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Jack Zhai of ABI on the Emerging Chinese Microarray Market

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At A Glance

Name: Jack Zhai, Product Manager, Expression Array Business at Applied Biosystems.

Professional Experience: Product Manager of Microarray Scanning Technology, Axon Instruments; Senior Application Scientist, BioGenex Laboratory.

Education: PhD, cell and molecular biology, University of Wisconsin-Madison; Hooper Foundation Postdoctoral Fellowship, University of California, San Francisco.

Jack Zhai is the product manager for Applied Biosystems' expression array business and he has spent seven of his 15 years in life science business developing and selling expression-related products.

In addition to this professional experience, he is also highly knowledgeable about the Chinese microarray market. For the past six years he has served as an adjunct professor at the Shanghai Institute of Metallurgy at the Chinese Academy of Sciences. He is also recognized as a biotechnology authority in the Asia Pacific region and has been invited by Chinese government and the city of Hong Kong to give speeches on the state of the Chinese biotech business.

While interviewing Zhai to learn more about ABI's efforts to stake its claim on a piece of the Chinese microarray market, BioArray News decided to take the interview beyond ABI to get a better picture of the market.

Who are the primary customers in China? Are the major players selling to research labs, budding pharmaceutical companies?

From my personal knowledge, if you look at the Chinese market, the big market there is the diagnostic market, because the government really promotes disease prevention programs and early diagnosis. That is the biggest market. And they do have a lot of diagnostic biochips. [They have developed a] microarray chip for diabetes, and some kind of other diseases. So, that's the biggest market segment. The next one would be research, and the last one would be pharmaceutical. Actually, pharmaceutical is a really, really small segment. As you may or may not know, a lot of pharmaceutical companies in China don't do R&D at all. What they do is get the raw materials from overseas, make a product in China, and then sell the product in China. This is their business model.

And who are the major players in the Chinese market today?

There are a couple of big players. First of all we have to separate the Chinese companies and the foreign companies. So the foreign companies are Affymetrix, Agilent, ABI, and Illumina. And also GE Healthcare has representatives there as well. Then there are the Chinese players. Of the Chinese players, number one is CapitalBio and number two is Shanghai Biochip. There's another one in X'ian, the oldest city, called LifeGen.

I gather that the Chinese companies clearly have the advantage here with regards to developing their customer base because they are based there.

Yes, you are right.

So what is it going to take for foreign companies to really crack into that market then, when they are up against the Chinese players?

Relatively speaking it's a small market. I still think that current platforms — Affy platforms, Agilent, AB, whatever — they are still [sold] to the research segment, but not the diagnostic segment at all. Of them all, it might be Affy [that breaks into the diagnostic segment] because they got their scanner approved by the US Food and Drug Administration, and they are working with Roche as well. So that part can go into the diagnostic market. But I would say for other firms, they still target the research segment.

Perhaps you can also tell me about your company…

We at ABI have a big sales force. So we have about 60 people now, but we focus only on marketing on the mainland.

To researchers only?

Well, it's hard to say. We just have so many product lines. If you are talking about the 1700 Chemiluminescent Microarray Analyzer, I believe we target the clinical research segment and also basic research segment of the market.

What products are you really focused on selling?

We have a lot of products, but I can say that we are doing extremely well in the Chinese market selling the sequencer, synthesizer, and real-time PCR for the microarray platform.

Is the Chinese government still as willing as it has been in the past few years to invest in these kinds of technologies?

I believe they still have the interest to develop these products. Now it is getting more mature. It is not like five years ago when everybody wanted to do a microarray. A lot of institutions are getting mature [about the technology]. They know why they want to use microarrays. And the government, of course, they always support it.

That is why the two big companies [CapitalBio and Shanghai Biochip] can survive. Basically, they are owned by the government. The government invests a lot of money in these companies.

Are there any chances for foreign businesses to get any money from the Chinese government?

It's tricky because you are able to get the money, however, once you get money what they want you to do is build your office and buy the instruments. And in the end you don't have money to do real development. So if you can go to any [Chinese chip vendor's headquarters], you would be surprised and impressed because all the equipment and infrastructure is much better than the labs in the US. However, they don't have money to do development. That's the problem for Chinese biotech and also for a lot of research institutions as well.

Do you think China will be able to compete with India in regards to the amount of attention that country is getting from global biotech?

Well it depends on what kind of business. There are a lot of IT companies, and a lot of semiconductor companies in China already. That's ok to set up these kinds of things in China, because it's labor intensive, but biotech I don't know. I don't know if it's wise to set up facilities in China. There are a couple of reasons; number one, biotech is not labor intensive. Number two, I am still concerned about their research level. That's not just me there are also a lot of American companies that feel like that. Like quality control. How do they ensure QC? That is difficult to control.

I think there are only a few businesses you can do in China. If you make hardware or an instrument and it works, that's something you can do.

Clinical trials are the kind of business you can set up in China.

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