In early July, China’s Center for Drug Evaluation released draft guidance on the clinical development of oncology drugs that spooked investors, sending shares in some cancer drug makers and contract service providers spiraling downward.
An analyst asked Sartorius, a provider of products such as single-use equipment for the manufacture of biologics, about the potential impact of the changing Chinese regulatory environment on demand. Sartorius CEO Joachim Kreuzburg, while noting the Chinese market “will tick slightly differently than others do,” downplayed the likely impact of the changes on sales of single-use equipment on a July 21 conference call to discuss the company’s second quarter results.
“We don’t expect today that there will be a regulatory framework that reduces the utilization of, or the opportunity for, single-use technologies. We do not see any significantly changed regulatory or anyhow competitive environment in China at this point in time,” said Kreuzburg.
Sartorius has identified China as a growth opportunity and been rewarded with rising revenues. Sales in Asia Pacific grew 65.5% over the first half of the year, helped by the relatively easy comparison to the pandemic-affected first six months of 2020.
Single-use manufacturing technologies
Patrick Wood, the BofA Securities analyst who asked about the impact of Chinese regulations, said there is fairly high use of single-use manufacturing technologies in China. Sartorius faces competition from local manufacturers of stainless steel components.
“When it comes to stainless steel components, then, of course, you would find more local Chinese companies that are able to provide certain of such components than is the case in single-use technology. So there is clearly, as in other industries as well, maybe a slightly different overall situation in the Chinese market than in some other markets globally,” said Kreuzburg.
Products made in stainless steel bioreactors can still require single-use components in parts of the manufacturing process, as Kreuzburg explained in response to a question about the impact of the changes in the Alzheimer’s disease market following the accelerated approval of Biogen’s Aduhelm.
“Absolutely correct that maybe parts of the manufacturing for the Alzheimer’s medicine will be realized in stainless steel or it is partially already realized in stainless steel. However, there is a substantial single-use business, nevertheless,” said Kreuzburg.
The opportunity relates to single-use components used in filtration, purification, fluid management and other activities beyond the production of material in bioreactors.
