globalization of traditional chinese medicine (tcm) presented at chinese bioscience association

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Globalization of Traditional Chinese Medicine (TCM)

The materials contained in this document are intended to supplement a discussion. These perspectives are confidential and will only be meaningful to those in attendance.

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Chinese Bioscience Association

TCM Market Overview.CONFIDENTIAL

DRAFT

1

Global Capability

Life Sciences Experience & Expertise

20 offices worldwide, including 2 in China Founded in 1983 in London 1000+ consulting professionals; 100+

partners Advised 25% of largest 200 companies

globally Highly differentiated from peer consultancies

in analytically driven decision-making

Leading advisor to life sciences companies around the world with over 2,800 engagements; advised 9 of the top-10 pharmas, 4 of the 5 top global biotechs and more than 150 biotechnology companies

More than US$120bn in transactions in life sciences

Awarded Healthcare Sector Adviser of the Year 2010 by Acquisitions Monthly and Consultant of the Year at the 2011 Health Investor Awards

On the ground capabilities and experiences in China; over 50 projects each year in China life sciences and healthcare

L.E.K. Consulting is a leading global strategy firm with a strong focus on life sciences

Introduction to L.E.K. Consulting


DRAFT

2

TCM has evolved over thousands of years in China. Practitioners use herbs, acupuncture, and other methods to treat a wide range of conditions, while formulated TCMs are also available today

Globalizing Traditional Chinese Medicine

6,000 different medicinal substances, with 600 widely used time-honored

therapeutic herbs

Sanqi 三七

Astragalus 黄芪

Salvia丹参

Sterculia 胖大海

Bezoar 牛黄

Danshendripping pills

丹参滴丸

Danhonginjection丹红注射液

Rubescens tablet冬凌草片

Over 13,000 formulated TCM products

Bezoar tablet牛黄解毒片

TCM practitioners

Source: L.E.K. research and analysis


DRAFT

3

TCM is mainly used for the treatment of cardio-cerebral vascular, oncology and respiratory ailments


Breakdown of China TCM Rx drugs by select therapeutic areas (2010)

16

12

8

5

DermatologyOthers

37

6

432

Percent

OncologyRespiratoryMusculoskeletalGastrointestinalGynecologyUrologicalNeurologyENT

100

80

60

40

20

0

CCV

4

Source: Broker report, L.E.K. analysis

Cardiovascular cerebral vascular treatments is the single largest therapeutic area for TCM- TCM injections mainly benefits from its fast

efficacy with safety extracts from TCMs, and better value for money compared to western medicines

- Oral drugs are typically used for long-term treatment, such as prevention or post-surgical therapies of hypertension, stroke, and disorders of microcirculation

Oncology therapies are mostly in supportive care and typically enhances the patients’ quality of life

TCM Rx drugs for respiratory mainly target at fever and infection treatment, cough relief, and throat medication


DRAFT

4

Wider coverage of TCM medical resources Increased number of TCM practitioners Improved patient acceptance of TCM treatment Set up of nation wide and provincial TCM R&D institutes for infectious

disease prevention and treatment Set up TCM department in infectious disease specialized hospitals Enhanced clinical research on specialized therapeutic areas

China’s 12th Five Year Plan (2011-15) for TCM industry proposed establishing resources, standardizing technical practices, and improving internationalization


Establishing resources

Technical standardization

Continue to develop systematic research on TCM theory, diagnosis technology and medical efficacy assessment

Build TCM clinical research database and a nation wide platform for information sharing and management

Inter-nationalization

Cooperation with foreign government and international organizations on TCM development

Better promoting TCM’s international recognition and adoption Build international TCM research and development bases

Source: 12th Five Year Plan of TCM Industry, L.E.K. analysis


DRAFT

5

(Artemisinin)

(Paclitaxel)

There are already traditional Chinese medicine ingredients developed through the Western pharmaceutical pathway


Product / ingredient

Qinghaosu, has been used to treat fever for over 2000 years

1972: Artemisinin extracted and purified from Qinghaosu

1991: Novartis and China Academy of Military Medical Sciences co-developed Coartem, a fixed dose artemisinin-based combination therapy for falciparum malaria treatment

1998-2009: Western country approvals

Paclitaxel is a mitotic inhibitor used in cancer chemotherapy. It was isolated from the bark of the Pacific yew tree and discovered in a U.S. National Cancer Institute program at the Research Triangle Institute in 1967

Paclitaxel was developed commercially by Bristol-Myers Squibb (BMS) in 1993

Paclitaxel is now widely used as treatment for oncology, such as carcinoma of the ovary, breast cancer, non-small cell lung cancer, AIDS-related Kaposi’s sarcoma

HistoryCompanies

Source: Company Website, L.E.K. analysis

Company Examples


DRAFT

6

As of April 2011, medicinal products containing herbal substances/preparations must fall within three categories- traditional medicinal use- well-established medicinal use- stand alone and mixed application

One TCM drug from China has received marketing authorization under the new regulations so far, with about ~10 drugs in application

Both Europe and the United States have outlined registration pathways to allow botanicals to be registered as Rx and OTC drugs


Europe

United States FDA issued the Guidance for Industry Botanical Drug Products which

sets out the framework for a new category of licensed drugs –botanical drugs – in June 2004- waiver for preclinical pharmacology / toxicology studies- should provide its safety and efficacy through randomized, double

blind, and placebo-controlled (or dose-response) studies

So far, no TCM drugs has successfully registered in FDA as botanic Rx drugs yet; though a number of companies are in process. Examples include Tasly, Hutchison MediPharm and Luye

Source: EU, US FDA, L.E.K. analysis


DRAFT

7

Besides Chinese companies, a number of multinational pharmas have begun to explore opportunities in botanicals and Chinese medicine


GSK unveiled its plan to open a new Discovery Performance Unit (DPU) in China to look at traditional Chinese medicines in February 2012

“… Within our discovery organization in China we have created a DPU that will marry traditional Chinese medicine with modern drug discovery and clinical efficacy. With modern technology, we have the potential to yield new molecular entities with significant efficacy …”

Chairman, R&D, GSK

In 2009, Novartis invested US$1bn in expanding its R&D center in Shanghai, which specializes in basic research and development of new drugs including small molecule and biological medicines to treat diseases that are highly prevalent in China- one of the objectives of the expansion is to allow Novartis to

combine modern drug discovery approaches with those of traditional Chinese medicine that have been used to treat patients in China for thousands of years

Source: Telegraph, Pharmaceutical Technology, L.E.K. analysis

Company Examples


DRAFT

8

Questions and discussion about globalizing traditional Chinese medicine


What is the role of Chinese medicine and botanicals in the global pharmaceutical market?

What are the companies doing in advancing this field?

Should Western pharmas invest in botanical R&D?

How can pharmas ensure consistency and product quality?

Will the US and Western physicians accept these as innovative drugs?

What are the concerns?


DRAFT

99

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globalization of traditional chinese medicine (tcm) presented at chinese bioscience association

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