TCM Still Struggling to Find Cure for Its FDA Woes

12.09.2013 17:47

TCM Still Struggling to Find Cure for Its FDA Woes

Traditional Chinese medicines usually do not get very far in U.S. testing, and even the one that has made it into the final round has a ways to go

By staff reporter He Chunmei and intern reporter Li Huiling

(Beijing) – In November, the traditional Chinese medicine (TCM) Fuzheng Huayu Tablets passed the second phase of the U.S. Food and Drug Administration’s (FDA) clinical testing.Before this, only one TCM drug had cleared the second of the three phases needed for a medicine to hit the U.S. market. That was Compound Salvia Droplet Pills (CDSP), made by the Tasly Group of Tianjin. CDSP has still not passed FDA’s third phase.

This means that no compound TCM drug has entered mainstream U.S. medical markets.

The first phase of FDA studies are usually conducted in healthy volunteers to determine the drug’s most frequent side effects. The emphasis during the second phase is on effectiveness. This step aims to obtain preliminary data on whether the drug works in people who have a certain disease or condition.

Phase three studies gather more information about safety and effectiveness, studying different populations and different dosages, and using the drug in combination with others.

TCM products include patented drugs, herbal ingredients and decoction strips, which contain ingredients that result from boiling a substance. Compound TCM drugs are one variety of the patented type.

For a long time, TCM herbal ingredient products such as plant extracts and decoction strips accounted for more than 80 percent of TCM exports from China. Patented TCM drugs have always accounted for a small proportion. In 2012, China exported US$ 270 million in patented TCM drugs, primarily to Hong Kong, Japan, Singapore and Australia. These patented drugs remain almost unheard of in Europe and America, where the majority of TCM products are foodstuffs, health products or plant ingredients, primarily consumed by Chinese communities.

Data from the China Chamber of Commerce for the Import and Export of Medicines and Health Products indicates that as of the third quarter of this year, the total export value of patented TCM drugs was down to US$ 195 million.

Other data shows that Japan accounts for 80 percent of exports of patented TCM drugs and South Korea contributes 15 percent. China – the originator of TCM – exports only 3 to 5 percent.

Most people attribute Westerners’ inability to accept TCM to cultural differences and differences between Western and Chinese medical theory.

Shi Lichen, a senior partner at the Beijing-based consulting firm Alliance PKU Management Consultants Ltd., said the reason patented TCM drugs made in China are not leaving the country include questions over the effectiveness of  ingredients and mechanisms, poor controllability and poor quality standards.

The best choice for the internationalization of patented TCM drugs is to apply to register them with nations that are known to have high standards for drug regulation, thereby increasing the quality of production and research and development. However, as of now only a precious few Chinese drug companies have tried to make inroads with the FDA. Not many companies are interested in entering the European Union, where drug regulation is relatively more lax.

The reasons for that are that getting the go-ahead from the FDA for a drug costs a minimum US $1 billion, the process takes a decade or more and the chance of success is one in 6,000. Meanwhile, if a company wants to offer drugs on European or American markets, it must adhere to European or American standards, meaning that a pharmaceutical company must completely overhaul its agricultural centers, which grow base ingredients. All of that requires new investments of several hundred million yuan, the economics of which can stop even the most aggressive pharmaceutical company dead in its tracks.

A Shortcut

In the 1990s, the Ministry of Science and Technology chose a handful of patented TCM drugs to submit to the FDA for clinical testing. CDSP survived the first two steps, but the rest were never heard from again.

CDSP is used to treat coronary heart disease and angina. On December 9, 1997, it passed the FDA’s first phase of testing, but did not clear phase two until 2010. Over those 13 years, Tasly spent several hundred million yuan on research and development.

The Shanghai Sundise Traditional Chinese Medicine Co. Ltd. submitted applications for Fuzheng Huayu to the FDA in 2006. It was quickly approved for testing, and after three years of case work, it formally entered into phase two of clinical testing. This step cost another three years and 70 million yuan.

Sundise chairman Bian Huashi said that compared to the routes taken by other compound TCM drugs, Huazheng Fuyu was afforded a shortcut. His company’s drug targets liver fibrosis, a condition that Western drugs have never been able to treat. This was precisely the reason the drug initially piqued the FDA’s interest.

Bian said the FDA attaches great value to data, and so the completeness and symmetry of information generated during the experimentation process were of utmost importance. In 2006, a company report indicated that of the 56,000 subjects who took Fuzheng Huayu during the first step of testing, not a single one had experienced an adverse reaction.

Over the following three years, Sundise made great effort in addressing production management, quality control and information systems. The company installed software frequently used in FDA clinical testing and overhauled its electronic data management system, making it the first company in Asia to use that system.

Most other compound TCM drugs that have applied for FDA approval have all been rejected outright or eliminated in the second phase due to lack of reliable evidence or poor clinical testing.

Bian said Fuzheng Huayu has just entered the preliminary stage of phase three clinical testing. It is expected that the drug will finish this step in 2019.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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