Pediatrix Therapeutics: Seizing the Moment for a Pediatric-Focused Biopharma in China

In mid-2020, Zhang Cheng, COO of Simcere Pharmaceutical, was buried in a pile of documents preparing for an initial public offering when investors from Stora Capital, F-Prime Capital, and Hongyuan Capital extended an olive branch to him, proposing to jointly establish a platform company focused on pediatric drugs.

To outsiders, this idea appears to be driven solely by sentiment. The commercialization of pediatric drugs has long been an industry-wide challenge: drug design involves complex processes, clinical development is difficult to advance, and costs are higher than those for adult medications, while profit margins may not meet expectations. Large pharmaceutical companies are reluctant to engage in this area, and biotech firms lack the necessary resources despite their willingness.

For Zhang Cheng, former Vice President of MSD China, three decades of experience in drug commercialization have taught him thatWhen These Two Major Challenges Collide, a New Opportunity Emerges。

The Chinese pediatric drug market suffers from a scarcity of available products, presenting both strong market demand and ample room for growth. He believes it is entirely feasible to establish a platform-based company that transforms a pediatric specialty pharmaceutical firm into a biopharma, with the past two years offering the most opportune timing—robust policy support for pediatric drug development has opened up new frontiers for the industry.

In October 2020, Simcere Pharmaceutical successfully completed its initial public offering. Subsequently, in March 2021, Zhang Cheng left Simcere Pharmaceutical to commence the preliminary establishment of Pediatrix Therapeutics.

Addressing several major challenges in the field of pediatric pharmaceuticals, Pediatrix Therapeutics has tackled them one by one and built a dedicated team. On the commercialization front, CEO Zhang Cheng, who brings nearly 30 years of experience in commercialization, product in-licensing, and national medical insurance reimbursement negotiations, formulates the strategy. In clinical development, Dr. Yu Miao, Chief Medical Officer with over 15 years of experience at multinational pharmaceutical companies and five years as a clinician at Beijing Children’s Hospital, oversees quality control. Backed by support from STOC Capital, F-Prime Capital, and Hongyuan Capital, Pediatrix Therapeutics’ journey from zero to one has officially begun.

Pediatrix Therapeutics has maintained a low profile in drug development since its inception, making this its first public appearance. Prior to this, the company had already accumulated numerous achievements. While several pharmaceutical companies have entered the domestic pediatric drug market, there has been a lack of a company like Pediatrix.

From the perspective of population base and proportion, China’s population aged 0–14 stands at 260 million, accounting for 17.95% of the total population. However, the share of pediatric drugs falls far short of this figure: as of March 2022, there were over 30,000 drug products on the Chinese market, among which only more than 600 had clearly indicated pediatric indications, representing merely 1.7% of all pharmaceutical formulations. Meanwhile, the total market size for pediatric medications in China exceeded RMB 100 billion in 2021, with over 95% comprising adult drugs used off-label in children. Phrases such as “children are not miniature adults” and “dosing by splitting tablets and guessing doses” highlight how off-label use across indications and populations poses significant safety risks and hazards to children’s health. Furthermore, drug efficacy and patient compliance lack adequate assurance.

Domestic pharmaceutical companies have made attempts, but their products are mostly concentrated in generic drugs. Considering the clinical and commercialization difficulties as well as the lack of significant policy advantages, many enterprises remain hesitant to develop pediatric drugs.

Domestic pediatric drug companies mostly focus on traditional Chinese medicine (TCM) preparations. According to reports, among the more than 7,000 pharmaceutical companies currently operating in China, fewer than ten specialize primarily in pediatric medicines; of these, six or seven mainly produce TCM preparations, while two or three focus primarily on dietary supplements and over-the-counter (OTC) products.

The Chinese pediatric drug market is characterized by a limited number of specialty drugs, few varieties, scarce dosage forms, and insufficient specifications. Most domestically available pediatric medications are concentrated in the treatment of common conditions such as colds, fever, cough, and diarrhea. In contrast, for specialized pediatric diseases encountered in clinical practice—such as neuropsychiatric disorders, allergic diseases, and neonatal conditions—physicians often resort to using adult medications or face a complete lack of therapeutic options. Furthermore,In China, it may take over a decade for an innovative drug to progress from its initial emergence to the development of proprietary formulations and dosages for pediatric use, whereas abroad this process takes only two to three years.。

Leading foreign pharmaceutical companies have also attempted to enter the market, but pediatrics has long remained marginalized within these multinational corporations. The limited market size of single-product portfolios makes it difficult for them to secure advantageous resource allocation.

In other words, given the vast size of the Chinese market, it is difficult for foreign pharmaceutical companies to achieve scale by merely launching one or two pediatric drugs without forming a product portfolio.

It is reported that Merck & Co. once had a specialized pediatric team, with Singulair achieving peak sales of RMB 3.5 billion in China’s pediatric sector; AstraZeneca’s Pulmicort Respules reached peak pediatric sales of RMB 5–6 billion in China. These two drugs can be considered blockbuster products in pediatrics; however, relying on a single product cannot address the substantial clinical needs in pediatric care.

Zhang Cheng, who has worked at Merck & Co. for 18 years, is deeply aware of this issue. The reason why leading foreign pharmaceutical companies have failed to capture a larger market share in China’s pediatric drug sector lies in the fact that their past business models dictated that the scale of their product portfolios was directly proportional to the resources invested in China. In terms of resource allocation, foreign companies inevitably prioritized adult medications.

Pediatrix Therapeutics is not only the first domestic innovative pediatric pharmaceutical company to genuinely focus on new and specialty drugs, but also aspires to become a platform-based enterprise in the field of pediatric medicines. In addition to promoting its own products, the company aims to engage in extensive collaborations with domestic and international enterprises to deeply develop the pediatric market.

Why have other companies failed to chart a clear path, while Zhang Cheng is firmly convinced that now is the optimal time and that Pediatrix Therapeutics can succeed in this endeavor?

The domestic pharmaceutical industry is largely policy-driven.Over the past three years, pediatric drugs have received strong policy support in areas such as priority review and approval, market access (inclusion in the National Reimbursement Drug List and the National Essential Medicines List), market exclusivity periods, and clinical use (exemption from restrictions on “two specifications per product” and limits on the number of drug varieties stocked by hospitals).

From a market perspective, pediatric drugs have shown significant growth in recent years, even as the pharmaceutical industry has cooled.“Over the past five years, the growth rate has exceeded 11%, far outpacing the global market’s growth,” said Lin Rui, Senior Partner at STOV Capital. From an industry perspective, Zhang Cheng observed that although the overall investment climate has been sluggish from late last year to early this year, interest in the pediatric sector has been steadily increasing.

More importantly, to address the challenges of commercialization and clinical implementation, Pediatrix Therapeutics has identified a breakthrough by leveraging market conditions and its own competitive advantages.

Pediatrix Therapeutics was founded by F-Prime Capital (backed by the Fidelity Group) and Hongyuan Capital, with commercialization veteran Zhang Cheng formulating its development strategy. The company enjoys distinct advantages in market trend analysis, cash flow management, and partnership networks.

“In the pediatric drug sector, products with sales exceeding one billion yuan are considered blockbuster drugs. However, if a company relies on only one or two such products, commercialization remains challenging even if sales reach over one billion yuan: a small team cannot provide adequate market coverage, while a large team is financially unsustainable.” Drawing on years of experience, Zhang Cheng has already recognized the impending challenges and formed expectations regarding the commercialization pathway.

Therefore,Pediatrix Therapeutics' first step is to rapidly build its product pipeline portfolio。

“There is a significant gap between the Chinese market and those of developed countries; in China, fewer than 3% of drugs actually have pediatric indications, whereas in the United States, the figure exceeds 20%,” said Lin Rui, Senior Partner at STOC Capital. The substantial disparity between the domestic and international pediatric drug markets indicates considerable potential for license-in transactions. Typically, license-in deals enable companies to rapidly build their product pipelines, albeit at the cost of significantly reduced profit margins. However, the situation is markedly different in the pediatric field.

Conventional in-licensing strategies often focus on pursuing blockbuster drugs that no longer offer significant profit margins, whereas Pediatrix Therapeutics’ strategy is to license products based on gaps in the domestic market and unmet clinical needs.On one hand, the safety and efficacy of imported drugs have been validated, demonstrating clear commercialization potential. On the other hand, the cost of licensing-in pediatric drugs is relatively low, enabling the rapid establishment of a comprehensive product pipeline. Meanwhile, companies can leverage national support policies to secure priority review or even clinical trial waivers, thereby significantly reducing overall product costs and achieving a high return on investment.

From a commercialization perspective, the National Healthcare Security Administration is intensifying its efforts by gradually strengthening market access for pediatric drugs. Meanwhile, investors in Pediatrix Therapeutics are optimistic about the willingness to pay for pediatric medications. “The products we have developed are highly differentiated, so parents are willing to pay a certain premium. This serves as a moat for our commercialization strategy,” said the company. Pediatrix Therapeutics aims to demonstrate that it is indeed possible to find the perfect intersection of clinical value and commercial value in the pediatric field.

While most domestic biotech companies focus on technology and tell scientific stories, Pediatrix Therapeutics aims to tell a business story rooted in real clinical needs.

Pediatrix Therapeutics plans to advance in-house R&D in parallel with building its product pipeline through in-licensing, further deepening its pipeline in already covered therapeutic areas. It will then expand external collaborations to onboard more pediatric drug products onto its existing platform, thereby strengthening the capabilities of its commercialization platform.

Established for over a year, Pediatrix Therapeutics has accumulated 11 product pipelines, driven by the dual engines of product in-licensing and independent R&D. Three product pipelines have entered the NDA stage, and one has entered the IND stage, with three products expected to be approved for market launch next year.

Prior to the drug’s market launch, Pediatrix Therapeutics plans to rapidly assemble a commercialization team, breaking away from the conventional physician- or prescriber-centric approach.Pediatrix Therapeutics' business model will center on the interaction between parents and doctors., enhance medication adherence among users, and ultimately aim to strengthen the understanding, treatment, and management of pediatric diseases from the perspectives of both physicians and parents.

Considering the market coverage model, Zhang Cheng analyzed that China’s pediatric market is both concentrated and fragmented. Fifty percent of pediatric patients nationwide are concentrated in 200–300 specialized children’s hospitals, while the remaining 50% are dispersed across a broader range of institutions, such as county-level traditional Chinese medicine hospitals and county-level maternal and child health hospitals. Therefore, Pediatrix Therapeutics has adopted a hybrid approach: its own team covers the concentrated 50%, while partners cover the dispersed 50%. This includes enterprises that already have a presence in China’s pediatric drug market. Establishing effective collaborations with these partners is the next key step for Pediatrix Therapeutics.

Entering the pediatric drug sector is fundamentally driven by compassion for young lives and a deep commitment to safeguarding patients and their families.

Dr. Yu Miao, CMO of Pediatrix Therapeutics, deeply resonated with this sentiment. Having served as a clinician at Beijing Children’s Hospital for five years, she was profoundly moved when Zhang Cheng first introduced her to the project—recognizing it as an endeavor destined to deliver substantial social value.

Pediatrix Therapeutics chose desmopressin oral solution as its first product to launch, precisely because this drug is included in China’s second batch of the List of Pediatric Drugs Encouraged for Research, Development, and Application.It is an urgently needed medication for pediatric clinical use in China.

“Splitting pills by hand, guessing the dosage” has long been the primary dilemma in pediatric medication. Many drug package inserts state, “Take three times daily; reduce dosage for children as appropriate,” or “There is currently no evidence-based clinical data for pediatric use.” This presents a significant challenge for both parents and physicians: How much should the dosage be reduced? How can accurate dose division be achieved? Could a slightly higher dose cause harm, while a slightly lower one compromise efficacy?What safety risks are associated with off-label use?

According to statistics, improper medication use causes hearing loss in approximately 30,000 children and leads to the deaths of around 7,000 children annually in China. Behind these figures lie not only the affected children but also their families.

In addition to considerations of safety and efficacy, taste, dosage form, and dosing are also clinical challenges.

Professor Feng Xing from the Children’s Hospital Affiliated to Soochow University shared, “Whether it is tablets or powder emptied from capsules, they all have a bitter taste. Some children simply cannot swallow them and will vomit. This raises questions such as: How much was vomited out? How much was absorbed? Should an additional dose be administered? These are questions frequently asked by parents.”

Dr. Yu Miao and Director Feng Xing have many years of experience in pediatric clinical practice, where they have encountered numerous challenges in medication administration and witnessed a vast number of cases.

Pediatrix Therapeutics focuses its strategic layout across a wide range of diseasesPediatric Neurological/Psychiatric, Allergic and Immune Diseases, and NeonatologyPediatrix Therapeutics has also established a presence in three other areas lacking adequate drugs or effective treatment options: endocrinology, respiratory and infectious diseases, and gastroenterology. Its focus is primarily on pediatric-specific conditions, such as attention deficit hyperactivity disorder (ADHD), epilepsy, atopic dermatitis, allergies, asthma, and neonatal intestinal dysplasia. Furthermore, Pediatrix Therapeutics is dedicated to optimizing the dosage and formulation of commonly used medications for neonates and children, thereby enhancing medication safety and patient adherence.

Dr. Yu Miao cited two upcoming ADHD medications as examples, “We have launched methylphenidate extended-release chewable tablets and oral suspension, the world's only long-acting extended-release pediatric formulation,Among them, the chewable tablets are scored tablets that can be split for administration, ensuring therapeutic efficacy whether swallowed or chewed. The suspension can be mixed with food for pediatric patients who are particularly resistant to taking medication. Both products allow for dose adjustments in increments as small as 5 mg, whileThe product’s flavor-masking is highly realistic., thereby increasing the willingness of children who are reluctant to swallow or are sensitive to the taste and odor of medications to take their medicine, thus improving adherence.”

To meet clinical needs, Pediatrix Therapeutics has invited several highly respected experts in the field of pediatrics. These experts collaborate with Pediatrix Therapeutics to discuss issues related to pediatric medication, helping teams like ours address challenges in pediatric drug development directions and clinical trial management. This collaboration helps avoid working in isolation, reduces detours, and enables more effective research, development, and production of drugs that meet clinical demands.

Dean Feng Xing, a renowned pediatric specialist in China, has expressed strong endorsement for the endeavors of Pediatrix Therapeutics.Pediatrix Therapeutics has filled a domestic gap by addressing urgent clinical needs in pediatric care in China.“Their extensive product portfolio, highly professional team, dedication to pediatric medications, commitment to R&D, and educational initiatives for healthcare professionals have earned them high recognition from our peers.”

Policy Breakthroughs Unlock Commercialization Pathways: As More Pharmaceutical Companies Enter the Fray, China’s Pediatric Drug Market May See the Light of Day