After 12 Years in a Crowded High-End Formulation Market, How Is HuaYi TaiKang Adjusting Its Strategy?

Dr. Zhu Honggang, Chairman of Visum, sensed thatThe race for high-end formulations is becoming increasingly crowded.

In Zhu Honggang’s view, advanced drug delivery systems are a highly applicable technology, suitable for both generic drugs and innovative drugs; they encompass not only R&D at the laboratory stage but also process and manufacturing technologies during large-scale production. Innovative pharmaceutical companies hope to use this approach to reduce the risks associated with new drug development, while generic drug manufacturers look to improved new drugs as a new strategic focus to break through their current predicaments.

VBInsight has observed that the research and development of novel advanced drug formulations, having risen from obscurity to attract widespread industry attention, is now regarded by some insiders as an inevitable path for the innovative development and transformation of China’s pharmaceutical industry. With the emergence of major financing rounds and IPOs in this sector, companies specializing in advanced formulation R&D have entered a harvest phase and are poised for explosive growth.

The growth of Visum, established 12 years ago, is representative of the development trajectory of high-end formulation enterprises over the past decade or so.Especially after 2017, with the introduction of the generic drug consistency evaluation policy, Zhu Honggang, a keen entrepreneur, decisively targeted the domestic market and intensified his efforts in the CDMO business.

In late June this year, Visum also completed a Series B+ financing round of nearly RMB 100 million and is currently planning an IPO.

Generic drugs are closer to commercialization, which is one of the reasons Zhu Honggang chose the high-end formulation track when he founded Visum.

During his master’s studies at Shenyang Pharmaceutical University, Zhu Honggang studied under Professor Zhang Ruhua, a renowned Chinese expert in pharmaceutics, engaging in academic study and research in the field. In 1996, he had the fortuitous opportunity to pursue doctoral studies at the University of Utah in the United States.

Dr. William I. Higuchi, Zhu Honggang’s doctoral supervisor, is hailed as the founder of modern American pharmaceutics and the first person to introduce physical chemistry into the field. Dr. Higuchi’s influence on Zhu extended beyond academic mentorship, inspiring him to pursue entrepreneurship.

In the United States, Dr. Higuchi was once recognized as a “PhD Millionaire.” In an environment that encourages faculty entrepreneurship, he has already founded two startups. During his five-year doctoral program, Zhu Honggang published numerous papers and secured multiple patents. Recognizing the commercial potential of Zhu’s academic achievements, Dr. Higuchi established a third startup based on this foundation, with Zhu Honggang becoming its first employee and gaining initial exposure to entrepreneurship.

After completing his Ph.D., Dr. Higuchi hoped that Zhu Honggang would stay on. However, eager to broaden his horizons at a larger pharmaceutical company, Zhu seized the opportunity to join Merck & Co., where he engaged in research on oral solid dosage forms of innovative drugs.

Zhu Honggang’s experience at Merck & Co. gave him a profound appreciation for the challenges inherent in innovative drug development. Each product represents a massive systems engineering endeavor. All clinical trial samples fall under the responsibility of the formulation research department where Zhu works, which oversees their study, preparation, and production throughout the entire clinical development process until commercialization—a notably lengthy journey. From initial project initiation through preclinical studies involving toxicological, pathological, and pharmacological analyses, to human clinical trials, formulation research plays a pivotal role in determining a drug’s efficacy.

Zhu Honggang’s more than four years at Merck provided strong endorsement for his future career development, clarifying his entrepreneurial aspirations. Around 2001, he already had colleagues who left to start businesses in India. By 2006, he observed that not only were many Chinese professionals returning to China to launch startups, but many others were also coming to the United States to do so. Seeing those around him take action, Zhu felt increasingly eager to follow suit. “I also want to build my own career and hope for the opportunity to establish my own company.”

Starting a company requires the accumulation of industry experience. After leaving Merck & Co., Zhu Honggang did not immediately embark on an entrepreneurial venture; instead, he chose to continue deepening his expertise within the pharmaceutical industry. This time, he joined a generic drug company to conduct formulation research.

After working at both innovative pharmaceutical companies and generic drug manufacturers, Zhu Honggang discovered that their R&D approaches and paces differ significantly. Innovative pharmaceutical companies emphasize innovation for every product, with each project requiring at least ten years from initiation to approval. In contrast, generic drugs may take only one to three years from project initiation to approval. The accelerated R&D pace and improved efficiency enable generic drug manufacturers to commercialize their products more effectively.

“I have worked on nearly 10 projects at Merck & Co., primarily focusing on the preparation of clinical Phase I and Phase II samples. However, most projects were discontinued at this stage, leaving the products still a considerable distance from commercialization. In contrast, for generic drugs, greater emphasis is placed on post-launch production parameters, efficiency, and manufacturing processes.”From Zhu Honggang’s perspective, the closer proximity of generic drugs to commercialization is what attracts him most.

From talent development to product R&D, Zhu Honggang has accumulated nearly a decade of work experience in the U.S. industrial sector. His two distinct professional experiences have given him a deeper understanding of generic drugs than of innovative drugs. With the timing now ripe, it is time for him to return to China and launch his own venture.

When Zhu Honggang first returned to China, his entrepreneurial vision was simple: he believed that securing financing would gradually steer his company onto the right track. However, the funding landscape at that time differed significantly from today’s. Zhu relied on personal connections and friends to draft business plans and identify financing channels. Through this process, he had the opportunity to engage with Chinese entrepreneurs and establish ties with several local governments.

At that time, the Hainan provincial government was actively seeking investment. After Zhu Honggang and his investors conducted an on-site visit, the Haikou municipal government expressed strong approval of Zhu’s entrepreneurial plan and encouraged Visum to establish its operations in Haikou. The government presented a series of support initiatives, offering Visum favorable terms across funding, manufacturing facilities, and policy incentives.

In June 2010, Visum, specializing in high-end formulations, was established in Haikou.

Before embarking on his entrepreneurial journey, Zhu Honggang, who was based in the United States at the time, had limited understanding of China’s pharmaceutical industry. Domestic R&D capabilities for generic drugs were immature; many pharmaceutical companies operated only at the level of active pharmaceutical ingredient (API) development, and there were no consistent standards for drug approval.This made Zhu Honggang realize that introducing U.S.-style R&D to China was not aligned with the Chinese pharmaceutical market.

Therefore, Visum’s initial corporate positioning was to export drugs developed in China to the United States.. When initiating the project for the first product, Zhu Honggang decided to file for approval in the U.S. market,It also assists Chinese pharmaceutical companies seeking global expansion with formulation research and development., at this point, Visum had already begun undertaking R&D work similar to that of CRO companies.

China's pharmaceutical industry began to undergo changes in 2017. The policy on consistency evaluation of generic drugs was introduced,In China, both generic and innovative pharmaceutical companies have recognized the importance of formulation development for their products, leading more pharmaceutical enterprises to seek collaboration with Visum.

The consistency evaluation policy has unleashed tremendous potential in China’s pharmaceutical market, prompting Visum to adjust its corporate strategic objectives. While pursuing internationalization, the company has decided to focus on the domestic market.

Over the past 12 years, one of the things Zhu Honggang is most proud of regarding Visum is the development of its quality team, which has become one of Visum’s core competitive advantages.

In 2014, Visum had already initiated the regulatory filing process for its first product in the United States. During that period, the investment from Ancheng Pharmaceutical (Taiwan) marked a milestone in Visum’s development, providing critical support for its international strategic layout in terms of funding, sales channels, and quality management systems.

With this support, in 2016, Visum passed the U.S. FDA GMP inspection with zero defects for the first time.

To date, Visum has successfully passed the U.S. FDA’s Pre-Approval Inspection (PAI) with zero defects for four consecutive times. Zhu Honggang likened this process to a student attending classes: while hands-on guidance was necessary during the first inspection, by the second through fourth inspections, Visum’s quality and production team had become fully capable of independently handling U.S. FDA audits.

The rigorous quality control by the quality team has laid a solid foundation for Visum’s product exports and internationalization strategy, enabling Visum to achieve an export volume of 400 million tablets in 2021.

Zhu Honggang is a keen-sighted entrepreneur; the business operations and strategic positioning of Visum have been continuously adjusted in tandem with the development of China’s pharmaceutical industry.

In 2016, the Marketing Authorization Holder (MAH) system was introduced, establishing a management model that separates marketing authorization from manufacturing authorization. This allows MAHs to outsource product manufacturing to different producers, thereby facilitating the gradual maturation of the CDMO sector.

Prior to the promulgation of this system, domestic pharmaceutical companies had already approached Visum for assistance in formulation research and development. The introduction of the Marketing Authorization Holder (MAH) system, coupled with the emergence of a golden era for China’s innovative drug industry, presented new opportunities for Visum. Building on its previously accumulated achievements, Visum naturally embarked on the path of developing as a Contract Development and Manufacturing Organization (CDMO).

Today, Visum has become a comprehensive pharmaceutical enterprise integrating the R&D, production, export, and sales of high-end oral solid dosage forms.CDMO services have become a key strategic focus.

Zhu Honggang stated that for a company to develop a business segment, the market demand must first be sufficiently large.

Since 2019, the innovative drug sector has entered a golden age of development. Beyond innovative pharmaceutical companies, research institutions aiming to develop novel formulations or high-end generic drugs have generated substantial demand for CDMO services, propelling CDMOs into the industry spotlight. Formulations developed by research institutions or pharmaceutical companies are often more suited to laboratory settings; transforming them into marketable products requires process transfer and optimization, making R&D translation capabilities a critical priority for CDMOs. According to Zhu Honggang, years of accumulated achievements have enabled Visum to gain extensive experience in R&D, process transfer and optimization, scalable quality system management, and production cost control, which now constitute a significant portion of Visum’s business portfolio.

Today, Visum’s R&D team comprises high-caliber technical experts from renowned global pharmaceutical companies and experienced domestic pharmaceutical professionals. The company has established several distinctive technology platforms focused on sustained- and controlled-release pellets, sustained- and controlled-release matrix tablets, and poorly soluble drugs. Leveraging these platforms, Visum has successfully developed more than 80 products.

R&D is the focus, while exports also serve as a driving force.Visum’s initial positioning of selling Chinese pharmaceuticals to the U.S. market has enabled it to better meet customer demands in export operations, a capability that has also been validated by its independently developed products.

Currently, Visum has launched multiple independently developed products, with Metoprolol Sustained-Release Tablets being one of its flagship offerings. Despite the extremely complex manufacturing process, the product has successfully met the stringent requirements of the U.S. FDA. “The United States is a highly competitive market that imposes rigorous demands on both product quality and cost control.” This has provided Visum with opportunities to optimize its production and quality management systems. The company’s R&D efforts have enabled it to meet U.S. FDA standards while maintaining costs at a reasonable level.

“Visum’s quality system has undergone multiple FDA inspections and supported numerous commercial exports, demonstrating that its products are suitable for global distribution,” introduced Zhu Honggang.

Nowadays, Visum has been gaining an increasing number of partners. In the early stages, when service experience was limited, insufficient communication with clients frequently occurred. However, as its service awareness has continuously improved and matured, many clients have entrusted Visum with numerous projects.

Among them, innovative pharmaceutical companies represented by Kintor Pharmaceutical, after conducting extensive comparisons, chose to partner with Visum, deeming it the most suitable export partner for their needs.

Against the backdrop of the integration of imitation and innovation becoming a development trend in China's pharmaceutical industry, Zhu Honggang’s 12-year persistence,It can be said that Visum has positioned itself in the high-end formulation sector in China.The most representative participants and beneficiaries.

“Visum will continue to leverage its strengths, establish a solid foothold in China, and pursue internationalization,” said Zhu Honggang.