"Europe's Access Dilemma" (2/5) - Europe Can't Pay More For Innovation: The Case For Co-developing With Asia

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To think that we could really spend much more money on innovative drugs,

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I think is foolish.

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If you look objectively at what has happened in the past 20 years,

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Europe...

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I've been a massive loser of influence in this industry.

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What could be the solution?

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The solution could be that European companies collaborate with Asian companies to develop together innovative drugs that are actually very efficacious and some of them could even over time be first in class.

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And those drugs are developed with a different market than the US market in mind.

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In our last episode...

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Christopher gave us his perspective on Brussels,

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but today I want to push the conversation in a very different direction.

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I am with Franck Ledeux.

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Hello,

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Franck.

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Hello,

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Etienne.

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Franck,

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you spent 20 years in Asia at the top of McKinsey,

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advising the world's largest pharma groups.

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You watched China going from a simple market to a true global source of biopharma innovation.

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Now you're kind of back.

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to Europe or between Asia and Europe,

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and you carried the message that challenges the consensus,

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and I think it could not be more timely.

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In this episode,

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we talk about the geopolitics of innovation,

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and I would like to start with a bit of your background.

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When exactly did you realize that China was not just a market,

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but a real source of global innovation?

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Well,

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Hello again,

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Nathalie,

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and thank you for having me on your podcast.

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So in terms of background,

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I was born in France.

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I'm still French,

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but I left France

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25 years ago.

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I spent quite some time in the US actually before moving to Shanghai in China in 2005.

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So roughly 20 years ago,

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I was working with McKinsey for a long period of time.

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Actually,

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I left McKinsey only last year.

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So I spent two decades in China advising big pharma companies,

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biotech companies,

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metal companies as well.

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A lot of my work

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was in China,

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but I also did some work across Asia more broadly.

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And to your question,

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we could sense a transformation happening in China,

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I would say,

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as early as 2013,

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so about 12,

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13 years ago.

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Before that,

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the conversation about China was largely about how do I bring my drugs to the Chinese market and how do I sell in the Chinese market.

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The conversation around China becoming a source of innovation started a little bit in 2013.

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You could start to see you

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what we call sea turtles,

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American Chinese or Chinese Americans folks who wanted to come back home and felt that something was about to happen and started to come back and started to create companies,

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companies like Wuxi Apptech,

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for example,

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that started to provide CRO services.

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But the real transformation started at real pace,

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I would say,

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in 2017,

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when China started a huge reform of the equivalent to the FDA called the NMPA.

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China joined

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ICH for clinical trial standards,

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guidelines,

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and really started also a reform of its capital market to allow much more venture capitalists to invest in China innovation.

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We had the opening of the Hong Kong exchange for biotech companies.

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And very rapidly,

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capabilities across the value chain started to improve.

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I think some early believers in the Chinese innovation started as early as 2017-18 to take bets on the China innovation.

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But there were a few,

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it was not the majority,

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it's only a few years later,

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that in the face of the evidence that the China innovation was real,

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that the quality was rapidly improving,

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and increasingly that Western companies had to learn from the Chinese companies,

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that we started to see a huge flow of interest that started in the US,

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I would say,

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and then caught up a little bit in Europe.

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And now you could argue that China is,

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after the U.S.,

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the second most important innovation ecosystem in the world.

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On some dimension,

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it is already ahead of the U.S.

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when you think,

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for example,

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of early-stage trials and maybe application of AI to drug discovery,

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things like that.

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So it's very clear that we have seen an incredible transformation.

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I was very lucky to be part of that journey.

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over the last two decades.

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I'm actually now in my post-McKinsey life,

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more dipping into the venture capital world,

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and I joined an investment firm that is going to look to support innovation companies from the West,

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from the US,

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from Europe,

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or Asia,

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that can tap into the Asia ecosystem for clinical trials.

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So it's a long,

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long story that I will try to distill a little bit today on this podcast,

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and in particular,

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thinking about the implication for Europe,

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because as a French...

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I'm very interested in the topic of sovereignty for Europe.

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And I think biopharma,

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biotech is a very important topic where a lot needs to happen if we don't want

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France and Europe probably to fall behind even more on a very important industry.

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That's why you're here today,

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because I think we're wanting something to happen.

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And we start to see some big deals between biopharmas and

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Asia or

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France there.

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but...

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What we mainly see is that Europe still underestimates this movement and what happens in

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Asia or in Chinese companies.

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Yeah,

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I think it's,

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I don't know if it's specific to the pharma industry,

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but I think in general,

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at least that's my observation as a French who still lives in Asia,

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by the way.

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I'm still based in Asia and I come back to Europe a bit more than before,

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but I'm still based in Asia.

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But when I come back here and have discussion with people in the industry and across industry,

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I'm struck by...

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The lack of understanding still today in 2026 that a large number of fellow Europeans have about what's really happening in Asia.

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I think the electric vehicle is a wake-up call a little bit.

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People realize that the Chinese are doing cars now that actually bear what Europeans can produce.

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And that's a big wake-up call,

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I guess.

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But when you look at what's happening across industries,

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when you see how far ahead

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China is now in many dimensions,

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I think a lot of people have not yet understood what is happening there.

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And I guess it applies as well in biopharma.

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I think people have heard about it.

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They kind of know something is going on.

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But until you actually have taken the plane and spent some time on the ground to see with your own eyes and hear with your own ears what's going on,

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I mean,

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it's tough to really portray and understand the magnitude of the change,

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the scale,

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the speed of what's happening there.

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I think that's what I'm hoping to do a little bit in my time is actually try to...

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create more of a bridge between Asia and Europe on both sides.

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And it's a two-way bridge so that people on both sides can understand what's happening on the other side,

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but also understand how collaborations could happen.

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I think right now the people who understand what's happening are some of the big pharma companies.

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And today we got this on Wednesday.

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And I saw that the new deal was just announced by Eli Lilly,

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who is going to partner with a Chinese company to have this Chinese company.

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work on new targets and doing basically very early stage work for really in China.

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Just a few weeks ago,

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we had another significant deal between Pfizer and Innovent along the same lines.

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We also had a deal between

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Bristol-Myers Squibb and Hungary,

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a lot of American companies,

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by the way.

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Yeah,

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some European also doing deals,

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right?

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But you know,

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the Americans,

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despite geopolitics,

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are actually tapping actively into the China ecosystem.

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You have a few midsize pharma companies who are also looking at it.

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And then you have like special purpose vehicles that are being set up by venture capitalists.

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A lot of them from the U.S.

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again,

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RA Capital,

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for example,

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and others,

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who basically source assets from China and then bring them home to the U.S.

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and put experience team around them to develop the drugs for the U.S.

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market and global market later on.

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So a lot is happening.

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From Europe's side,

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there's a few things as well.

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But I would say that if you ask today the CEO of a biotech in Europe,

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how are you thinking about integrating Asia and China in particular into your clinical trial plans,

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many of them don't have a good answer.

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You know,

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they don't really know how to start.

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And if you look at the deals made by European companies,

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yes,

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AstraZeneca is very active,

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you know,

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Roche is quite active,

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JSK as well.

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But overall,

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I would say the Europeans are not ahead of the Americans at this point,

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maybe a bit behind.

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So that's interesting to me because Europe has a lot to gain in this new ecosystem,

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a call multiple

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polar biopharma world where maybe the US,

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Asia and Europe can collaborate and compete as well,

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but do it in an intelligent way that can benefit patients.

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We'll conclude in the end with what a CEO can do.

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But I would like to go a bit before.

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You said many things are very attractive in Asia and China today.

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Maybe can you give us a list of what is really interesting to look at?

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Sure.

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So first,

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I think for people on the podcast,

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it's important to understand that it's a story that goes beyond China.

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Korea is another country that is really making huge progress in biotech.

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Australia,

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actually,

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so it's not just

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East Asian countries,

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Australia as well in Asia Pacific,

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is also extremely interesting when it comes to running clinical trials,

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in particular phase 1B and 2A,

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that you can run in Australia very effectively at lower cost and with very efficient processes.

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Singapore itself has some interesting assets as well that it can bring to the table.

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And Japan is also waking up a little bit and trying to revive its biotech industry.

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So.

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What's happening in China is very important,

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but there's a broader story of Asia that's rising in biotech.

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So you could say almost like innovation is being democratized and innovation is happening everywhere around the world.

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And every day,

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multiple new biotech companies are being created,

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whether it's in Europe,

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the U.S.

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or Asia,

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which is great for patients around the world.

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What Asia can bring is efficiency,

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you know,

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the ability to maybe.

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challenge the status quo when it comes to regulatory processes,

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how to start and run clinical trials.

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I mentioned Australia,

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but China as well has pushed a lot of reform to make the overall clinical trial on that much more efficient.

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Obviously,

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China brings huge patient population that can allow faster recruitment for clinical trials.

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And that's often the bottleneck to run trials and therefore adds to cost.

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China can also bring maybe a different ways of

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thinking of how to work,

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actually,

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which is a topic that in the West is a little bit sensitive.

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And I know that when I say that,

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I may potentially offend some people,

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but the truth is people in Asia tend to work harder than people in the West,

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or more efficiently,

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or use different communication channels that make their work more effective.

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And I think without falling into the trap of maybe the Asians are working too hard and don't have the right work-life balance,

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um

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00:11:28.758 --> 00:11:39.104
There's a reality as well that they have figured out something about collaboration with the working that is extremely efficient and allows them to make progress extremely rapidly in a very disciplined way.

260
00:11:39.724 --> 00:11:54.572
There's also something about the role of the government in setting priorities for industries and giving the umbrella for industry participation to make sure that they have enough visibility on what will come and how

261
00:11:54.592 --> 00:11:57.414
much of a priority it is for the government so that people can invest.

262
00:11:58.238 --> 00:11:59.319
So there's a lot of lessons,

263
00:12:00.179 --> 00:12:01.619
what you can see as well,

264
00:12:01.840 --> 00:12:03.560
if you want to make this more concrete.

265
00:12:04.040 --> 00:12:08.842
If you are a new biotech from Europe or a new biotech from the US,

266
00:12:09.123 --> 00:12:13.564
you can potentially think of doing more with less.

267
00:12:14.325 --> 00:12:20.867
So doing more meaning potentially running trials across a broader range of indication for your lead program.

268
00:12:21.808 --> 00:12:27.390
Doing it faster and speed in biotech is probably the most important.

269
00:12:27.874 --> 00:12:32.737
A tribute your company can have beyond having obviously great science and a great management team,

270
00:12:32.917 --> 00:12:33.137
right?

271
00:12:33.417 --> 00:12:36.399
You have to go fast and you have to go faster than competition.

272
00:12:37.699 --> 00:12:37.819
And

273
00:12:38.220 --> 00:12:43.282
China and Asia in general is a great way to accelerate a lot of things in your processes.

274
00:12:43.903 --> 00:12:44.023
So,

275
00:12:44.143 --> 00:12:44.383
you know,

276
00:12:44.403 --> 00:12:47.325
it's a combination of efficiency or challenging the status quo,

277
00:12:47.545 --> 00:12:48.585
different ways of working,

278
00:12:49.146 --> 00:12:50.346
taking more shots on goals,

279
00:12:50.586 --> 00:12:51.767
which is very important,

280
00:12:52.307 --> 00:12:52.528
right?

281
00:12:53.088 --> 00:12:53.708
At the same time,

282
00:12:53.709 --> 00:12:56.890
and I think that's also very important for people here to understand.

283
00:12:57.418 --> 00:13:03.060
The China biopharma market and biotech world is far from being mature at this point,

284
00:13:03.061 --> 00:13:03.440
I would say.

285
00:13:03.700 --> 00:13:04.440
In particular,

286
00:13:05.240 --> 00:13:08.701
China as a country does not value innovation sufficiently,

287
00:13:09.421 --> 00:13:16.523
which means that the end market to basically sell innovative drugs in China is still surprisingly small.

288
00:13:16.703 --> 00:13:21.165
When you think about the size of the population and the perception we may have,

289
00:13:21.665 --> 00:13:26.006
the size of the innovation market today in China is probably still smaller than the French innovation market.

290
00:13:26.554 --> 00:13:27.775
for a population that is,

291
00:13:27.835 --> 00:13:27.975
what,

292
00:13:28.135 --> 00:13:28.615
25,

293
00:13:28.635 --> 00:13:29.455
30 times bigger,

294
00:13:29.495 --> 00:13:29.675
right?

295
00:13:29.695 --> 00:13:31.576
68 million versus 1.3 billion.

296
00:13:32.576 --> 00:13:32.957
So 20,

297
00:13:33.017 --> 00:13:33.677
25 times.

298
00:13:34.157 --> 00:13:37.058
That market is still constrained and has very low pricing.

299
00:13:37.358 --> 00:13:38.059
And therefore,

300
00:13:38.599 --> 00:13:43.141
if you are a Chinese biotech company and you have some interest in drugs,

301
00:13:43.841 --> 00:13:49.083
you actually cannot make a living by just selling your drugs in the Chinese market.

302
00:13:49.523 --> 00:13:49.944
Therefore,

303
00:13:49.964 --> 00:13:50.864
you have to partner,

304
00:13:50.904 --> 00:13:52.184
which is where,

305
00:13:52.485 --> 00:13:52.885
obviously,

306
00:13:53.265 --> 00:13:55.806
multinationals from Europe and the US or Japan And...

307
00:13:56.378 --> 00:14:13.126
can find great collaboration opportunities because on the one hand the western world is looking for innovative drugs and to move faster and on the other hand the chinese ones are looking for ways to create value out of their assets that goes beyond what they can get from just the chinese market that's

308
00:14:13.186 --> 00:14:15.227
why you see a number of deals in the last

309
00:14:15.947 --> 00:14:22.150
12 months where the chinese partner is looking to not just unlicensed drugs to a Western country.

310
00:14:22.318 --> 00:14:22.658
company,

311
00:14:22.799 --> 00:14:29.705
but also to secure commercial rights so that they can learn actually how to commercialize their drugs outside of China,

312
00:14:30.626 --> 00:14:31.287
step by step,

313
00:14:31.367 --> 00:14:32.268
as the Chinese like to do,

314
00:14:33.229 --> 00:14:41.497
so that one day we can actually stand on their two feet and not just become an outsourcing shop of innovative drugs to the West,

315
00:14:41.577 --> 00:14:42.758
which is not what they want to do.

316
00:14:43.702 --> 00:14:49.726
And today we see that the economic value of the pharma industry is almost entirely captured by the U.S.

317
00:14:50.026 --> 00:14:53.149
What does it mean concretely for European decision makers?

318
00:14:53.249 --> 00:14:54.630
Yeah,

319
00:14:54.631 --> 00:14:54.950
on this,

320
00:14:54.990 --> 00:14:55.250
I mean,

321
00:14:55.410 --> 00:14:56.711
it becomes quite political,

322
00:14:56.731 --> 00:14:57.111
obviously.

323
00:14:57.211 --> 00:14:57.331
And,

324
00:14:57.332 --> 00:14:57.612
you know,

325
00:14:57.613 --> 00:15:00.193
I had the opportunity to go to Washington,

326
00:15:00.233 --> 00:15:00.434
D.C.

327
00:15:00.634 --> 00:15:01.274
back in March.

328
00:15:01.275 --> 00:15:05.297
I was on stage at this pharma forum organized by pharma,

329
00:15:05.357 --> 00:15:05.897
a big U.S.

330
00:15:05.937 --> 00:15:06.538
organization.

331
00:15:06.578 --> 00:15:09.920
I was on stage with former head of the FDA,

332
00:15:10.060 --> 00:15:10.761
Scott Gottlieb,

333
00:15:10.921 --> 00:15:12.502
and the governor of Rhode Island.

334
00:15:13.378 --> 00:15:13.618
Gina,

335
00:15:13.798 --> 00:15:14.178
Raimondo.

336
00:15:14.559 --> 00:15:19.681
And the topic was pretty much about how do we stop China and make sure that the U.S.

337
00:15:19.761 --> 00:15:22.302
keeps its domination on the industry.

338
00:15:22.862 --> 00:15:23.042
And,

339
00:15:23.102 --> 00:15:23.362
you know,

340
00:15:23.442 --> 00:15:24.823
I'm not anti-American.

341
00:15:24.863 --> 00:15:27.684
I'm actually a big fan of many things the U.S.

342
00:15:27.764 --> 00:15:28.044
does,

343
00:15:28.125 --> 00:15:30.385
and I've spent seven years of my life in the U.S.

344
00:15:30.486 --> 00:15:32.326
and have many American friends.

345
00:15:32.907 --> 00:15:36.088
But I must also say that as a European,

346
00:15:36.748 --> 00:15:40.630
we cannot be happy with the way the industry is evolving today.

347
00:15:41.146 --> 00:15:46.029
The truth is the industry has become increasingly U.S.-centric in the last 20 years.

348
00:15:46.129 --> 00:15:47.870
If you look at multiple metrics,

349
00:15:47.950 --> 00:15:48.810
so for example,

350
00:15:49.290 --> 00:15:52.712
what's the share of revenues for big pharma companies coming from the U.S.

351
00:15:52.752 --> 00:15:53.032
market?

352
00:15:53.633 --> 00:15:54.213
And the answer,

353
00:15:54.214 --> 00:15:55.694
if you take the top 20 companies,

354
00:15:55.734 --> 00:15:57.495
including Japanese and European companies,

355
00:15:57.635 --> 00:15:58.776
is over 55%.

356
00:16:00.316 --> 00:16:02.177
What's the share of profit coming from the U.S.?

357
00:16:02.678 --> 00:16:04.359
Nobody has an exact number on that,

358
00:16:04.419 --> 00:16:05.559
but from my conversation,

359
00:16:06.140 --> 00:16:07.820
I think it's north of 75%.

360
00:16:08.501 --> 00:16:10.422
The vast majority of profits and revenues

361
00:16:10.682 --> 00:16:13.144
in this industry are created by the US market.

362
00:16:13.685 --> 00:16:14.926
And the US market is what?

363
00:16:16.227 --> 00:16:16.487
4%

364
00:16:16.687 --> 00:16:17.688
of the world's population.

365
00:16:18.188 --> 00:16:28.717
So we have a global industry and there's no industry that on paper is more global than the pharma industry because a drug that works in a French way works in an American,

366
00:16:28.797 --> 00:16:30.139
and in Japanese or Chinese,

367
00:16:30.639 --> 00:16:33.321
there might be some technical differences on efficacy,

368
00:16:33.421 --> 00:16:33.922
things like that.

369
00:16:33.962 --> 00:16:34.943
But by and large,

370
00:16:35.703 --> 00:16:36.944
drugs are developed for the world,

371
00:16:37.145 --> 00:16:38.646
for all patients on the planet.

372
00:16:39.218 --> 00:16:41.920
But it's actually a small proportion of patients in the world,

373
00:16:41.960 --> 00:16:42.821
largely in the U.S.,

374
00:16:43.422 --> 00:16:45.143
that drive the economic service industry.

375
00:16:46.084 --> 00:16:48.025
And that's why it becomes a bit complex.

376
00:16:48.286 --> 00:16:48.686
You see

377
00:16:49.927 --> 00:16:50.888
President Donald Trump,

378
00:16:52.009 --> 00:16:52.910
through his policies,

379
00:16:53.010 --> 00:16:53.750
in particular,

380
00:16:53.850 --> 00:16:54.791
most favored nation,

381
00:16:55.452 --> 00:16:56.112
present policy,

382
00:16:56.292 --> 00:16:56.653
MFN,

383
00:16:57.413 --> 00:17:00.436
trying to get the Europeans to pay more for innovations.

384
00:17:00.437 --> 00:17:01.657
It's become a huge topic,

385
00:17:01.677 --> 00:17:01.877
right?

386
00:17:02.618 --> 00:17:03.318
But the reality,

387
00:17:03.398 --> 00:17:07.462
and I don't know if he's ignoring it by ignorance or just...

388
00:17:07.702 --> 00:17:08.002
you know,

389
00:17:08.603 --> 00:17:09.563
as a different agenda.

390
00:17:09.743 --> 00:17:11.144
But if you look at it,

391
00:17:11.145 --> 00:17:14.207
the fact that the revenues and profit are largely in the U.S.

392
00:17:14.347 --> 00:17:16.668
has been usually beneficial to the U.S.

393
00:17:16.748 --> 00:17:17.048
economy.

394
00:17:17.709 --> 00:17:19.210
Because when you look at where,

395
00:17:19.710 --> 00:17:20.271
for example,

396
00:17:20.431 --> 00:17:22.112
where do all the IPO take place?

397
00:17:22.692 --> 00:17:23.513
In the Western world.

398
00:17:24.093 --> 00:17:24.734
It's in the U.S.

399
00:17:24.834 --> 00:17:26.275
There's no IPO market in Europe.

400
00:17:26.735 --> 00:17:30.798
If you're a European entrepreneur with an interesting innovation idea,

401
00:17:31.058 --> 00:17:36.182
you may do your Series A in Europe and you see the Series A in Europe and the Series B.

402
00:17:36.902 --> 00:17:37.222
Beyond,

403
00:17:37.262 --> 00:17:38.624
you often have to take up U.S.

404
00:17:38.664 --> 00:17:39.084
capital,

405
00:17:39.104 --> 00:17:40.725
and if you want to go public,

406
00:17:40.826 --> 00:17:42.027
you have to go to the NASDAQ.

407
00:17:42.167 --> 00:17:43.208
That's the answer right now.

408
00:17:43.788 --> 00:17:45.870
You have to move part of your management team to the U.S.

409
00:17:46.390 --> 00:17:47.271
And over time,

410
00:17:47.431 --> 00:17:50.314
a lot of the innovation that comes from Europe is actually captured by

411
00:17:51.435 --> 00:17:52.396
U.S. organizations,

412
00:17:52.716 --> 00:17:54.077
venture capital and big pharma.

413
00:17:54.658 --> 00:17:57.560
If you look at the economic development of Boston,

414
00:17:57.640 --> 00:17:58.121
Cambridge,

415
00:17:58.321 --> 00:17:58.501
or

416
00:17:59.082 --> 00:17:59.622
San Francisco,

417
00:17:59.722 --> 00:18:00.183
Palo Alto,

418
00:18:00.203 --> 00:18:03.806
there's been a huge economic boom driven by the biopharma industry.

419
00:18:04.374 --> 00:18:05.655
If you look at the service industry,

420
00:18:05.855 --> 00:18:08.518
it's usually where it's legal or consultant or whatever,

421
00:18:08.998 --> 00:18:09.679
used in the U.S.

422
00:18:10.239 --> 00:18:14.743
If you maybe also look at other aspects of economic development,

423
00:18:14.844 --> 00:18:15.564
for example,

424
00:18:15.804 --> 00:18:16.465
manufacturing,

425
00:18:17.146 --> 00:18:17.386
right?

426
00:18:17.506 --> 00:18:18.287
Manufacturing,

427
00:18:18.367 --> 00:18:19.868
opening up of R&D center,

428
00:18:20.369 --> 00:18:22.611
the flow of investment is moving to the U.S.,

429
00:18:23.391 --> 00:18:26.774
including from some of the biggest European companies like AstraZeneca,

430
00:18:26.814 --> 00:18:27.275
for example,

431
00:18:27.335 --> 00:18:27.515
right?

432
00:18:27.635 --> 00:18:30.558
So it's a flow of investment.

433
00:18:30.890 --> 00:18:34.452
towards the US that is driven by higher pricing in the US.

434
00:18:34.792 --> 00:18:37.194
There's other factors like faster regulatory system,

435
00:18:37.614 --> 00:18:39.435
more transparency in capital market,

436
00:18:39.455 --> 00:18:40.015
things like that.

437
00:18:40.375 --> 00:18:41.196
But at the end of the day,

438
00:18:41.416 --> 00:18:44.278
if you look objectively at what has happened in the past 20 years,

439
00:18:44.998 --> 00:18:49.320
Europe has been a massive loser of influence in this industry.

440
00:18:50.061 --> 00:18:51.061
And this is playing out,

441
00:18:51.081 --> 00:18:51.462
by the way,

442
00:18:51.463 --> 00:18:52.282
in other industries,

443
00:18:52.322 --> 00:18:54.163
as we can see every day.

444
00:18:54.523 --> 00:18:58.185
We know that Europe is losing relevance across a range of industries.

445
00:18:58.186 --> 00:18:59.006
The question is,

446
00:18:59.106 --> 00:18:59.366
is it...

447
00:18:59.562 --> 00:19:01.423
It's still time to act and try to change that.

448
00:19:01.963 --> 00:19:07.664
And my position is that the rise of Asia as an alternative ecosystem to the U.S.

449
00:19:07.724 --> 00:19:16.067
ecosystem is an opportunity for Europe to rethink how it participates in this global market and maybe through rebalancing,

450
00:19:16.267 --> 00:19:18.908
regain some competitiveness and relevance.

451
00:19:18.909 --> 00:19:19.808
The fact is that

452
00:19:20.748 --> 00:19:22.829
Europe is under an enormous budget pressure.

453
00:19:23.629 --> 00:19:24.569
We have rearmament,

454
00:19:24.609 --> 00:19:26.070
we have pension deficit,

455
00:19:26.150 --> 00:19:27.450
we have fiscal constraints.

456
00:19:28.018 --> 00:19:29.879
Is that realistic that France,

457
00:19:29.979 --> 00:19:30.359
Germany,

458
00:19:30.479 --> 00:19:32.560
the UK can keep paying for

459
00:19:33.481 --> 00:19:35.402
American innovation at full price?

460
00:19:36.262 --> 00:19:36.583
So it's,

461
00:19:36.983 --> 00:19:37.263
you know,

462
00:19:37.264 --> 00:19:40.505
we always say that healthcare is complicated and pricing is complicated.

463
00:19:40.645 --> 00:19:45.127
So it's very difficult to know what is the real price that should be set for any drug.

464
00:19:45.447 --> 00:19:50.210
What we know today is that the pricing in the US is two to three times higher than the price in Europe.

465
00:19:50.787 --> 00:19:53.549
The prices in Europe is two to three times higher than China,

466
00:19:54.290 --> 00:19:56.412
which itself is like five times higher than India.

467
00:19:56.452 --> 00:19:56.672
I mean,

468
00:19:56.673 --> 00:19:59.435
so there's like huge differences between big countries around the world.

469
00:20:00.355 --> 00:20:02.177
We know that the high pricing in the U.S.

470
00:20:02.497 --> 00:20:04.639
drives a lot of positive outcomes,

471
00:20:05.120 --> 00:20:09.643
including the willingness to take big risks when it comes to new science,

472
00:20:09.724 --> 00:20:10.584
new research,

473
00:20:10.624 --> 00:20:11.345
first-in-class,

474
00:20:11.485 --> 00:20:12.626
new biology,

475
00:20:12.726 --> 00:20:13.167
all of that.

476
00:20:14.147 --> 00:20:18.031
We also know that the ability of Europe to pay more.

477
00:20:18.491 --> 00:20:20.152
and therefore to get closer to U.S.

478
00:20:20.212 --> 00:20:21.573
pricing is very limited.

479
00:20:22.213 --> 00:20:24.574
I'm not saying that Germany,

480
00:20:24.734 --> 00:20:25.075
France,

481
00:20:25.076 --> 00:20:25.415
the U.K.

482
00:20:25.875 --> 00:20:28.176
could not spend more on new drugs.

483
00:20:28.697 --> 00:20:30.798
And I'm not saying it would not be a good thing to do.

484
00:20:31.118 --> 00:20:32.779
It probably would be a good thing to do at some level,

485
00:20:32.899 --> 00:20:33.099
right?

486
00:20:33.899 --> 00:20:35.600
But I doubt that the countries,

487
00:20:35.800 --> 00:20:37.181
regardless of who is in power,

488
00:20:37.301 --> 00:20:39.302
have the ability to do that in the next few years.

489
00:20:40.203 --> 00:20:40.443
Why?

490
00:20:40.523 --> 00:20:43.124
Because we all know that there are some other priorities.

491
00:20:43.605 --> 00:20:44.365
You didn't mention,

492
00:20:44.425 --> 00:20:44.725
I think,

493
00:20:44.925 --> 00:20:45.345
military.

494
00:20:45.786 --> 00:20:47.927
We know that we need all those countries to increase.

495
00:20:48.399 --> 00:20:51.340
contribution to the military in their GDP from what,

496
00:20:51.420 --> 00:20:51.640
2%

497
00:20:51.900 --> 00:20:52.300
to 5%

498
00:20:52.380 --> 00:20:53.360
in the next few years.

499
00:20:53.701 --> 00:20:55.621
And that's going to be priority number one,

500
00:20:55.622 --> 00:20:55.921
number two,

501
00:20:55.941 --> 00:20:57.242
number three.

502
00:20:57.243 --> 00:20:58.862
Then we have pension plans to fund all of that.

503
00:20:58.882 --> 00:21:02.963
So to think that we could really spend much more money on innovative drugs,

504
00:21:03.483 --> 00:21:04.524
I think is foolish.

505
00:21:05.104 --> 00:21:09.265
Countries may give some gesture to Trump to appease him a little bit like the UK has done,

506
00:21:09.305 --> 00:21:12.626
but I think fundamentally it will not be a significant shift.

507
00:21:14.526 --> 00:21:16.367
So this being established,

508
00:21:16.855 --> 00:21:17.955
What could be the solution?

509
00:21:18.016 --> 00:21:28.160
The solution could be that European companies collaborate with Asian companies to develop together innovative drugs that are actually very efficacious,

510
00:21:28.200 --> 00:21:30.661
and some of them could even over time be first in class.

511
00:21:31.361 --> 00:21:34.262
And those drugs are developed with a different market than the U.S.

512
00:21:34.302 --> 00:21:34.942
market in mind.

513
00:21:35.643 --> 00:21:38.484
If you think again about population distribution around the world,

514
00:21:38.564 --> 00:21:40.265
Europe is 450 million people,

515
00:21:40.385 --> 00:21:40.705
China,

516
00:21:41.405 --> 00:21:42.846
even if you take out rural China,

517
00:21:42.906 --> 00:21:45.787
you still have half a billion people who could access innovative drugs.

518
00:21:46.191 --> 00:21:46.611
You add

519
00:21:47.031 --> 00:21:47.711
Latin America,

520
00:21:47.932 --> 00:21:48.592
Southeast Asia,

521
00:21:48.812 --> 00:21:49.332
Middle East,

522
00:21:49.333 --> 00:21:49.532
I mean,

523
00:21:49.533 --> 00:21:50.052
you get to,

524
00:21:50.312 --> 00:21:50.452
what,

525
00:21:50.532 --> 00:21:51.813
1.52 billion people,

526
00:21:52.253 --> 00:21:52.753
not the 4%

527
00:21:52.754 --> 00:21:52.953
of the U.S.

528
00:21:52.954 --> 00:21:53.313
Open the mindset,

529
00:21:53.314 --> 00:21:53.433
yeah.

530
00:21:53.434 --> 00:21:54.694
Yeah.

531
00:21:54.994 --> 00:21:55.974
So the question becomes,

532
00:21:56.014 --> 00:21:56.214
okay,

533
00:21:56.294 --> 00:21:57.474
why are companies not doing this?

534
00:21:58.135 --> 00:22:00.095
I think some are going to start to think about it,

535
00:22:00.255 --> 00:22:02.396
but this will be a decade-long journey,

536
00:22:02.476 --> 00:22:02.856
probably,

537
00:22:02.936 --> 00:22:05.777
because there are huge implications on how you manage your pipelines.

538
00:22:05.778 --> 00:22:10.918
There needs to be big changes in terms of regulatory integration between Asia and Europe.

539
00:22:10.919 --> 00:22:11.899
We've been in Europe first,

540
00:22:11.959 --> 00:22:13.339
but also within Asia and Europe.

541
00:22:13.911 --> 00:22:16.112
You need to think about the manufacturing implication,

542
00:22:16.212 --> 00:22:18.752
because if you do the same drug for a much larger population,

543
00:22:18.812 --> 00:22:22.894
you also need the ability to lower your cost of development,

544
00:22:22.914 --> 00:22:24.574
but also lower your cost of manufacturing,

545
00:22:24.634 --> 00:22:26.114
which requires different capabilities.

546
00:22:26.715 --> 00:22:27.055
And again,

547
00:22:27.056 --> 00:22:29.015
I think this could be a great opportunity for Europe.

548
00:22:29.615 --> 00:22:31.736
What if Europe was to say to China,

549
00:22:31.976 --> 00:22:32.136
look,

550
00:22:32.176 --> 00:22:34.637
we will open the market for some of your drugs,

551
00:22:35.037 --> 00:22:38.758
but they will be co-developed in joint venture between European and Chinese players.

552
00:22:39.138 --> 00:22:39.798
And by the way,

553
00:22:39.978 --> 00:22:42.379
the manufacturing will be onshore in Europe.

554
00:22:43.063 --> 00:22:45.764
To address some of the concerns people have around sovereignty.

555
00:22:45.984 --> 00:22:47.625
And as we saw during COVID,

556
00:22:47.665 --> 00:22:52.767
we don't want to be dependent on China to get access to anti-infective or medical products.

557
00:22:53.428 --> 00:22:54.268
And the Chinese company,

558
00:22:54.288 --> 00:22:54.468
I think,

559
00:22:54.469 --> 00:22:55.469
will be quite open to that.

560
00:22:55.509 --> 00:22:58.230
So basically do what we failed to do on the EV side,

561
00:22:58.250 --> 00:23:02.232
where we are waiting very late in the game to propose some joint ventures from a position of weakness.

562
00:23:02.792 --> 00:23:03.292
In pharma,

563
00:23:03.532 --> 00:23:05.893
Europe actually can still act from a position of strength.

564
00:23:06.073 --> 00:23:08.514
if you think about the size of a market,

565
00:23:08.614 --> 00:23:09.515
the...

566
00:23:09.955 --> 00:23:12.476
actual alternative to the US market that this could be,

567
00:23:13.076 --> 00:23:14.956
but also the capabilities that Europe has.

568
00:23:15.016 --> 00:23:22.699
There's a lot of capabilities that are much more mature in Europe than in China when it comes to early science,

569
00:23:23.339 --> 00:23:24.079
translation,

570
00:23:24.859 --> 00:23:27.380
but also experience running global clinical trials.

571
00:23:28.640 --> 00:23:32.881
That's why I think there are a lot of opportunities and some of them are starting to show up.

572
00:23:32.961 --> 00:23:34.222
Like just a couple of days ago,

573
00:23:34.882 --> 00:23:35.402
Sofinova,

574
00:23:35.442 --> 00:23:37.963
the French venture capital fund,

575
00:23:38.063 --> 00:23:38.503
announced.

576
00:23:39.371 --> 00:23:45.676
the creation of a new company that is basically based on some assets,

577
00:23:45.837 --> 00:23:47.438
molecules that were sourced in China,

578
00:23:48.038 --> 00:23:48.699
in immunology,

579
00:23:48.919 --> 00:23:52.682
and those assets are now developed by a team of former executives from Sanofi,

580
00:23:53.283 --> 00:23:59.047
who are very experienced in the immunology field and are going to develop that work for Europe and maybe US as well at some point,

581
00:23:59.048 --> 00:23:59.287
I guess.

582
00:23:59.988 --> 00:24:01.950
So those models can already work.

583
00:24:02.070 --> 00:24:02.910
But this is more,

584
00:24:03.451 --> 00:24:05.052
I wouldn't say anecdotal,

585
00:24:05.112 --> 00:24:07.854
but it's just an early sign of what could happen on a much,

586
00:24:07.894 --> 00:24:08.635
much bigger scale.

587
00:24:09.555 --> 00:24:10.836
One gut reaction from

588
00:24:11.476 --> 00:24:12.177
Europeans can be,

589
00:24:12.737 --> 00:24:12.857
OK,

590
00:24:12.978 --> 00:24:14.679
if we open the door to China and pharma,

591
00:24:14.999 --> 00:24:17.801
maybe they will swallow us whole.

592
00:24:17.802 --> 00:24:20.503
I think people are afraid that history will repeat itself.

593
00:24:20.583 --> 00:24:20.703
And,

594
00:24:20.704 --> 00:24:20.943
you know,

595
00:24:20.944 --> 00:24:29.629
we have so many stories about the high speed train technology and the aircraft carrier technology and a bunch of technology being stolen by China.

596
00:24:29.689 --> 00:24:30.470
But the truth is,

597
00:24:31.010 --> 00:24:32.491
if Europe doesn't engage Asia,

598
00:24:32.651 --> 00:24:32.871
again,

599
00:24:32.872 --> 00:24:33.552
it's not just China,

600
00:24:33.572 --> 00:24:34.553
it's also Korea and

601
00:24:35.133 --> 00:24:36.054
Singapore and Japan.

602
00:24:36.094 --> 00:24:36.474
And,

603
00:24:36.475 --> 00:24:36.854
you know,

604
00:24:36.855 --> 00:24:37.955
they will move on on their own.

605
00:24:38.075 --> 00:24:39.536
They will find other ways anyway.

606
00:24:39.656 --> 00:24:43.260
And a lot of the best science will start to happen there.

607
00:24:43.940 --> 00:24:47.924
Application of AI to healthcare is happening there faster than in Europe.

608
00:24:48.805 --> 00:24:52.668
So there's actually a world as well where Europe refuses to engage with China,

609
00:24:52.909 --> 00:24:53.129
says,

610
00:24:53.169 --> 00:24:53.289
OK,

611
00:24:53.429 --> 00:24:53.929
you know what,

612
00:24:53.990 --> 00:24:55.371
we are going to wall them off.

613
00:24:56.055 --> 00:24:56.255
You know,

614
00:24:56.275 --> 00:24:57.156
stay away from us,

615
00:24:57.256 --> 00:24:57.936
don't engage.

616
00:24:57.937 --> 00:24:59.197
It's too dangerous.

617
00:24:59.198 --> 00:25:00.218
They're going to steal our IP,

618
00:25:00.458 --> 00:25:00.878
blah,

619
00:25:01.138 --> 00:25:01.379
Okay,

620
00:25:01.719 --> 00:25:01.979
fine.

621
00:25:01.980 --> 00:25:03.240
You do that in 10 years.

622
00:25:04.020 --> 00:25:04.621
In 10 years,

623
00:25:04.622 --> 00:25:07.443
there will be still a very important US ecosystem.

624
00:25:07.563 --> 00:25:08.904
There will be a very,

625
00:25:08.964 --> 00:25:10.425
very important Asian ecosystem.

626
00:25:10.905 --> 00:25:12.126
And Europe will be way behind.

627
00:25:12.186 --> 00:25:13.207
And then it will be too late.

628
00:25:14.167 --> 00:25:18.010
Because the attractiveness and the strength that Europe has will be gone by then.

629
00:25:18.011 --> 00:25:22.293
They will not nearly be as attractive or important to the Chinese companies that they are today.

630
00:25:22.433 --> 00:25:24.354
So I think there's a window to act.

631
00:25:25.495 --> 00:25:27.717
Not engaging cannot be the right solution.

632
00:25:28.298 --> 00:25:31.000
Not engaging means becoming more and more dependent on the U.S.

633
00:25:31.080 --> 00:25:31.921
actually in this industry.

634
00:25:32.662 --> 00:25:35.644
I would like then to conclude on this solution.

635
00:25:35.704 --> 00:25:38.086
What if Europe decides to make different choices?

636
00:25:38.187 --> 00:25:39.528
What can we imagine?

637
00:25:39.568 --> 00:25:42.310
You started two expensive partnerships.

638
00:25:42.671 --> 00:25:44.332
Can you maybe give a bit of details?

639
00:25:45.273 --> 00:25:45.873
I think first,

640
00:25:46.694 --> 00:25:47.455
at first,

641
00:25:47.635 --> 00:26:07.208
company level and even some of the venture capital fund i think some companies some natural capital from europe are already acting on the asia opportunity and actively engaging they are ramping up their team and their capabilities on the ground in china they are doing deals they are learning from each other they are building trust all of it is happening i think there's a question

642
00:26:07.248 --> 00:26:17.055
mark on the political will though in brussels or other government about how they see that are they going to be supportive of that and in particular are they going

643
00:26:17.255 --> 00:26:17.915
to welcome

644
00:26:18.296 --> 00:26:21.178
Chinese innovation in French or German hospitals?

645
00:26:22.839 --> 00:26:27.142
And are they going to see it as an alternative source to the traditional source of innovation?

646
00:26:28.603 --> 00:26:29.324
That's a key question,

647
00:26:29.944 --> 00:26:32.526
because there is obviously a lot of regulatory implications,

648
00:26:32.606 --> 00:26:35.228
pricing implications that will need to be sorted out.

649
00:26:35.728 --> 00:26:39.351
So I think we need to see that response from Brussels to shut up.

650
00:26:39.811 --> 00:26:42.553
I've been happy to see that

651
00:26:43.334 --> 00:26:44.555
Brussels is working on...

652
00:26:44.915 --> 00:26:45.936
European competitiveness,

653
00:26:46.016 --> 00:26:48.197
there's a lot of reports coming up recently.

654
00:26:49.078 --> 00:26:51.199
What struck me though when I read those reports,

655
00:26:51.840 --> 00:26:53.681
or summary of the report because they're quite long,

656
00:26:55.502 --> 00:26:57.043
is that it's very inward looking.

657
00:26:57.263 --> 00:27:00.586
It doesn't actually talk about collaboration with the rest of the world.

658
00:27:00.646 --> 00:27:01.506
It's very much about,

659
00:27:01.546 --> 00:27:01.746
okay,

660
00:27:01.806 --> 00:27:05.169
how do we transcend the European capabilities within Europe,

661
00:27:05.209 --> 00:27:05.569
basically,

662
00:27:06.089 --> 00:27:07.210
which I think is the wrong answer.

663
00:27:07.370 --> 00:27:08.271
The answer has to be,

664
00:27:08.311 --> 00:27:08.491
yes,

665
00:27:08.531 --> 00:27:08.911
do that,

666
00:27:08.951 --> 00:27:11.753
but also figure out how we can engage with Asia.

667
00:27:12.374 --> 00:27:12.674
Again,

668
00:27:12.714 --> 00:27:14.315
I think an encouragement moment.

669
00:27:14.475 --> 00:27:17.877
to the big pharma and the VCs to partner more with Asia would be great.

670
00:27:18.698 --> 00:27:23.041
Maybe some policies to attract reassuring of manufacturing to Europe through JVs.

671
00:27:24.041 --> 00:27:24.302
Maybe,

672
00:27:24.482 --> 00:27:24.702
again,

673
00:27:24.722 --> 00:27:27.304
some more collaboration on clinical trials.

674
00:27:27.824 --> 00:27:28.184
Learning,

675
00:27:28.244 --> 00:27:28.725
for example,

676
00:27:28.785 --> 00:27:33.348
from Australia or Singapore how to run clinical trials in Europe to do it faster,

677
00:27:33.468 --> 00:27:36.250
give more credits for innovative companies.

678
00:27:36.930 --> 00:27:39.432
So there's a lot of lessons that we can learn.

679
00:27:39.992 --> 00:27:40.753
More exchanges,

680
00:27:40.853 --> 00:27:44.135
more bridges between the two regions would be very important.

681
00:27:44.675 --> 00:27:47.316
And I'm not saying that we should prioritize with the U.S.

682
00:27:47.396 --> 00:27:47.776
The U.S.

683
00:27:47.836 --> 00:27:49.777
needs to be still a strong partner to Europe.

684
00:27:50.157 --> 00:27:51.318
We just need a rebalancing,

685
00:27:51.998 --> 00:27:52.218
right?

686
00:27:52.278 --> 00:27:57.360
And the rebalancing needs to be also welcomed by European decision makers.

687
00:27:57.460 --> 00:28:00.702
I think that's important because if they keep this ambiguous stand,

688
00:28:01.422 --> 00:28:02.002
you know what,

689
00:28:02.262 --> 00:28:02.542
China,

690
00:28:02.823 --> 00:28:03.863
this is a threat to us,

691
00:28:03.864 --> 00:28:04.683
we shouldn't do it.

692
00:28:05.384 --> 00:28:07.284
We screwed up in so many other industries.

693
00:28:07.344 --> 00:28:09.065
They are going to take advantage of us again.

694
00:28:09.105 --> 00:28:09.345
You know,

695
00:28:09.405 --> 00:28:13.267
that's a mindset that will lead to basically stay behind.

696
00:28:13.387 --> 00:28:17.249
I think we need to engage in a smart way with thinking about sovereignty,

697
00:28:17.909 --> 00:28:19.350
thinking about the strengths of Europe,

698
00:28:19.430 --> 00:28:21.811
leveraging those strengths and engage.

699
00:28:21.951 --> 00:28:22.831
And if we do that,

700
00:28:22.931 --> 00:28:24.272
there's so many opportunities.

701
00:28:24.332 --> 00:28:29.474
Some of them we cannot even think about today because as part of the story of China,

702
00:28:29.614 --> 00:28:31.015
things move so fast there.

703
00:28:31.135 --> 00:28:35.857
But what you believe to be the answer today is quite different from what it was three years ago.

704
00:28:36.057 --> 00:28:39.179
And I'm sure they're different from what it will be in the next decade.

705
00:28:40.151 --> 00:28:40.311
Yeah,

706
00:28:40.491 --> 00:28:41.011
engaging,

707
00:28:41.091 --> 00:28:42.012
building more bridges,

708
00:28:42.092 --> 00:28:44.053
having political cover to do more things.

709
00:28:44.873 --> 00:28:50.035
This is so diverse and it also needs a lot of creativity to imagine win-wins.

710
00:28:51.636 --> 00:28:52.476
I think at the end of the day,

711
00:28:52.536 --> 00:28:53.257
that's my position.

712
00:28:54.397 --> 00:28:56.598
Innovation is for all patients around the world.

713
00:28:56.998 --> 00:29:00.740
The innovation today is driven largely by a very small population,

714
00:29:00.940 --> 00:29:05.142
largely in the US and then very affordable people in Europe and Japan and some nations,

715
00:29:05.182 --> 00:29:05.622
Switzerland,

716
00:29:05.662 --> 00:29:06.282
things like that.

717
00:29:07.243 --> 00:29:07.663
We need...

718
00:29:07.923 --> 00:29:09.865
innovation to be accessible to much,

719
00:29:10.165 --> 00:29:11.907
much larger population around the world.

720
00:29:12.427 --> 00:29:13.008
To do that,

721
00:29:13.048 --> 00:29:15.671
we need to drive the cost of research and development down a lot,

722
00:29:16.211 --> 00:29:18.353
which means clinical trials happening all over the world.

723
00:29:18.653 --> 00:29:21.376
We need to get manufacturing costs to go down a lot as well,

724
00:29:21.416 --> 00:29:22.577
and we need pricing to change,

725
00:29:23.158 --> 00:29:23.398
right?

726
00:29:23.518 --> 00:29:29.104
So that governments and private pay even can afford giving access to innovation to a much larger population.

727
00:29:29.712 --> 00:29:31.893
And I think that can be a better world.

728
00:29:31.933 --> 00:29:32.873
And I think to do that,

729
00:29:33.374 --> 00:29:36.775
you need the three ecosystems to collaborate and compete where it makes sense.

730
00:29:37.475 --> 00:29:37.656
Okay,

731
00:29:37.896 --> 00:29:38.336
interesting.

732
00:29:38.876 --> 00:29:46.259
If you could put one thing on the desk of every European CEO or investor or policymaker tomorrow morning,

733
00:29:47.040 --> 00:29:47.800
just one,

734
00:29:48.640 --> 00:29:49.501
what would it be?

735
00:29:50.181 --> 00:29:55.143
It would be a return ticket to Shanghai to go see on the ground what's actually going on,

736
00:29:55.604 --> 00:29:56.504
spend a week there.

737
00:29:56.964 --> 00:29:57.805
Meet with the CRO,

738
00:29:57.885 --> 00:29:58.765
the CDMOs,

739
00:29:58.905 --> 00:30:03.208
meet with some of the entrepreneurs who come back from the U.S.

740
00:30:03.288 --> 00:30:05.870
and have great ideas on how they start companies in China.

741
00:30:06.511 --> 00:30:15.276
Meet with some of the R&D heads of European companies who are based in China and move away from the myth of what China is to really understand what's going on on the ground.

742
00:30:15.357 --> 00:30:16.838
So go there.

743
00:30:16.898 --> 00:30:21.701
I think most people who go there actually change their opinion pretty radically about,

744
00:30:21.841 --> 00:30:22.121
you know,

745
00:30:22.241 --> 00:30:26.344
how real the innovation is and whether or not we can actually do things together.

746
00:30:27.092 --> 00:30:27.392
Franck,

747
00:30:27.393 --> 00:30:29.473
thank you very much for what you've shared today.

748
00:30:29.593 --> 00:30:31.234
This is ultimately one thing,

749
00:30:31.314 --> 00:30:33.415
but an important idea.

750
00:30:33.535 --> 00:30:34.955
Europe is at crossroads.

751
00:30:35.956 --> 00:30:36.236
Yes.

752
00:30:36.656 --> 00:30:37.897
If I just put one plug,

753
00:30:37.937 --> 00:30:42.518
I just wrote an article about the topic that can be found on the BioCentury.

754
00:30:42.699 --> 00:30:43.519
It's free access,

755
00:30:43.619 --> 00:30:44.959
so there's no suppression.

756
00:30:46.320 --> 00:30:46.920
Yeah,

757
00:30:47.020 --> 00:30:49.441
the article is about

758
00:30:50.262 --> 00:30:51.122
Europe and China,

759
00:30:51.362 --> 00:30:51.482
and

760
00:30:52.263 --> 00:30:55.204
I call it the narrow path for Europe between China and the U.S.

761
00:30:55.364 --> 00:30:55.504
and

762
00:30:56.092 --> 00:30:59.517
Hopefully that will help people to continue the conversation.

763
00:31:00.779 --> 00:31:02.442
Thank you for listening to PharmaMinds.

764
00:31:02.602 --> 00:31:04.265
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765
00:31:04.465 --> 00:31:06.789
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766
00:31:06.969 --> 00:31:09.312
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767
00:31:09.473 --> 00:31:10.614
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768
00:31:10.775 --> 00:31:11.476
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