Embrace the competition from China, says Maraganore
U.S. biotechs need to rise to the challenge and learn from their competitors
The rising competition from China is to be welcomed not feared, says John Maraganore, who argues the innovation will push biotechs globally to greater heights and provide a net positive for patients and the biopharma ecosystem.
In a fireside chat with BioCentury at the BIO CEO & Investor Forum in New York on Feb. 11, Maraganore, the former and longtime CEO of Alnylam Pharmaceuticals Inc. (NASDAQ:ALNY) who is now chairman of City Therapeutics Inc., took a strong stance to encourage openness to this new source of competition.
“I think the innovation coming out of China is fantastic and we should embrace it, not run away from it and feel afraid of it,” said Maraganore.
The escalating pace of innovation from China has leapt onto the radar of every biotech and investor in the past few months, becoming a key talking point around the J.P. Morgan Healthcare conference in January.
What began with a flow of partnering deals from East to West, with pharmas licensing innovative assets from Asia, has spread to company formation, with Western VCs buying assets from China at a galloping pace to seed new companies in the U.S. and Europe. BioCentury identified 13 companies that fit this profile, defined as the “NewCo Model,” with at least 56 VC firms participating. And it’s clear that the hunt is on for more.
“What we should do as a country is respond to this innovation coming from another country and say, what do we have to do to be even more competitive than they are?”
It’s a topic of discussion in boardrooms, and many biotech CEOs are responding with concern. “I think they’re wrong,” said Maraganore, who acknowledged having such conversations. “It’s great to have innovation coming from anywhere in the world.”
He added, “I love competition. It’s what makes us work harder. It makes us make better medicines. It makes us think about cost and price. It lowers cost. So competition is good.”
The response, says Maraganore, should be to rise to the challenge. “What we should do as a country is respond to this innovation coming from another country and say, what do we have to do to be even more competitive than they are?”
For example, are there opportunities to get clinical trial data faster, or expedite IRB approval pathways, he asked. China’s introduction of investigator-initiated trials (IITs) has allowed researchers to generate clinical data much faster than can be done in the West. Eleven of the 13 NewCos had clinical data, a significant derisking for investors.
“Why don’t we learn from what they have been doing, and the power of that?” said Maraganore. “Of course, it has to be grounded in science and quality, as always, but I think there are opportunities to harness that kind of thinking and bring it here to the States.”
He added that despite the strong foundation in the U.S., he is concerned about the direction of the policies coming out of Washington.
“I have no doubt the U.S. science will always be the greatest,” said Maraganore. “Now in the same voice we say this, we also have to reject policies that will have a negative effect on our American research institutions.”
He cited “categorical reductions of indirect costs” as one example. That’s an area that is worth addressing, but it requires a thoughtful approach, and a systematic way of reducing costs over time, he said. “I don’t think those costs should necessarily be borne by the government, but to change it overnight in a way that would devastate our American research institutions would be the wrong thing to do.”
Maraganore added that this is a time to seize the opportunity. “I don’t think it’s easy because we have a lot of educating to do. But I do believe there’s an opportunity here that could be net net positive for patients who we need to serve.”