China's pharmaceutical industry, battered by bribery allegations and struggling to counter years of price inflation, may seem an uninviting platform from which to launch a new business.
But two Connecticut residents — born in China but 15-year veterans of the U.S. pharmaceutical industry — saw an opportunity in that country's attempts to stem the price inflation and to better regulate the industry.
"Those are the things that can encourage us more to help ... do the business here [in China]," one of them, Jun Xu, said in a recent phone interview from China. "It was a mess before, there's no way we can do anything. We're heading to the right direction."
In 2011, Xu, 48, and a coworker, Zeren Wang, 54, formed HLK Biotechnology Ltd. to help chart a new course. Xu is president, Wang is managing director.
The idea was to take their expertise back to China and coordinate business dealings between U.S. and Chinese companies.
Based just north of Hong Kong in the Chinese city of Shenzhen, the company provides scientific expertise in chemical development of drugs, as well as information technology consulting and project management. That includes drug licensing, protecting intellectual property rights, and bringing manufacturers to compliance with both U.S. and Chinese standards.
HLK currently has six employees and about $1 million in committed investments. Wang said they hope to hire 12 to 15 more people in the next year.
From China To Connecticut, And Back
Xu and Wang were both well-established scientists in Connecticut's bioscience industry working at Boehringer Ingelheim, a Ridgefield-based pharmaceutical company, and were settled in Connecticut with their families, when they idea for their company first occurred to them.
Xu had arrived in the U.S. in the 1990s. After earning her master's degree from the State University of Buffalo, she went to work at a pharmaceutical company in Westchester, N.Y. and then Novartis Pharmaceuticals Corp. in New Jersey. She joined Boehringer Ingelheim at the end of 2000, in the research department.
Wang, born and raised in Shanghai, had come to the U.S. in 1988 to earn his Ph.D. and a postdoctoral degree from the University of Utah in physical pharmacy. He went on to work at Eisai Pharmaceuticals in North Carolina, then to Novartis — though not at the same time as Xu — and, in 2002, joined Boehringer Ingelheim.
There, his wife, Yang Yu, worked with Xu in the research department and the two had become friends. (Yu and Wang had met in Shanghai and were married there.) Their families, along with a few other Chinese co-workers, formed a small community based on their shared nationality, getting together for lunches and dinners regularly.
Yu died from lung cancer in 2006.
In 2009, Peter Farina, a former senior vice president in preclinical development at Boehringer Ingelheim, was informally mentoring Xu, Wang and a few of the other Chinese workers when the idea of the new venture began to take shape. The question was, how could they help U.S. companies navigate the challenges of entering China's primarily generic drug market.
"Generally speaking, it's safe to say the market in terms of health care [in China] is very dysfunctional," said Adefemi Adenuga, an analyst on the Healthcare Industry Dynamics team with London-based market research firm GlobalData.
In 2009, the Chinese government began enforcing reform measures, including increasing health care coverage to rural areas, and stricter protection of intellectual property rights — a move that has attracted multinational pharmaceutical companies like Pfizer and AstraZeneca to enter the Chinese market, Adenuga said.
But because all drugs must be manufactured domestically and must go through an extensive approval process, many multinational companies are partnering with local companies to help them reach commercialization — and reaching out to companies like HLK to help them overcome regulatory hurdles and cultural barriers, said Adam Dion, an analyst with GlobalData.
Drug manufacturers within China are also more focused on advancing technology, which wasn't a priority a decade ago, Wang said in a phone interview.
Those factors combined led Xu and Wang to establish HLK in 2011.