Editor’s Note: This article is based on ChinaBio Today’s exclusive interview with Dr. Peter Zhang, CEO and founder of Shanghai GenePharma Co. Ltd., in its new Suzhou facility.

In March this year, a little known China biotech called Shanghai GenePharma Co. Ltd., made history when the company signed a license granting it rights to the Kreutzer-Limmer patents covering short-interfering RNA IP (siRNA) held by Alnylam (NSDQ: ALNY) (see story). This was a groundbreaking event, as it is the first time Alnylam has licensed these patents to a company located in China. Now GenePharma, who had previously sold its siRNA products only in China where the technology is not protected by the patents, can sell its siRNA products worldwide without any infringement issues.

The IP deal underscores the fact that GenePharma is doing very well. Since its founding in late 2002, it has become one of the top three siRNA oligo providers in the world, supplying about 50% of China’s needs, and it is one of the few suppliers of RNA monomers in the world. The company currently has 55 employees with plans to grow to 80 by year-end. 

GenePharma is in a technology area that is currently hot - siRNA. Biotechnology work with the various forms of RNAi has come a long way in a very short time. Since 1998, when Drs. Mello and Fire published the first scientific article on their seminal discovery, thereby opening the field, the biomedical world has moved quickly to capitalize on the implications of their research. Academics realized that the discoveries managed to be at the same time both practical and interesting. Big pharma has responded by opening up its corporate pocketbook to buy companies with RNAi technology. As just one example, Merck (NYSE: MRK) paid $1.3 billion to acquire Sirna, one of the early adopters of the technology.

Dr. Peter Zhang, Chairman and CEO of GenePharma, began the process of forming GenePharma in late 2002 to sell oligos. Educated in China, he worked at the SFDA Research Institute in Beijing for two years after graduation. A fellowship took him to King’s College in London, where he learned to make RNA oligos, at a time when the field was not as popular as it has become. From there he went to Cruachem Ltd. in Glasgow, one of four major companies manufacturing RNA monomers, where Zhang further refined his knowledge of the technology. 

But in 2002, as RNAi was advancing to the forefront of biotech research, Zhang felt it was time to move on. Zhang said simply, “We wanted a larger platform.” Because the new company would be a manufacturing enterprise, “China offered advantages,” according to Zhang, and he, together with his partners, decided to locate the company in Zhangjiang Hi-Tech Park in Shanghai.

Zhang and his partners started their new company, called GenePharma, on a proverbial financial shoestring, borrowing money from friends and family. Like most returnees, the partners received some financial help from the local government, in this case Shanghai, and located their company in the biotech incubator managed by the Shanghai Pharma Engine, a local government agency. Later on, the central government would also provide financial support to their enterprise.

“We could have raised money from private VC investors,” said Zhang in an exclusive ChinaBio® Today interview, “but it wasn’t practical. The investors had lots of ideas and we had some very interesting discussions. But in the end, they were not interested in a startup operation.”

GenePharma focused its attention on RNAi products and services that were upstream (monomers) and downstream (oligos) – focusing on providing a quality product at a reasonable price. “Product wise, we are providing standard products, but technical know-how is part of the product,” said Zhang, making the point that his company endeavors to supply an above-average level of service to clients. “Our competitors’ products are lower quality, and so we do not have many real competitors in China,” he continued.

Recently, GenePharma has completed a capital raise of about $2 million US with the Suzhou Venture Group and other Suzhou and central government agencies. GenePharma will use the money to build a manufacturing facility in Suzhou’s new BioBay park, which is located in the 200 sq. mile Suzhou Industrial Park, while its main R&D operation will remain in Shanghai. BioBay just opened its first two buildings last June, and already houses over 60 companies. It plans to eventually have an incredible 8 million sq. feet of office and lab space available on its 200 acre site.

Zhang said that he made a family visit to Suzhou a number of years ago and was impressed with the beauty and quality of the Suzhou Industrial Park. He decided then he would like to locate there some day, when his business required a larger facility. Because of the park and the professionalism of the people in BioBay, including Ms Yuwen Liu, its President, Zhang decided to expand there even before he had received Suzhou’s investment in GenePharma. 

In 2006, GenePharma began moving from a fee-for-product/service model to more lucrative collaboration projects with its clients. The company is now working with its partners on developing both RNAi-based diagnostics and therapeutics. “These projects are still in their preliminary stages,” declared Zhang, “though we have had some very interesting early results.”

Asked about the reasons why the so-called sea turtles or hai gui have flourished in China, Zhang says, “It is the right time for returnees. China is changing rapidly and there are many new opportunities here.” The government’s willingness to provide startup funding helps as well, and scientists can put their experience to good use in a country where, compared to the West, the cost basis is highly attractive.

“We will stick to what we have been doing, offering good quality products to researchers and drug development firms,” declared Zhang. “People need affordable drugs,” he continued, which gives Shanghai GenePharma its mission. By giving investigators a high-quality, low-cost research tool, GenePharma helps them develop drugs without driving up expenses.


Disclosure: none.