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Lilly and WuXi App Tech: Tips and Insights from a Successful Western and Chinese Pharmaceutical Collaboration

Posted By Cynthia B. Hanson, Friday, September 9, 2016

Only 50 percent of China’s population is urbanized, which means the pace of change over the next decade is likely to be colossal. Its already one of the largest and fastest growing pharmaceutical markets. But it also can be one of the most challenging for alliance managers to negotiate because of the cultural differences. 

Eli Lilly and Company is known for being one of the firstand most persistentpharmaceuticals to make inroads into China. The company began with an R&D partnership with Shanghai-based WuXi App Tech in 2003. Last year, the companies entered into a significant strategic collaboration for a new project as part of a global program. 

For Brent Harvey, CA-AM, director of alliances at Lilly, the test tube is clearly more than half-full when it comes to doing business in China. “How do we leverage the difference between our two companies or cultures for competitive advantage?” he asked during the session “A New Model for Western and Chinese Pharmaceutical Partnering,” at the 2016 ASAP BioPharma Conference “New Faces, Unexpected Places in Partnering: The Foresight to Lead, the Foundation to Succeed” held Sept. 7-9 at the Revere Hotel Boston Common, Boston. 

Assisting with the presentation was Zhihui Qiu, Director of Strategic Transactions, at WuXi App Tech (Shanghai) Co., who shared her company’s perspective. The two company representatives discussed their approach to resolve cultural differences, cut government red tape, and extract long-term value from the partnership. They provided several valuable tips gleaned from the experience: 

IP Security
Harvey: We typically manage the IP at the mother ship. But we also have local counsel. It is so hard to keep track of what’s going on there, so it’s important to have that local presence. 

Qiu: IP is receiving increasing attention in China. Dedicated IP Courts were established in China earlier this year. In the United States, you tend to have very good IP management. In China, it is not a big practice yet. You probably need local help and US counsel to work together to make sure you are protected. 


Harvey: We try to de-risk as much as we can in the contract. We tend to view it as definitive, while the Chinese view it as general guideline. When I think about Western trust, it’s someone who honors his or her word. In China, this perspective is about honing change in mutualities. Chinese people want to stay practical. They don’t want to rewrite their contact. 

Qiu:  Contacts tend to be simple and boilerplates are greatly simplified. As the relationship evolves, the contract may be replaced by a new one to better serve the purpose. 

Making the Deal

Harvey: It’s very important to have high-profile executives helping to build trust and social capital. In Western culture, the deal is the deal, and we would probably celebrate it by going to a bar. 

Qiu: We might celebrate the major deals with a ceremony. The government is trying to foster and build innovation in pharma industry, and we would invite multiple government officials and key opinion leaders to the ceremony to raise their awareness. 

Planning and Team Meetings

Harvey: Time zone differences can be challenging; use a lunar calendar because holidays will change. It’s very important to have actions and decisions clearly documented in meeting minutes. The Chinese have a different approach to planning with optimistic and aggressive milestone dates. It has benefitted Lilly to be stretched and pushed by aggressive Chinese firms. Relationships are important, but there is a lot of turnover in Chinese firms, which is something you should be aware of going in. 

Qiu: Chinese company power is more centralized, which allows the Chinese to push. Our teams are Western educated; the English is really good, which helps a lot with communications. You won’t need translators. Face-to-face meetings are important. 

Regulatory pathways

Harvey: China issued a new policy to allow biotech companies to hold product licenses. Manufacturers used to be the only ones who could hold the license. Things change so quickly in China, and you need to think about how you are staffing your alliances to be agile and adaptable in this very, very dynamic environment.

Qiu: New drugs used to be produced by the multinationals, and domestic companies didn’t have the capability for innovation, but that has changed in the last 10 years. A government agency set prices incentives for innovative drugs developed by domestic companies. 

Government Regulation

Harvey: It took a lot of conversation, the documents were in Chinese, and requirements needed transcription. It took a lot to engage the expertise of Lilly’s Shanghai and Beijing offices. It was not easy to figure out what we needed to do to have an acceptable package. 

Qiu: You need local people who truly understand regulatory affairs in China. Your approach depends on what route you are going and the specific goals you are trying to achieve. 

Tags:  ASAP BioPharma Conference  Brent Harvey  contracts  cultural differences  cultures  Eli Lilly and Company  Government Regulation  high-profile executives  IP Security  partnership  pharmaceuticals  Planning and Team Meetings  R&D partnership  Regulatory pathways  strategic transactions  WuXi App Tech  Zhihui Qiu 

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‘Dr. Sam’ Nussbaum: Healing the US Healthcare System One Politician at a Time

Posted By Genevieve Fraser, Thursday, September 8, 2016

As chair of an action network progress tracking group, Dr. Samuel Nussbaum has been busy tracking the progress of alternative payment models for health care payments.  Dr. Sam, as he is known informally, claims we are in the best of times and worst of times, citing unprecedented advantages such as mapping the human genome.  But despite one of the greatest achievements in the history of human exploration and extraordinary medical breakthroughs, despite the thousands and thousands of drugs under development which are the fruits of basic research, many of which were government funded, we have created a healthcare system that scientifically, in terms of delivery and accessibility, has been less than socially responsible.

“People can’t afford the cost of drugs. Over the past decade the average wage has not changed, but look at the cost of healthcare!”

Dr. Sam points to the populist enthusiasm for Bernie Sanders and Donald Trump. During their primary campaigns, both capitalized on the type of anger that is the natural outgrowth of this dilemma, he said.

Sharing insights gained from 15 years as executive vice president and chief medical officer of Anthem, Dr. Sam ticked off the issues. We’re spending more, and through the Affordable Care Act, a.k.a. Obamacare, there’s better access. But spending on other services that also play a vital role in health and wellbeing is down—public health, mental health, dental care, education, housing, and the list goes on.

“We stole from other investments to increase access. We are not using our trillions wisely,” he claims.  “Thirty to 40 percent is wasted on poor services, admin costs, fraud, etc. Obama tried to introduce reforms, to deliver care differently and provide more integration and coordination of care. But pharmaceuticals remain front and center. Chronic illness treatment is all about drugs. Granted, there have been extraordinary strides made toward cures and better management of chronic illnesses, but this comes at a cost. In 2015, health care spending topped $3 trillion.  Twenty-five percent was spent on drugs, particularly specialty drugs,” he said, emphasizing how much more of the healthcare pie is being taken by pharmaceuticals than in the past.

People want price controls, Dr. Sam reminded the audience. Seventy-five percent of the American public believes the drug companies are taking advantage. The USA pays the highest prices for drugs. The pressure is building, and it’s playing out in the 2016 campaign.

Donald Trump claims the drug companies are lobbying the politicians and that’s why costs are exorbitant. Clinton is adjusting her opinion, borrowing from what worked for Sanders during his campaign. With the pressure on and the public outcry growing louder, Nussbaum said Congress can be expected to act, regardless of who wins the presidency. 

Will the ongoing reform of US healthcare now start borrowing from the single payer model? According to Dr. Sam, “Unless we find a way to solve this ourselves, there will be increased regulation. We need to figure out these new models of value. Few want price controls because it hampers innovation. We need financial incentives that provide an engine for innovation. But egregious price increases are driving political blowback.”

Concerning the election, with Clinton, Nussbaum expects there will be a continuation of alternative payment models and cost controls, including less than full access to all drugs. As for Trump, he is quick to condemn Obamacare and threatens to repeal it. But Nussbaum also reminded the audience of Trump’s son-in-law, real estate entrepreneur Jared Kushner, whose brother Josh is co-founder of Oscar Health, a health insurance company that, as a licensed health care provider, sells to individuals and families in the marketplaces created by Obamacare. Perhaps, he suggested, the real differences in healthcare policy between Clinton and Trump might not be so great post-election.

Nussbaum currently serves as a strategic consultant to EGB Advisors, Inc., consulting arm for Epstein, Becker & Green, where he advises life science companies, hospitals and health care systems, and physician and provider organizations. 

**Footnote: Dr. Samuel Nussbaum was the Conference Keynote at the 2016 ASAP BioPharma Conference.

Tags:  Affordable Care Act  Anthem  Clinton  congress  Donald Trump  Dr. Samuel Nussbaum  pharmaceuticals  US Healthcare System 

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