Editor's Note: The third of the panels held at ChinaBio® Day, held in conjunction with BioPharma America™ on September 15 in San Francisco, was a discussion of the rationale behind recent deals – by representatives of companies that have recently completed partnerships. A major topic was the criteria by which a partner was selected.

Panel Moderator
Ruediger Herrmann, PhD, Partner, WilmerHale

Panel Members:
R. Stephen Porter, PharmD, CSO, Medicilon-MPI Preclinical Research
Frank Torti, MD, MBA, Senior Associate, New Enterprise Associates
Yingfei Wei, PhD, CSO, 3SBio
Guo-Liang Yuo, PhD, President and CEO, Epitomics

Herrmann (WilmerHale): What did you want in a partner? What were you looking for?

Wei (3SBio): We concentrated on the type of product being offered, especially the area of indication. We also wanted our partner to have the right technology. Another question we asked was: What can we learn from them? We wanted expertise in technology and business knowledge as well. The quality of the product was important, especially if we were going to become the China marketing partner.

Yuo (Epitomics): We’re smaller, not as well established financially as many companies. We wanted someone who could advance our technology. So we examined their technology, and we also wanted them to have some distribution ability. Because healthcare is a global issue, we wanted the partner to have a global vision. The chemistry between the people from both companies was also important.

In many China companies, one person, the CEO, dominates while everyone else plays a minor role, which frightens me. What happens if something happens to that person? So we were looking for a company with a team effort. We tried to anticipate everything that could go wrong, and we put all of that into our first draft, which ran for 50 pages.

Porter (Medicilon-MPI): We wanted as little government involvement as possible. The partner company had to have a positive cash flow and a straightforward board structure – some China companies have complicated boards. It had to have a good track record and clients we could talk to. We needed to be near a hub with an airport. And then the personality fit was important.

Torti (New Enterprise): We want to make sure that key people are incentivized to stay on after a deal is done. IP is also a tricky issue.

Porter (Medicilon-MPI): Money is not important for retaining employees. A creative environment where they are going to learn is more important. China IP is still a work in progress, especially in large molecules.

Yuo (Epitomics): We have low turnover. I had to ask my accountant if we were paying too much. The answer was, “No, our employees are interested in working on innovative projects.” Salaries are not as important; if employees can learn and grow, they will be happy.

Wei (3SBio): Chinese people are thought to be not as direct as Westerners. Common sense is important and that means a deal must pass the “win-win” test. What is their business; what do they want to gain; does it help us as well?

Porter (Medicilon-MPI): We are in China because the business is there. We worry about where the CRO practice is going. There is a huge range of quality and an equally huge range of prices. We also worry that we are competing against companies that are being subsidized by government.

Porter (Medicilon-MPI): First in man studies are very difficult to get in China. Most approvals are for drugs that are approved elsewhere.

Yuo (Epitomics): We don’t take money from any level of China government because I don’t want them to try to control what I do.

Porter (Medicilon-MPI): Nobody is China is willing to do a western-style deal that is structured along the upfront fee-milestones-royalties lines, based on a net present value of assets. Many companies are willing to sell assets to China companies, but China companies want the asset without conditions.

Disclosure: none.