Sherpa Biosciences Emerges as China's Second-Largest CDMO with Ambitious Global Vision

Dr. Zhou Kaisong, who has worked at Innovent Biologics for six years, never expected that the CMC team he led would pave the way for the founding of Sherpa Biotechnology.

In the field of CMC process development, Zhou Kaisong has cultivated deep expertise for over a decade. He previously oversaw process development and commercialization at Qilu Pharmaceutical, a traditional pharmaceutical company. Subsequently, he led the establishment of a comprehensive commercialization team at Innovent Biologics, an innovative biopharmaceutical company, covering multiple areas including process development, product development, manufacturing, procurement, and supply chain management.

Now, he is the General Manager of Sherpa Biotechnology and the helmsman of China’s second-largest CDMO by production capacity.

Sherpa Biotechnology was born with a distinct advantage: it boasts over 1,000 professionals specializing in CMC research and industrialization, with more than 30% of its development team comprising returnees, master’s, and doctoral degree holders. The company has experience in commercializing four products, has managed regulatory submissions for multiple drugs in China, the United States, and Europe, and has facilitated the commercial launch of eight drugs both domestically and internationally. As the CDMO in China that provides commercial manufacturing services for the largest number of biologics, Sherpa Biotechnology has successfully completed over 400 commercial production batches, achieving a 100% success rate for each batch.

But they are like top students taking the college entrance examination., not only commands high attention but also demands outstanding performance in this major test。The CDMO industry is undergoing significant transformation, and innovative pharmaceutical companies expanding into the CDMO business will face stringent tests amidst this upheaval.

How can Sherpa Biotechnology establish a differentiated positioning? How can it target the vast blue ocean market in the CDMO sector? What valuable value and experience can it provide to customers? Has Sherpa Biotechnology figured out these issues?

With these questions in mind, VBInsight spoke with Dr. Zhou Kaisong.

“Our initial motivation was to address Innovent Biologics’ potential excess production capacity and improve asset utilization efficiency,” said Zhou Kaisong.

Cost has become a core issue for biopharmaceutical companies that have commercialized antibody drugs. When a product is first discovered, the most critical challenges lie in process development and ensuring product quality; however, as more products enter the market, price competition becomes the key determinant.In 2018, when sintilimab was launched, its price was RMB 7,843. After being included in the National Reimbursement Drug List for the second time, the price dropped to RMB 1,080. This pricing advantage provided the company with substantial room to significantly increase production capacity, while also indicating further cost compression.

An increasing number of enterprises are factoring cost considerations into their initial strategic planning. Moreover, the current market landscape has led to the emergence of idle production capacity, which in turn translates into high costs. This not only prevents the recovery of the hundreds of millions invested in facility construction but also results in the loss of highly skilled professionals who have been cultivated with significant time and effort.

Meanwhile, innovative drug development is fraught with peril; pipelines that fail in clinical trials are promptly terminated, yet the large quantities of procured materials become unusable inventory.Clinical supply chains have also increased cost expenditures.

Idle production capacity and material inventories require an outlet for consumption, making CDMO a direct solution.

The idea is certainly good, but how do we execute it?

As a leading biopharma company in China, Innovent Biologics’ every move draws significant industry attention. The expansion of an innovative pharmaceutical company into the CDMO sector has sparked considerable skepticism within the industry, with critics arguing that “innovative pharma companies entering the CDMO space cannot establish core technological barriers” and that “they cannot maintain sufficient focus to balance new drug R&D with client service.”

The establishment of Sherpa Biotechnology by Innovent Biologics is the focal point of this discussion.

In May of this year, after Sherpa Biotechnology was officially established in Suzhou, it maintained a low profile for the most part in the face of various opinions. Behind the scenes, however, senior management held repeated strategic discussions, as they were well aware that in the highly competitive CDMO sector, they needed to pinpoint their positioning right from inception.

What is certain is that Sherpa Biotechnology has the determination and boldness.Initially, Sherpa Biotechnology aimed to recruit only a few senior experts from Innovent Biologics to form its founding team.

“"Later, after numerous high-level discussions, we reached a strong consensus: half-hearted efforts are pointless. Either we don’t do it at all, or we must strive to make it the best."。“Zhou Kaisong recalled, ‘Ultimately, we decided to spin off Innovent Biologics’ CMC team of over 1,000 employees to establish a separate, professionally mature, and differentiated CDMO company.’”

Zhou Kaisong also relayed to VCBeat New Medicine the words of Dr. Yu Dechao, founder of Innovent Biologics: “Innovent Biologics grew from an obscure small company into a major enterprise, whereas Sherpa Biotechnology was established as the second-largest CDMO in China by production capacity. We can draw on Innovent’s growth experience to drive Sherpa’s development.”

Sherpa Biotechnology was established, as it were, standing on the shoulders of giants. After its low-key establishment in May, Sherpa Biotechnology began to gradually release information to the industry. Currently, not only have many antibody drug clients approached them, but CGT companies and even CDMOs have also reached out.

As Zhou Kaisong engaged with an increasing number of clients, he became increasingly aware that the relationship between Sherpa Biotechnology and Innovent Biologics was a double-edged sword.

According to the CDMO industry research report published by Frost & Sullivan, China's CDMO industry has demonstrated a growth rate higher than the global average, and its market share is projected to account for more than 20% of the global market share after 2025.

When Sherpa entered the market, it coincided with the rapid growth of Chinese CDMO companies. As the transfer of CDMO capacity in China gradually advanced and the market size expanded rapidly, the CDMO sector witnessed explosive growth. Mature CRO and CMO firms have been transitioning to CDMO models, while CDMO companies focusing on niche segments have begun to emerge. Furthermore, as innovative pharmaceutical companies increasingly crossed over into this space and launched their own CDMO brands, intense competition has become inevitable in this field.

The market is growing, competition is intensifying, and CDMO companies at the forefront of this trend will inevitably undergo a rigorous process of survival of the fittest.

Zhou Kaisong candidly admitted that many clients were drawn by the Innovent brand, “If we had no affiliation with Innovent, no one would have reached out to us so quickly.”

However, due to its relationship with Innovent Biologics, many customers have expressed concerns and doubts, fearing potential entanglement over product intellectual property rights.

Sherpa Biotechnology has clearly addressed these issues. “Since its inception, Sherpa Biotechnology has maintained a clear distinction in its core business operations from Innovent Biologics. Innovent Biologics focuses on the research and development of new drugs, whereas Sherpa Biotechnology is not involved in this segment.”Both are subsidiaries under the Cinda Group. From now on,Sherpa Biotechnology will exist as a CDMO company providing professional services, while Innovent Biologics will always remain a pharmaceutical enterprise.”

Innovent Biologics has become a client of Sherpa Biotechnology. All other clients maintain an equal client relationship with Innovent Biologics in their dealings with Sherpa Biotechnology. Zhou Kaisong emphasized that Sherpa Biotechnology will treat all clients equally and provide high-quality, professional services.

Regarding IP issues, Zhou Kaisong will provide clear explanations to clients. Sherpa Biotechnology does not engage in new drug R&D; it only provides CMC-related services such as process development and manufacturing. Sherpa will not hold any IP, which will always remain the property of the clients.

With clear relationships and positioning, Sherpa Biotechnology can move forward on its development path without any concerns.

However,The relationship between the two still seems to require further exploration:How to establish a robust firewall management mechanism and prevent risk transmission and conflicts of interest between companies may appear to be an internal positioning issue, but it ultimately manifests as a matter of customer trust in Sherpa Biotechnology.

During discussions with VCBeat New Medicine, Zhou Kaisong mentioned “what customers need” no fewer than ten times. In his view, this is a long-term question that Sherpa Biotechnology must continue to explore. As the era and industry evolve and customer demands change, Sherpa Biotechnology will continuously iterate in the future.

The exploration of the proposition “what customers need” has been internalized into Sherpa Biotechnology’s business philosophy of “sharing, helping, achieving, and win-win cooperation.” This is inseparable from Zhou Kaisong’s experience leading the CMC team at Innovent Biologics.

As the Head of CMC Process Development at Innovent Biologics, Zhou Kaisong is well aware of the functions and role of the CMC team in drug development. “Previously, our positioning within Innovent Biologics was that of a service department, serving clinical and marketing needs.”

This has endowed Sherpa Biotechnology with a service-provider DNA since its inception, while also fostering a culture of open collaboration. True to its name, the company aspires to emulate the Sherpa people beneath Mount Everest, supporting biotech firms in their “climb” by successfully bringing their products to market.

Having a concept alone is not enough; it also requires the rich experience accumulated over more than 10 yearsCMC'sThis experience has given Sherpa Biotechnology the confidence to carve out a differentiated path in the hyper-competitive CDMO landscape.

“We must identify where we can deliver value to customers within the scope of what we are capable of doing.” Zhou Kaisong is firmly confident about the distinctive strengths of Sherpa Biotechnology: first, its deep expertise in drug development, and second, its team’s extensive experience in industrialization.

Currently, Sherpa Biotechnology boasts a team of seasoned experts in the biopharmaceutical industry. Its core team members each possess over 20 years of experience in biologics process development, commercial manufacturing, and regulatory submissions. They have overseen the development, pilot-scale production, manufacturing, and regulatory filing of more than 40 antibody drugs, with over 10 projects advancing to pivotal clinical stages and more than 10 projects obtaining marketing approval or post-approval change approvals. In China, few CDMOs can match such extensive expertise in manufacturing process development.

Particularly regarding post-approval changes to marketing authorization, Sherpa Biotechnology has pioneered advanced initiatives in collaboration with regulatory authorities. “For certain types of changes that have never been undertaken in China, we have worked with regulators to invite industry experts to discuss the methodologies and pathways for such changes, emulating the format of the U.S. FDA’s Oncologic Drugs Advisory Committee (ODAC) hearings,” said Zhou Kaisong.

In terms of industrialization, Sherpa Biotechnology operates a commercial antibody manufacturing facility with a capacity of 60,000 liters, with an additional 170,000 liters of capacity currently under construction. Its production lines are built and operated in compliance with the Good Manufacturing Practice (GMP) requirements of the National Medical Products Administration (NMPA), the U.S. Food and Drug Administration (FDA), and the European Medicines Agency (EMA). To date, the production team has successfully completed over 400 commercial batches and dozens of clinical batches of antibody products, achieving a 100% batch production success rate.

Equally valuable is Sherpa Biotechnology’s experience in overseas commercialization. Zhou Kaisong recalled the period when sintilimab was submitted to the U.S. FDA for approval. Although the outcome was regrettable, the process yielded significant insights that provided nourishment for Sherpa Biotechnology’s growth.

During the 2022 Spring Festival, the Sherpa Biotechnology team did not take a break, continuously engaging in remote online audits with the FDA. Ultimately, no major deficiencies were identified in the audit, and it was successfully passed. “To prepare for this audit, we spent a total of two and a half years. In the initial phase, we needed to communicate with Eli Lilly, which maintained particularly strict control over details and provided numerous recommendations. We then devoted nearly another year to strengthening our audit readiness and solidifying our GMP compliance.” This experience has equipped the Sherpa team with the expertise to assist pharmaceutical companies in their international expansion, eliminating any apprehension regarding overseas product regulatory submissions.

Regarding Sherpa Biotechnology’s strategic planning, Zhou Kaisong mentioned that the company will accelerate its layout in key sectors such as antibodies, cell therapy, gene therapy, and antibody-drug conjugates (ADCs) to fully meet customers’ diverse needs. Meanwhile, it will continue to strengthen capabilities in areas including production capacity and safety testing, comprehensively empowering clients and helping enterprises accelerate product development and market launch. Additionally, Sherpa Biotechnology is currently constructing a larger-scale manufacturing facility in Hangzhou.

As the conversation drew to a close, Zhou Kaisong stood on the fifth floor of Cinda Group’s headquarters at No. 168 Dongping Street in the industrial park, pointing out the window and saying, “Opposite this site, we still have a vacant lot that will be subject to a new round of rational planning based on the development progress of Sherpa Biotechnology.”

In the CDMO sector, Sherpa Biotechnology, established just over five months ago, will continue its path of exploration.