditional Chinese medicine. Being able to efficiently and effectively design a meaningful clinical program, to develop a product for the Chinese market – that requires something beyond operational skills. That requires scientific and strategic knowledge, and also communication with KOLs, for example. If we look back five or six years ago these kinds of people were very hard to find, but now there are a lot more - although still not sufficient.
The same is true on the regulatory side, one cannot act simply as a messenger, delivering a dossier to the agency or delivering questions to the headquarters, someone must be able to look at the filing, and strategically understand how a product should be filed: which indication comes first, what kind of data is needed, what kind of data can we generate locally, what kind of global data can we leverage – that kind of thinking and planning. Again I would say we have seen a lot more people like this developed [in China] over the last six or seven years.
So, in terms of global management experience, MNCs' activities in terms of locating regional hubs and running global studies in China, but not just for China, these are certainly facilitating the development of global talents. I would say we are still on a learning curve. There are many more capable people than 5 or 6 years ago, but still in terms of the seasoned, experienced leaders, we still need more.
GBI: How about domestic companies, has MNC investment driven innovation in local companies?
SL: Certainly – although the term "domestic" company is kind of vague, because a lot of these start-up companies, particularly the biotechs, it is hard to say whether they are domestic or international. But in terms of traditional local companies, over the last five or six years, there have been a couple of waves of government funding into major new drug development programs, and these are now producing pretty significant achievements in terms of new drugs, either approved or in clinical development, and also new technology platforms – databanks, compound libraries, clinical trial platforms. This kind of push by the government certainly has a very positive effect in terms of innovation, even though the money at the global scale is not a huge amount, it means quite a bit to the local industry, and represents a positive push in the right direction. But overall, in terms of the level of innovation it is still very much me-too or me-better type of products, and small-molecule.
GBI: Moving on to the regulatory side of things, I saw there was a steep drop in the number of clinical trials last year. There was no specific explanation for this…
SL: No, I cannot find any explanation for this.
I also looked at this drug review report and compared numbers over the last four years and you can see the drop in almost all clinical areas, and I don't know what the reason is, that is pretty interesting to note. The number of applications is pretty steady, just a slight increase. I think the whole industry must undergo a certain kind of transformation, in terms of the drivers that see so many companies submit so many generic applications for the same compound, there could be over 100, or over 50 applications. It is not logical. But that is beyond the CFDA – they cannot refuse to accept applications for a certain drug. It must use certain economic levers to change that. That is a bigger question related to health care reform, and pricing policy.
GBI: The CFDA and CDE are in the process of ongoing and wide-ranging reforms, how do you assess their progress to date?
SL: In terms of regulatory reforms, I think China has come a long way if you look back. But I think there is still a long gap with the advanced regulatory agencies like the U.S. FDA, EMA [European Medicines Agency], or PMDA [Japan's Pharmaceuticals and Medical Devices Agency], or the HSA [Health Sciences Authority] in Singapore. There is also a big gap between the regulator's capabilities and what the environment or society requires, reflected in a lot of issues, for example the drug lag, the drug approval backlog.
It is pretty difficult because so many factors contribute to the current system. China is a very big country. Even in the pharmaceutical space it is very complicated. There are many generics producing a lot of applications, there are also highly innovative companies producing highly innovative applications. The resource limitations of the drug review agency, the CDE, is something we all know about.
The agency needs to consider how to overhaul the drug regulatory system, they will need to see what kind of fundamental change is needed. These ongoing reform projects are a major opportunity for the CFDA.
The last revision of the Drug Administration Law was in 2001, and the first version was 1985. So it is very outdated, as are a lot of the regulations, which are not fit for today's drug development paradigm. They need to take a hard look to see what should be changed and what can be changed. Otherwise, it will be very difficult. Because even though the CDE has been trying to streamline approval pathways, there are limitations as to what it can do, because the law has not changed.
GBI: What kind of changes do you think are necessary for the CFDA's reform plans to come to fruition, and are there any internal barriers to this reform process?
SL: To facilitate this reform, I have thought about some of the parameters. I think there are four Ps. The first one is political willingness, and wisdom. It's from the top, even beyond the CFDA and CDE level. They need to realise, "I need to make this change". Because this is not just purely about drug administration, there are economic implications to changing the law in a certain direction. There must be political willingness to do it. And it requires wisdom to modernise the system.
I'll give you an example, we have about 7,000 manufacturers. So there is a lot of discussion about introducing a market authorisation holder [MAH] system, as opposed to the manufacturer-based system. Currently in China, it is a manufacturer-based system – anyone who wants to market a drug, they need to be a manufacturer, otherwise they are not the holder of this licence. The benefits of the marketing authorisation holder system are clear, and would basically liberalise a lot of resources. So, the question is how, if everyone agrees that the MAH system is a good one, how can we move towards that among today's 7,000 companies? It's something that requires a certain wisdom to deal with it. Political willingness, and how to tackle it. We need solutions.
The second P is related to Professional and scientific knowledge and expertise. For the reviewers, and the drug developers, they need to really have an up-to-date scientific knowledge and expertise to enable them to make decisions based on science with confidence. They need to overhaul the whole system, the agency needs to upgrade their scientific base. There should be more real science-based review and decision making, not just box ticking.
The third one is Personal, personal experience and confidence. Again, that applies to both the industry, the drug sponsors, and the regulator. If you look back at innovative research in China, it has been ongoing for probably only 10 years, 15 max. So the accumulation of experience requires time, particularly at a personal level. If nobody has gone through a whole process of drug development, he or she may not be confident, on both the sponsor or reviewer side. If the reviewer sees more and more applications and discussions with company or global regulatory agencies, he or she will be more confident to make certain decisions. That will need to happen.
The fourth P is the Public. Public awareness and society understanding. We see and hear a lot of noise regarding drug development, for example looking at clinical trials, whether Chinese patients are being used as a guinea pig etc. which I think is a misguided perception. The public will need to know what is the government's responsibility and the sponsor's responsibility. There are different responsibilities within the drug development chain, and this is not clearly understood by the general public. If something goes wrong, it is always the regulator's fault, or individual reviewer's fault. So that puts tremendous pressure on the regulators, so they become more risk averse or conservative, which at some point will become a limiting factor for drug development.
So I think these are the things that will need to move in order to create a good environment for regulatory reform. Regulators need to be more than just a gate keeper, they need to be a gate opener, an enabler for drug development, but the whole ecosystem is required to support this. I wouldn't solely blame the CFDA for this or for that. They have their responsibilities but other parts of society need to take their responsibilities, too.
GBI: In terms of future reforms, the CFDA has suggested greater delegation of powers to provincial authorities, do you view this as a positive step forwards?
SL: It depends. It depends on what power is being delegated. It is my personal view that it is good to be mobile and utilise all of the resources available. If you look at the whole country, you have 80,000 or more people working in the whole drug administration system. You have city, provincial, county levels, meaning a lot of people. How to mobilize these resources is an issue. So, it depends on what power is being delegated. I am not sure that delegating product approval to the provincial level is a good idea – that may not be a good idea, and could lead to confusion. They can do certain work for the central government, but the final authority must be retained by the central government. However, monitoring and enforcement is one area the provinces can help – I always think that China is such a big country, enforcement must be very local and down to earth.