Pfizer strikes deal with China's 3SBio to license cancer drug

Key Concepts:

• Bispecific antibody targeting PD-1 and VEGF
• Licensing deals between Big Pharma and Chinese biopharmaceutical companies
• Clinical trials in China (faster and cheaper)
• Geopolitical tensions and trade talks
• Drug manufacturing location (US vs. China)
• China's investment in biopharma

Pfizer's New China Strategy: Licensing Deal with Three-S Bio

• The Deal: Pfizer is licensing a cancer drug from China's Three-S Bio. The drug is a bispecific antibody that targets PD-1 (like Keytruda) and VEGF.
• Drug's Status: The drug is already in several clinical trials in China for non-small cell lung cancer, colorectal cancer, and gynecological tumors. Three-S Bio plans to start a Phase 3 trial in China this year.
• Financial Terms: Pfizer is paying Three-S Bio $1.25 billion upfront and up to $4.8 billion for the rights to develop and sell the drug outside of China.
• Significance: This deal is roughly double what Merck paid for a similar licensing deal late last year, highlighting the growing interest in both bispecific antibody technology and Chinese deals.

Trend: Big Pharma Licensing Drugs from Chinese Companies

• Prevalence: 42% of big pharma deals with at least $50 million upfront this year have come from China. This already surpasses last year's record, according to data from Dealogic.
• Reasoning: This trend reflects the increasing innovation and drug development capabilities within China's biopharmaceutical sector.

Geopolitical Tensions and Manufacturing Location

• Tariffs: The rush of deals before tariffs raised questions about whether companies were trying to get ahead of geopolitical tensions.
• Pfizer's Statement: Pfizer specifically stated in its release that it plans to manufacture the drug in the US, which is unusual as companies typically don't disclose manufacturing locations. This may be a response to geopolitical tensions.

China's Advantages in Drug Development

• Faster and Cheaper Clinical Trials: Clinical trials in China can be conducted much more quickly and at a significantly lower cost compared to the US.
• FDA Challenges: Companies are increasingly choosing to conduct drug development studies in China due to problems getting approvals through the FDA in the United States.
• Investment in Biopharma: China has made a concerted effort to invest in its biopharmaceutical industry, leading to a proliferation of companies.
• Return of Talent: Many Chinese Americans are returning to China, bringing their knowledge and expertise gained in the US to contribute to the growth of the biopharma sector there.

Conclusion:

Pfizer's licensing deal with Three-S Bio exemplifies a growing trend of Big Pharma companies partnering with Chinese biopharmaceutical firms. This trend is driven by China's increasing innovation in drug development, the speed and cost-effectiveness of clinical trials in China, and the country's significant investment in its biopharma industry. While geopolitical tensions exist, they don't appear to be significantly slowing down these deals, and may even be influencing decisions like Pfizer's commitment to US-based manufacturing.