A Nuclear Entrepreneur's Reflection: High Barriers to Entry in a Regulated Field

In 2018, when Grand Pharma and CDH Investments entered the field by completing the acquisition of Sirtex for $1.4 billion, attention to radiopharmaceuticals in China’s capital market rapidly increased. Subsequently, several traditional large pharmaceutical companies in China entered the radiopharmaceutical market. Within just six months from 2020 to 2021, Xiantong Medicine raised RMB 600 million to invest in radiopharmaceutical development.

Foreign giants such as Bayer, Novartis, and Boston Scientific entered the market earlier. Bayer completed a €2.1 billion acquisition as early as 2013. In particular, between 2017 and 2018, these industry leaders were highly active, sequentially completing major acquisitions worth billions of dollars.

They quickly reaped the rewards: in recent years, therapeutic radiopharmaceuticals have been successively approved for market launch, marking the rise of therapeutic nuclear medicines. Novartis’s Lutathera is poised to become a “blockbuster” drug with sales exceeding $1 billion.

In contrast, Grand Pharma’s introduction of Sirtex’s core product, yttrium [90Y] microsphere injection, was approved for launch in China in early February—two decades after its initial overseas market entry. For the preceding ten-plus years, not a single radioactive innovative drug had been approved for marketing in China.

It is foreseeable that in the near future, domestic radiopharmaceutical companies will intensively develop products already marketed abroad. What macro environment will these domestically developed products face? This is the most pressing concern for the industry.

China’s “Administrative Measures for Radiopharmaceuticals” were enacted in 1989, more than 30 years ago. Although they were revised in 2017, industry insiders report that the overall framework has remained largely unchanged. Furthermore, the regulation of radiopharmaceuticals and their radioactive raw materials involves multiple departments, including the National Medical Products Administration, the National Health Commission, the Ministry of Ecology and Environment, the State Administration of Science, Technology and Industry for National Defense, the Ministry of Transport, the Civil Aviation Administration of China, and the General Administration of Customs; however, most regulatory approaches are still in an exploratory stage.

In essence, the “radiopharmaceutical” industry remains one that is difficult to fully commercialize. Particularly at this stage, when market-driven enterprises enter the sector, they encounter unforeseen difficulties.

In March 2021, New Radiomedicine obtained the development rights in China for Boston Scientific’s Y-90 radioembolization glass microspheres. Prior to this, the company had encountered nearly every conceivable challenge in the development of therapeutic radiopharmaceuticals; it made several beneficial attempts and accumulated valuable experience.

Below are the sincere remarks shared by Ge Qiang, Deputy General Manager of New Radiomedicine, at the VB Think Tank Salon, an offline event hosted by VCBeat’s New Medicine division:

He hopes that those who follow will be able to avoid unnecessary detours. He also believes that the policy-driven radiopharmaceutical industry, once it gains momentum and achieves breakthroughs at the regulatory level, may usher in a true explosion of growth.

Upon entering the field of therapeutic radiopharmaceutical development, you will find that the barriers to entry are exceptionally high.

The responsibilities of several of our departments involve obtaining qualifications related to radiopharmaceuticals. First, as radiopharmaceuticals are radioactive, they are subject to regulation by the ecological environment authorities, and a corresponding "Radiation Safety License" must be obtained before any operations can be conducted.

During the first three years of our six-year entrepreneurial journey, from 2016 to 2018, we primarily focused on infrastructure development and obtaining the Class A Radiation Safety License required for R&D and production. Only after securing this license could our R&D team commence relevant thermal testing.

China’s regulations classify workplaces handling unsealed radioactive materials into Class A, Class B, and Class C. However, the currently marketed therapeutic radiopharmaceuticals involve high doses, making their production operations difficult to conduct in Class B facilities.

Taking yttrium-90 glass microspheres as an example, the typical administered activity for patients is approximately 1–3 GBq, whereas the product specification listed in the package insert ranges from 3 to 20 GBq. An activity of 20 GBq is equivalent to 540 millicuries; thus, a single batch involves several curies, which poses significant operational challenges in a Class B radiation facility.

Furthermore, Novartis’s well-known Lu-177-PSMA-617 has applied for import drug registration in China, meaning it is radiolabeled abroad and then shipped to China for clinical use. The administered dose is 7.4 GBq (200 mCi). The manufacturing specification is unclear to me due to uncertainty regarding its shelf life; assuming a shelf life equivalent to only one half-life, the initial manufacturing activity would need to reach 14.8 GBq, implying that the production dose per patient is approximately 400 mCi.

Most activities involved in the production of radiopharmaceuticals, such as dispensing and labeling, are classified as “simple operations.” According to China’s definition of Class B facilities, the actual maximum operational capacity for simple operations, calculated based on the daily equivalent operational quantity, is approximately one curie. If dispensed according to the dosage per patient, with each vial containing 400 millicuries, a Class B facility would be limited to producing only two vials per day. Out of these two vials, at least one must be retained for quality control testing, and Good Manufacturing Practice (GMP) regulations further require retaining an additional sample vial. This implies that Class B facilities cannot meet production demands.

Therefore, you must have a facility with Class A qualifications for production.

This imposes stringent requirements on the qualifications for the research and development of therapeutic radiopharmaceuticals in China. Prior to project initiation, it is essential to determine the clinical dosage and identify the appropriate facility type for conducting trials.

Of course, there are also smaller doses; for example, yttrium-90-labeled ibritumomab tiuxetan is administered at an activity of only 20–30 millicuries, which should be sufficient for a Class B facility.

However, for products such as yttrium-90 glass microspheres, 177Lu-DOTATATE, and 177Lu-PSMA-617, a Class A facility is required for domestic production in China.

What are the requirements for Class A facilities? First, you must obtain ownership of the production site, which means securing land, constructing buildings, and acquiring property title certificates. Then, you need to recruit qualified technical personnel in relevant fields such as nuclear physics, radiochemistry, nuclear medicine, and radiation protection. In addition, you must procure processing and production equipment and refine related processes. Only then is it possible for the state to issue you a Class A Radiation Safety License.

Of course, conducting R&D does not necessarily require obtaining a "Radiation Safety License" for the corresponding premises. R&D and production activities can be outsourced; however, there are currently few enterprises capable of undertaking such outsourcing. If outsourcing is not pursued, another option is to collaborate with industry partners possessing the relevant qualifications, such as China Isotope & Radiation Corporation and the Institute of Nuclear Physics and Chemistry, China Academy of Engineering Physics (commonly referred to as the Second Institute of the Ninth Academy).

Our current Radiation Safety License covers one Class A facility, two Class B facilities, and one Class C facility. However, we plan to further expand our scope to include additional product categories. We have not yet obtained the qualification for the transport of radioactive nuclides, which requires application through the transportation authorities.

The aforementioned requirement is merely one of many qualification thresholds, covering only the research and development and manufacturing stages. Subsequent pharmacological studies, toxicological studies, and clinical trials all require specific qualifications.

Preclinical safety evaluation of radiopharmaceuticals requires GLP certification, and the facility must also hold a "Radiation Safety License."

Currently, only two institutions in our country are qualified to undertake this work. Both are Class B facilities handling a wide range of radionuclides. Before conducting preclinical safety evaluations, it is necessary to confirm whether the radionuclide you intend to use is listed on their Radiation Safety License and whether the dosage falls within the permitted range. To my knowledge, research on the medical isotope Lutetium-177 (Lu-177) is highly competitive; if you apply now, the estimated wait time could extend until 2023.

Another issue concerns hospital qualifications for use. Although yttrium-90 resin microspheres have been approved, how many hospitals are actually qualified to administer them? Currently, none of the interventional radiology departments in hospitals across China’s largest cities—Beijing, Shanghai, Guangzhou, and Shenzhen—are licensed to use yttrium-90 microspheres. Nationwide, only a few hospitals in Nanjing, Wuhan, and Hangzhou have obtained the necessary qualifications for their interventional radiology departments to use yttrium-90 microspheres.

Why is the number so low? Because yttrium-90 microspheres must be administered in the interventional radiology department. While nuclear medicine departments hold a "Radiation Safety License," the licenses held by interventional radiology departments generally permit only the operation of radiation-generating devices, not the handling of unsealed radioactive pharmaceuticals. Currently, interventional radiology departments seeking to add this scope of practice must navigate numerous administrative procedures.

According to our understanding, the Ecology and Environment Bureaus of Beijing and Shanghai are extremely cautious in issuing qualifications related to nuclear radiation.

Currently, we have been assisting hospitals in obtaining the qualifications for the use of Yttrium-90 microspheres, and we have also realized that, as a fourth party, it is very difficult to coordinate the other three parties in the licensing process.

In addition, numerous challenges arose during the review process. For instance, some experts expressed concerns about potential leakage from the infusion device. In fact, there have been no reported cases of microsphere leakage due to tubing issues in overseas markets despite years of clinical use. Nevertheless, these experts maintained their skepticism, raising questions such as: What if leakage occurs? Would it generate liquid radioactive waste? Would a dedicated drainage system need to be installed?

"Installing dedicated sewage pipelines in a high-traffic interventional radiology suite would require halting contrast imaging procedures to accommodate civil construction work, which is highly challenging. This disruption would adversely impact hospital revenue. Given that our pharmaceutical R&D efforts may take several years before reaching market launch, how can we compensate hospitals for their losses? This presents a very practical challenge."

Therefore, we observe that the radiopharmaceutical market is vibrant with significant growth potential; however, the number of nuclear medicine departments and qualified interventional radiology departments remains very limited. Moreover, the authorized quantities of radionuclides specified in their Radiation Safety Licenses are extremely low, which constitutes a bottleneck in the development of radiopharmaceuticals.

If you are developing radiopharmaceuticals, the supply of radionuclides is a key factor. I believe there are primarily four sources for these radionuclides: first, reactor-produced isotopes; second, production via generators; third, production using accelerators; and fourth, external procurement.

Domestic reactors all belong to military-industrial entities; although they can produce radionuclides, difficulties still arise when processing the transfer-out of such radionuclides.

Many radionuclides in our country currently rely on imports from abroad. Although purchasing from overseas is straightforward, the stability of its supply is affected by many factors. Since the pandemic, most cities in China have suspended air links with foreign countries; even in major cities like Beijing and Shanghai where flights are still operating, the number of available aircraft remains very limited.

The international security situation also impacts the supply of radionuclides. Amid escalating tensions in Ukraine and the closure of its airspace, I have begun to worry about how we will receive our radionuclide shipments next month (March). With original flight routes suspended, it remains uncertain how long it will take for airlines to obtain approval for new routes.

In Beijing, even major events or a heavy rainstorm can disrupt the supply of short-half-life radionuclides.

"If you aspire to become a large-scale manufacturer of therapeutic radiopharmaceuticals, it is best to secure your own radionuclide resources. For instance, in our production of Yttrium-90 microspheres, we have established our own strontium-yttrium separation production line, which is scheduled to achieve industrial-scale production this year."

Therefore, when entering the industry, you must carefully consider the source of your radionuclides and the technical documentation for the radionuclide separation process. Failure to address these critical aspects will result in rejection by the Center for Drug Evaluation (CDE). If you intend to produce radionuclides using accelerators, you need to thoroughly evaluate which accelerator manufacturer to partner with, determine the appropriate class of Radiation Safety License required, and plan for the establishment of an operations and maintenance team.

Overall, the domestic supply of therapeutic radionuclides in China is currently severely scarce. During our entrepreneurial journey, we have also encountered difficulties stemming from the inadequate supporting infrastructure within the domestic industry.

Furthermore, there are barriers related to talent and capital. It is extremely difficult for a startup engaged in the research, development, and manufacturing of radiopharmaceuticals to assemble a multidisciplinary team comprising experts in nuclear physics, radiation protection, radiochemistry, pharmacy, and medicine. This challenge stems from the fact that very few higher education institutions in China offer specialized programs in radiopharmaceutical sciences due to the current structure of academic disciplines.

Of course, the capital barrier is also extremely high. If you intend to develop a therapeutic radiopharmaceutical, you must calculate the required dosage. If Class A facility qualifications are needed, you will have to construct buildings, purchase equipment, and commence R&D only after passing regulatory inspection and acceptance. This process may require hundreds of millions in funding.

The radiopharmaceutical industry is a capital-intensive sector. The first aspect of this intensity lies in the substantial capital investment required; the second pertains to its equipment, which is exceptionally heavy, often weighing tens or even hundreds of tons.

Our company is highly open to external partners; you are welcome to explore our platform and leverage our qualifications to conduct experiments.

Although I have just outlined many practical challenges, the outlook remains highly promising. In particular, the rapid advancement of monoclonal antibody drugs and immunotherapy has created substantial opportunities for the development of radiopharmaceuticals.

The “Medium- and Long-Term Development Plan for Medical Isotopes (2021–2035),” issued in 2021, is a high-level official document jointly released by eight national ministries and commissions, providing assurance for the supply of medical isotopes. We contributed to this plan, which addresses the supply of yttrium-90. I anticipate that our company will achieve commercial supply of yttrium-90 in China in the second half of this year, enabling us not only to serve the entire Chinese market but also to export Chinese-produced yttrium-90 to the broader Asia-Pacific region.

There are still many difficulties on the road ahead, but the bright prospects attract us, and we must overcome all existing resistance. We believe that in the near future, several therapeutic radiopharmaceuticals will be launched in China, driving the development of this niche industry.