TIME:December 21, 2008 
Source: Global Entrepreneur

 

Is China destined to remain merely a large-scale producer of generics and a low-cost outsourcing hub for pharmaceutical R&D? Dr. Lu Xianping’s answer is a clear no.

 

Earning a Seat at the Global Table

 

Dr. Lu is among a small group of Chinese executives who have stepped onto the global stage of pharmaceutical innovation. At the “China Impact III: Global Pharma R&D Summit,” hosted by the Strategic Research Institute in New York, he emerged as a central figure—delivering multiple keynote presentations to an audience that included R&D leaders from multinational pharmaceutical companies such as Pfizer, Novartis, Roche, and Amgen.

 

“The industry’s perception of Chinese innovators has shifted significantly compared to just two years ago,” Dr. Lu noted. The change was both tangible and hard-earned.

 

For Chipscreen Biosciences, progress has come against a challenging backdrop. In 2007, the global pharmaceutical market exceeded $700 billion, while Pfizer alone reported revenues of $52 billion—greater than the GDP of many countries. In contrast, China’s pharmaceutical landscape was marked by a paradox: a vast and fast-growing market, yet one dominated by generics. Most of the country’s more than 6,000 pharmaceutical companies produced low-margin, non-patented drugs, while multinational firms leveraged China as a cost-efficient R&D outsourcing base.

 

Even leading Chinese CROs, such as WuXi AppTec, initially explored innovative drug development before pivoting away due to uncertain prospects. Many smaller companies followed a similar path, scaling back ambitions in innovation.

 

A Determined Challenger

 

Founded in 2001, Chipscreen set out to change this narrative.

 

Over eight years, the company filed 32 foundational invention patents in innovative drug discovery, provided oncology research support to Roche China, and licensed the international rights of its oncology drug candidate, chidamide, to a U.S. partner. This licensing deal marked a milestone: one of the first instances of a Chinese pharmaceutical company out-licensing a small-molecule innovative drug to an international partner.

 

“The most important lesson over the years has been persistence,” said Dr. Lu. “There were many internal debates, and I was often in the minority—but ultimately, we stayed the course.”

 

Breaking New Ground

 

When Chipscreen was founded, China’s innovative drug sector was virtually nonexistent. After 14 years in the United States, Dr. Lu returned to Shenzhen, leaving behind a senior R&D role in a global dermatology company.

 

Prior to its launch, Chipscreen held a large-scale fundraising roadshow, attracting over 40 investment institutions from the U.S., Hong Kong, Singapore, and mainland China. The company ultimately secured $6 million from six investors.

 

However, Dr. Lu soon realized that the domestic environment for innovative drug development was far more challenging than anticipated. For example, while the U.S. regulatory system allows investigational new drugs (INDs) to proceed to clinical trials within 30 days if no objections are raised, China’s approval process could take six months to a year—placing domestic companies at a significant disadvantage.

 

Determined to compete globally, Chipscreen developed its proprietary chemical genomics platform—an integrated technology designed to predict outcomes early in the drug discovery process, reduce risk, and improve efficiency.

 

Building this platform was a complex undertaking. It required integrating multiple advanced technologies, including computer-aided drug design, combinatorial chemistry, high-throughput and high-content screening, gene expression profiling, bioinformatics, and cheminformatics. The process involved over 1,000 experiments and nearly two years of development, culminating in its completion in early 2002.

 

Accelerating Innovation

 

With the platform in place, Chipscreen quickly targeted oncology.

 

While several international companies—such as Amgen—were pursuing similar therapeutic areas, Chipscreen leveraged its platform to identify promising molecular structures more efficiently. This enabled the company to rapidly advance its lead compound.

 

By February 2003, its oncology candidate, chidamide, had entered preclinical evaluation—just over a year after the platform’s completion, an unusually fast timeline even by global standards.

 

In July 2003, Chipscreen entered into a cross-licensing agreement with the U.S. FDA’s National Center for Toxicological Research (NCTR), allowing both parties to access each other’s platforms. Chipscreen was the only Chinese pharmaceutical company to receive such recognition at the time.

 

These achievements led to multiple invention patents and strengthened collaborations with global partners, including Roche China. Since 2006, Chipscreen has supported Roche’s oncology research efforts using its proprietary platform.

 

Dr. Lu often compares innovative drug development to walking a tightrope: risky and complex to outsiders, but manageable with the right expertise. “Our platform allows us to control risk to the greatest extent possible,” he said.

 

Strategic Globalization

By 2005, despite technological progress, Chipscreen remained unprofitable. Dr. Lu made a pivotal decision: to out-license international rights to chidamide.

 

As an oral anti-cancer agent designed to selectively inhibit tumor growth, chidamide aligned with emerging global treatment trends. Licensing the drug allowed Chipscreen to accelerate its global development while sharing early-stage risks with partners.

 

Initial discussions with multinational pharmaceutical companies proved challenging, as entrenched perceptions of Chinese firms as “low-end” or “imitative” persisted. However, a U.S.-based company specializing in bringing Chinese therapies to Western markets recognized the potential of chidamide and initiated discussions.

 

Negotiating the licensing agreement was complex—particularly around defining milestone payments. Dr. Lu personally led much of the negotiation and documentation, emphasizing the importance of precise legal language and intellectual property protection.

 

Lessons from history reinforced this approach. In the 1970s, China developed artemisinin for malaria treatment but lacked the infrastructure to fully commercialize it globally, resulting in limited long-term value capture. Determined not to repeat this, Chipscreen structured the deal as a licensing agreement—not a patent transfer.

 

Looking Ahead

 

Chidamide has since passed the FDA’s preclinical review stage. If it ultimately secures FDA approval, it would gain access to the world’s largest pharmaceutical market. In China, the drug is progressing through clinical development and was projected at the time to reach market around 2010, with potential annual revenues of approximately RMB 1 billion at maturity.

 

Internally, Dr. Lu has fostered a culture of openness and accountability. Debate is encouraged, and scientific rigor is non-negotiable. Employees are expected to defend their research with data, and transparency extends across the organization—even to compensation and expense reporting.

 

“We may not yet be a global pharmaceutical company,” Dr. Lu said, “but we can start by making a single product globally recognized as a standard of care.”

 

Inspired by companies like Novartis and Amgen, his vision is clear:to position Chipscreen Biosciences as a leader in innovative drug development—both in China and on the global stage.