China CRO attracts $30m US investment

Headquartered in Shanghai, the firm counts large pharma companies such as Eli Lilly amongst its customers and is now looking to aggressively expand its offerings beyond chemistry outsourcing, into "more integrated drug discovery and early development services". ​ "In addition to increasing our potential for entering the highly lucrative internal drug discovery and development program, this powerful competitive platform puts us in a strong position to broaden our offerings along the entire pharmaceutical value chain",​ said ShangPharma's CEO Michael Hui. With TPG as its "cornerstone investor",​ ShangPharma unveiled grand plans to turn itself into a "fully integrated"​ CRO, with a new biological services armoury, including assay development and compound screening, drug metabolism and pharmacokinetic studies. The firm also intends to establish a cGMP manufacturing facility that is compliant with US Food and Drug (FDA) regulations. TPG's involvement will also provide the firm with the means to expand its customer base in the US, Europe and Japan, the company said. ShangPharma's endeavours may bring it closer to challenging China's largest CRO WuXi PharmaTech for the crown. Sing Wang, managing director of TPG Growth Fund, said ShangPharma will pursue a strategy of both organic growth as well exploring "acquisitions and integration opportunities that will aid in the transformation of the business". ​ To date, WuXi PharmaTech has only employed a strategy of organic growth. However, there is plenty of room in the market for both firms to grow extensively, particularly in the early-phase arena - China is fast becoming one of the best destinations to outsource preclinical work, which is often highly specialised and difficult to perform. "The Chinese scientific community has identified this as a niche area and the government has been working to provide an environment where these studies can be conducted to the satisfaction of global sponsors and regulatory bodies so that the country can become a leader in the field',​ DA Prasanna, vice chairman & managing director of Manipal Acunova recently told Outsourcing-Pharma.com. ​The speed of studies conducted in China has also contributed to the country's appeal, as is the low cost base the country is able to offer to those partaking in the high risk world of drug discovery. According to a recent report published by the UK Trade and Investment (UKTI) department, the local Chinese industry estimates that Phase I trials can be conducted in China for around 15 per cent of the equivalent cost in a Western country, while Phase II studies cost 20 per cent of the price in the west. China also has a large and untapped domestic market which further adds to its attraction. Indeed, the country's emergence as a favourite destination for outsourcing drug development has been reflected in a flurry of activity in this field of late involving several large pharma firms.