JHL Biotech eyes pioneer status in China's nascent biosimilar market

JHL Biotech Inc. is seeking to capitalize on its first-mover advantage in China's biosimilars market, which has undergone key regulatory changes in recent years.

In April, the China Food and Drug Administration approved JHL's clinical trial application to run phase 1 and phase 3 studies for a biosimilar version of rituximab, which Roche Holding Ltd. markets as MabThera or Rituxan. As it has the same delivery mechanism and dosing as MabThera, the rituximab biosimilar was exempt from phase 2 requirements, JHL said.

Speaking to S&P Global Market Intelligence, CEO Racho Jordanov said the company plans to bring more biosimilars to the market.

To help do that, the Taiwan-based company signed a strategic alliance with France's Sanofi in December 2016.

"We are combining JHL's development and manufacturing expertise with Sanofi's strengths in commercialization. Together, we will make high-quality medicines affordable to more patients in China," Jordanov had said when the deal was announced.

"It was mutual interest and shared commitment that brought Sanofi and JHL into this strategic alliance," a Sanofi China spokesperson said in an email.

There are about 29 biosimilars approved in Europe and five in the U.S., but none have been approved in China since the China FDA issued the first comprehensive guidelines in March 2015. The rules codified how biosimilars would be defined and outlined the clinical data drug companies would need to provide to evaluate bioequivalence.

Companies that were ahead of JHL in biosimilars manufacturing had to start over because of the new regulatory framework, which was modeled on European regulations, said Jordanov.

"The playing field was leveled when the Chinese government implemented the biosimilars regulations," the CEO said. "We're the only Chinese company that applied [for clinical trial applications] in Europe. We've always followed the European regulation."

The company received approval from the U.K.'s Medicines and Healthcare Products Regulatory Agency to run clinical trials for the rituximab biosimilar in early 2016.

JHL expects a market penetration of 5% in the EU and U.S., and about 30% in China and emerging markets.

Growth potential

The company is looking to raise $250 million to $300 million, starting with a private placement and an IPO on the Taiwan stock exchange's main board by the end of 2017, Jordanov said.

It is also looking to cash in on the expansion expected in China's biosimilars market.

The market is forecast to reach $350 million by 2019, up from $44 million in 2009, according to U.S.-based consulting firm Frost & Sullivan.

JHL's offerings will be very specific — products that are difficult to manufacture, costly and have "big growth potential in the emerging markets," said Jordanov.

"We know that many other companies tried to make [a biosimilar for] Rituxan. Even Samsung Biologics Co., Ltd. and Merck KGaA had a Rituxan program, but they discontinued them," said Jordanov.

JHL chose to make the rituximab biosimilar not just because the patent on Rituxan had expired, but also because it was very challenging to manufacture, he said.

The company's second product — a biosimilar for orphan drug Pulmozyme, another Roche therapy — was also selected based on the same criteria.

No other drugmaker had filed a biosimilar application for Pulmozyme, which treats cystic fibrosis, partly because it is very difficult to make, said Jordanov.

JHL plans to develop biosimilars for Roche's cancer drugs Avastin and Herceptin, both of which are under pricing pressure in China.

Despite growing regional interest in biosimilars, JHL expects its four products to be the first or second to launch in China. Korean manufacturers Samsung Biologics and Celltrion Inc. offer biosimilars development services, but do not compete directly with JHL, said Jordanov.

"The current regulations require the product to be made in China, and [Samsung and Celltrion] don't have a presence in China," said Jordanov.

Sanofi and JHL will be deciding on their next four products at a joint steering committee meeting scheduled May 19. Jordanov said the next four could all be biosimilars, or Sanofi may want to bring in some new molecules.

"For the biosimilars, we know we will probably do Xolair [for treating asthma], or some of the new biologics that are currently marketed."

According to the Sanofi China spokesperson, the company expects to introduce 11 new products into the Chinese market by 2020.