Cao explained that making deals for emerging and mature markets can be somewhat different.
“For emerging markets, the deal structure will be more sensitive towards the supply price. What Henlius can get is usually linked to the selling price, which is pretty sensitive for these markets. That's because improving affordability is the key to success of developing countries.” she said.
While cost is a valid concern worldwide, partners in some markets take a more holistic view of a candidate. “If we talk to partners in the U.S., they also desire cost-effectiveness. However, the price sensitivity is not the same. What US partners care more about is being the first to enter a market and having a reliable supply,” said Cao.
A bigger pie together
That is not to say Henlius will slash prices significantly to win partnerships in emerging markets.
“With the partner, we discuss a deal structure and design where we will share profits. Profits come from the partner’s selling price. The lower the costs, the bigger the margins for both sides, then you and your partner share a bigger pie,” Cao explained.
“We usually provide the partner with ‘a floor price’ and whatever goes beyond that, we will share as the profits. So in this way, they always know what's the bottom line if they have to lower their selling price,” she added.
Understanding new markets
Emerging markets remain little explored by Chinese drugmakers, who are more fixated on the home market, the U.S. and the EU where rules are clear. Navigating these markets is not an easy task, so being able to leverage the relationship with existing and potential partners is important.
“We hear the partners’ presentation, focusing on how they utilize their commercial capability, evaluate the market, and their track record in the related field. Meanwhile, we conduct internal analyses to make comparisons. We also use third parties for their expertise in these markets and get their input,” Cao explained.
“We don’t usually rely on just one partner. We get marketing evaluations from different sources, which allows us to challenge the partner. Most of the time the partner’s forecast tends to be conservative and the deal terms will be more favorable to them. You have to really understand the potential of the market,” she added.
Henlius has more than five partners in Latin America. Cao said with multiple partners in the same region, Henlius can stay better informed and alert about market trends.
“You learn from your partner for specific knowledge like the healthcare system in Brazil, the government tender system, the competition with the local players. Because if they do business with you, they share all the insights, information, knowledge and experience with you. That's how you gain an overall understanding of the market,” she said.
Taking Latin America as an example, Cao said authorities in most countries prefer to reward the tender business to the drugmakers who have a local manufacturing site.
“We help our partners get a better chance to win a tender offer. We transfer the drug product process to them and sometimes even the drug substances just to help them build their local manufacturing sites. This will give them a huge advantage in the tender bidding process,” she added.
Global quality, trials and filings
China is seeing a boom in the development of biologics, with numerous players developing biosimilars. But to be able to bring the products out of China, conduct global trials and meet global standards is vital. For now, very few can do so.
“When we talk to a potential partner, we demonstrate our proven tracked record. In a word,this is a Chinese company that has checked all the boxes: reliable quality and supply; global talents, etc. That is how you win the recognition from global partners,” Cao said.
In 2020, Henlius' Shanghai facility became China's first EU-certified GMP site to manufacture a self-developed antibody drug. It said the achievement demonstrated its commercial-scale manufacturing facility and a quality management system in line with EU standards.
In the same year, its trastuzumab biosimilar won EMA approval. Cao explained that the company must do global trials and filings to score this approval, which sets it apart from numerous Chinese players.
The trastuzumab biosimilar is marketed by Henlius’ partner Accord, which has a presence in the EU market. The drug brought in RMB62.2 million ($8.9 million) from the international market in 2021.
Advice on tapping emerging markets
Speaking from her experience, Cao advised those who are interested in emerging markets to understand the regulatory pathways there and find the right local partners.
“Look for a partner who appreciates your value and has synergies with your long-term goal. The partner may be able to offer a good upfront payment but if they don't have a good team or proven track record in commercialization, then they may not be a good partner,” she explained.
Getting a globally recognized green light, like an EMA approval, also boosts chances of success in more territories.
“For emerging markets, having EMA approval for your commercial manufacturing site definitely reassures local authorities to give you the green light more easily,” Cao said.
Successful business development
Cao believes that a partnership is just the beginning of a long-term alliance that can grow into extensive collaboration for multiple products and regions.
Once a deal is closed, the business development team’s responsibility is to extend from a single transaction to alliance management.
When Shanghai was put into a lockdown in April, partners were anxious about Henlius’ manufacturing facilities in the city and a potential delay in supply. Cao and her team mediated between the company and the partners to help them stay confident and on track.
She recalled communicating with the internal team to ensure manufacturing could keep up with the schedule and formulate plans to make up for the time lost during the lockdown. Meanwhile, she informed partners of the company’s progress and contingency plans to reassure them.
“A deal happens because of people,” Cao said, adding that a business development professional needs to develop and maintain trust with partner(s), especially during the challenging time
“You make a deal with a person. That’s why a business development professional has to be able to adapt, learn quickly and build strong relationships,” she said.
Strong relationships with existing partners will open the door to more partnership opportunities.
“Potential partners always check references, and your existing partners will be your strongest allies,” Cao said.
“Now, more and more partners come to us because of strong recommendations from our partners.”
(Edited by Daivd Ho)