Huayang Pharmaceuticals: Pursuing Innovation through a Hybrid Strategy of Original and Generic Drug Development and an Entrepreneurial Partner Model
Recently, the Center for Drug Evaluation (CDE) of the National Medical Products Administration released the “Guiding Principles for Clinical Development of Antineoplastic Drugs with a Focus on Clinical Value (Draft for Comment)” (hereinafter referred to as the “Guiding Principles”).
This guideline states:The primary goal of new drug development should be to provide patients with superior therapeutic options. When a non-optimal therapy is selected as the control, even if the clinical trial achieves its predefined objectives, it fails to demonstrate that the investigational drug meets the actual clinical needs of patients or proves its value to them.
As soon as the guidelines were released, public opinion erupted and pharmaceutical stocks plummeted. It is evident that the guidelines issued by China’s Center for Drug Evaluation (CDE) will have a profound impact on the development of innovative drugs in China. For “me-too” innovative drugs targeting the same indication with the same mechanism of action, success hinges entirely on the R&D speed of domestic companies. Once one company gains a first-mover advantage, other firms face significant regulatory approval risks for similar products. This indeed reflects China’s current strategic emphasis on fostering innovative drug development centered on clinical value and patient needs.
Given that new drug development is facing increasingly stringent requirements, what is the current state of development in the field of generic drugs?On one hand, the fifth round of national centralized drug procurement conducted in June this year indicates that generic drugs are primarily represented by new varieties; possessing such new products confers significant advantages both in securing winning bids and in post-award pricing. On the other hand, due to the tightening of medical insurance funds driven by China’s aging population, generic drugs, with their lower prices, still hold substantial room for future growth.
As a healthcare industry observer, VCBeat had the privilege of speaking with Tang Huaisong, Chairman of Jiangsu Huayang Pharmaceutical Co., Ltd. (hereinafter referred to as “Huayang Pharmaceutical”), an integrated innovative and generic pharmaceutical company, to explore questions regarding the future development of both innovative and generic drugs.
Jiangsu Huayang Pharmaceutical Co., Ltd is located in Siyang County, Jiangsu Province. To its south lies Hongze Lake, with its vast misty waves, endless lotus blossoms, and boundless fragrant breezes; to its north stands the “Sishui Kingdom,” renowned for its ancient civilization and splendid culture; to its east is adjacent to the former residence of Zhou Enlai, the great founding Premier of China; and it is close to the Beijing-Hangzhou Grand Canal, where thousands of sails compete and hundreds of vessels strive forward. With its beautiful scenery, the area has long been known as the “Little Jiangnan.”
Huayang Pharmaceutical traces its origins back to the Siyang Pharmaceutical Factory, established in 1975 as a local state-owned enterprise that provided employment opportunities for many veterans. In 2002, the Siyang Pharmaceutical Factory was acquired by a real estate entrepreneur, and Huayang Pharmaceutical was formally established in the same year. By 2018, despite the entrepreneur’s strong passion for biomedicine, the significant professional “gap” inherent in the pharmaceutical industry led to Huayang Pharmaceutical being fully acquired by Anhong Yuanhua Fund.
Jiangsu Huayang Pharmaceutical Co., Ltd. has made a new investment of RMB 600 million in its pharmaceutical project, with a construction area of 30,000 square meters. The factory buildings and supporting facilities are designed and built in accordance with the latest version of China's Good Manufacturing Practice (GMP) standards, featuring world-class advanced production equipment and laboratory instruments.and focuses on the research and development, production, and sales of pharmaceuticals for respiratory, gastrointestinal, cardiovascular and cerebrovascular conditions, as well as anti-allergy and oncology therapies. Currently, Jiangsu Huayang Pharmaceutical Co., Ltd. offers three major dosage forms: injections, tablets, and capsules. The company operates five GMP-certified production workshops, namely: a non-terminal sterilization glass ampoule workshop, a terminal sterilization glass ampoule workshop, an oral solid dosage workshop (for tablets and capsules), a dedicated oral solid dosage workshop for oncology products (for tablets and capsules), and a terminal sterilization plastic ampoule workshop.
When asked why Tang Huaisong’s team chose Jiangsu Huayang Pharmaceutical Co., Ltd, he stated, “From my personal perspective, I have long been engaged in investment within the biopharmaceutical sector and previously served as Chief Financial Officer and Board Secretary at pharmaceutical R&D companies. Our team specializes in private equity investment in the biopharmaceutical industry, having accumulated substantial industry resources and expertise. Furthermore, the biopharmaceutical sector is currently viewed favorably by the public. With China’s aging population and overall improvement in living standards, demand for pharmaceutical products is set to grow day by day.”
Thus, Tang Huaisong and his team took over Huayang Pharmaceutical from a real estate developer with a passion for the pharmaceutical industry, and formulated a detailed development strategy that gradually transformed Huayang Pharmaceutical from its unremarkable performance in the previous 16 years into a company that keeps pace with the times, brimming with creativity and innovation.
In terms of its corporate development strategy, Huayang Pharmaceutical has transformed from a company primarily focused on generic drugs into an innovative pharmaceutical enterprise that prioritizes novel drug development, with generics serving as a significant complement. However, unlike typical R&D-focused innovators, Huayang Pharmaceutical has not chosen to aggressively recruit in-house scientific research teams. Instead, it has adopted an “business partner” model, leveraging professional teams to conduct due diligence and assessments, thereby identifying and establishing controlling partnerships with capable innovative drug R&D teams.
Jiangsu Huayang Pharmaceutical Co., Ltd. invested with capital and the platform resources of its research institute, achieving complementary advantages and benefit-sharing with the R&D team’s innovative technologies—throughScientist + Industrial Capital Model, allowing the scientific team to focus on the early drug discovery phase. Jiangsu Huayang Pharmaceutical Co., Ltd. provides mid-stage preclinical and late-stage clinical services, along with all other supporting functions such as administration, finance, human resources, regulatory affairs analysis, and government relations, which can significantly enhance the R&D efficiency of innovative drugs.
Currently, Huayang Pharmaceutical has completed a strategic investment in Suzhou Antianshengshi Pharmaceutical Technology Co., Ltd., positioning itself in the research and development of RNA-targeted antisense oligonucleotide (ASO) innovative drugs. Professor Hua Yimin, as the Chief Scientist for ASO at Huayang Pharmaceutical, is fully responsible for the R&D of ASO innovative drugs.
Professor Hua Yimin conducted postdoctoral research in the laboratory of Professor Androphy at the University of Massachusetts Medical School, and subsequently served as a postdoctoral fellow and researcher in the laboratory of Professor Krainer at Cold Spring Harbor Laboratory. Professor Hua’s research interests include post-transcriptional RNA processing, RNA editing, development of RNA-targeted therapeutics, and neurodegeneration. He is the inventor of SPINRAZA, the first blockbuster nucleic acid drug, which effectively treats patients with spinal muscular atrophy (SMA). Approved by the U.S. FDA in December 2016, SPINRAZA has since been launched in Europe and China.
On the other hand, Jiangsu Huayang Pharmaceutical Co., Ltd. is actively expanding into the oncolytic virus field by collaborating with Nanjing Nuowei Biotechnology Co., Ltd. (hereinafter referred to as “Nuowei Biotech”) to develop related R&D projects. Nuowei Biotech’s R&D team, affiliated with the Medical School of Nanjing University, has maintained long-term collaborations with leading experts in oncolytic virotherapy, including Professor Russell from the Mayo Clinic in the United States and Professor Beltinger from Ulm University Hospital in Germany. The company has successfully established two development platforms for recombinant oncolytic adenoviruses and vaccinia viruses.
Professor Wei Jiwu, Founder and Chief Scientist of Nuowei Bio, has dedicated 17 years to the field of oncolytic virus therapy. He graduated from the German-taught Clinical Medicine Program at Huazhong University of Science and Technology and practiced clinically in general surgery and neurosurgery for eight years at the Third Affiliated Hospital of Jinan University’s Medical College. Subsequently, Professor Wei pursued his doctoral and postdoctoral research at Ulm University and the LMU Munich Faculty of Medicine in Germany. In 2009, he returned to China to serve as Professor of Oncology and Doctoral Supervisor at Nanjing University Medical School.
When asked about the key criteria for selecting partner teams, Tang Huaisong stated: “We value not only the team's scientific research and innovation capabilities, but also the development prospects of the research project.Taking oncolytic virus collaboration projects as an example, the number of cancer patients in China is gradually increasing. Immunotherapy represents a revolutionary concept in cancer treatment, with the market size expected to reach the hundred-billion-yuan level by 2022. As an emerging player in cancer immunotherapy, oncolytic viruses constitute a globally leading technological field. Currently, only three oncolytic virus drugs have been approved worldwide, indicating relatively limited domestic competition and lower regulatory review risks.
Leveraging the complementary strengths of scientific expertise and corporate capital, Jiangsu Huayang Pharmaceutical Co., Ltd. is actively advancing the R&D of 14 Class 1 innovative drugs in fields such as oncolytic viruses, RNA-targeted antisense oligonucleotides, and small molecules, while simultaneously ensuring the quality consistency evaluation of more than 20 core pharmaceutical products and the development of Class 3 generic drugs.Currently, Huayang Pharmaceutical’s pipeline of innovative drugs in development includes seven oncolytic virus therapies, five antisense oligonucleotide (ASO) drugs, and two small-molecule drugs. The company expects to obtain production approvals for multiple generic drugs that have passed consistency evaluation and for Class 3 generics in 2022, as well as clinical trial approvals for multiple Class 1 innovative drugs.
While actively positioning itself in the field of innovative drugs, Huayang Pharmaceutical has also established a plan to initiate the R&D of at least five Class 3 drugs annually. The Class 3 generic drugs and products undergoing consistency evaluation, whose development began in 2018, are expected to receive production approvals sequentially by the end of this year, with sales projected to surge next year. In 2020, Huayang Pharmaceutical achieved an operating revenue of RMB 200 million. Leveraging the dual advantages of a robust pipeline of products under development and the sequential approval of these products, the Huayang Pharmaceutical team projects that the company’s operating revenue will exceed RMB 1 billion by 2023.
When asked whether the recently issued guidelines would have any impact on Huayang Pharmaceutical, Tang Huisong stated, “This is actually a positive development for Huayang Pharmaceutical.”First, Huayang Pharmaceutical’s innovative drug projects under development, such as oncolytic viruses and RNA-targeted antisense nucleic acids, represent globally leading technological fields with limited domestic competition and lower regulatory approval risks. Second, Huayang Pharmaceutical is currently establishing a RMB 150 million innovative drug fund. Affected by the current policy changes, the innovative drug teams will suffer certain setbacks, and private equity investment will become increasingly cautious. It is believed that subsequent controlling acquisitions of innovative drug teams will likely be easier than at present.”
As an innovative drug R&D enterprise with positive cash flow, Huayang Pharmaceutical has always adhered to a research and development strategy centered on innovative drugs, with generic drugs serving as an important supplement. The company is committed to diligently and steadily advancing the R&D of both innovative and generic drugs. Meanwhile, leveraging its “Business Partner” system, Huayang Pharmaceutical prioritizes collaborations with R&D teams that possess unique technological advantages, novel mechanisms of action, or new targets. This approach aims to better meet patients’ clinical needs and contribute to enhancing the technical standards of innovative drug development in China.
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