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After Decade as CRO, Shanghai Biochip Plans Move into Chinese Molecular Dx Market

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By law, Chinese samples cannot leave China. That fact has made Shanghai Biochip a partner for international pharmaceutical companies seeking to conduct various trials in the country. But the 11-year-old company, based in the world's largest city, envisions moving beyond its role as a contract research organization into the molecular diagnostics market, according to an executive.

Huasheng Xiao, vice president of SBC, told BioArray News during a visit to the firm's headquarters last month that the company will in January begin accepting samples for various clinical tests via a subsidiary called Shanghai Biomedical Laboratory, of which he is general manager. While he did not disclose which conditions SBC will begin testing for, he said that microarray-based assays will be included in the new venture's future menu.

"We will make the decision based on clinical needs," Xiao said. "If it requires array technology, then we will use array technology," he said. "If it requires real-time PCR, we will use RT-PCR."

SBC already has a bevy of genomics research instruments at hand. In addition to RT-PCR, next-generation sequencing, and other analysis options, it offers array-based services on the Affymetrix, Agilent Technologies, and Illumina microarray platforms. In addition, SBC manufactures DNA, protein, and tissue microarrays. As the firm is supported in part by the Chinese government, it also acts as the National Engineering Research Center for Biochip Design and Engineering at Shanghai.

These resources have made SBC a partner for a number of large pharmas. Xiao named AstraZeneca and Roche as collaborators, while the company's website lists GlaxoSmithKline and Merck as partners.

But Xiao sees the firm expanding into the promising clinical market to become a third-party provider of clinical testing services, akin to Laboratory Corporation of America or Quest Diagnostics in the US. He said that Shanghai Biomedical Laboratory is at the "final stage" of securing Chinese Ministry of Health certification to offer clinical tests.

Xiao mentioned pharmacogenomics to guide cancer treatment as a potential offering for the firm. He said that SBC could introduce chromosomal microarray analysis in the future, but noted that such a test would require clearance from the China Food and Drug Administration, or SFDA, before SBC could make it available to its customers. He added that CMA is currently being offered mostly via hospital labs as a laboratory-developed test.

Before a test can be submitted for SFDA review, it must be cleared in the manufacturer's home country, he noted. Affymetrix and Illumina, two of the firms that sell arrays for cytogenetic analysis, both intend to submit their tests to the US Food and Drug Administration next year (BAN 12/4/2012).

Ultimately, SBC's test menu will include a mix of externally and internally produced products, Xiao said, noting that the firm has an R&D department developing new tests. He did not elaborate.

A 'Big Pie'

SBC signaled its interest in the clinical market in September when it announced a deal with Toronto-based GeneNews to establish a center for personalized medicine based on GeneNews' Sentinel gene expression profiling platform.

As part of the deal, SBC gained the non-exclusive right to market and sell GeneNews' ColonSentry test in China. ColonSentry is a blood-based assay for the early-stage detection of colorectal cancer.

PerkinElmer last month paid $38 million to acquire Chinese infectious disease diagnostic firm Shanghai Haoyuan Biotech, another deal that industry participants said shows international interest in the Chinese clinical market. PerkinElmer also paid $64 million to acquire Shanghai-based infectious disease test provider Sym-bio Lifescience three years ago

"The market is growing and the potential is enormous," Simon Sheng, Affy's general manager for its China business, told BioArray News in an interview during a workshop held last month in Hangzhou, a city just west of Shanghai. "Everybody agrees that the China market is exploding, not only on the research side but on the clinical side." (BAN 11/27/2012)

Another local player is Beijing-based CapitalBio, which, like SBC, serves as a service provider and has been branching out into the clinical market, with an array-based neonatal screening test for deafness gene mutation carriers currently under evaluation in three large Chinese cities (11/15/2012).

According to SBC's Xiao, the medical market in China is a "big pie," about a quarter of which is diagnostics, including molecular diagnostics. And of that quarter, Xiao said that 99 percent of diagnostic testing is currently done on site in Chinese hospitals, rather than by third-party testing services.

"Hospitals in China are well-funded, powerful, and can buy equipment," Xiao said. "They have people to run the tests and don't want to outsource this business out to third parties," he said. The remaining one percent of testing that is done by third-party providers comes from small hospitals that are not as well-funded as first-tier hospitals in larger cities.

To win business, Xiao said that SBC will promote its "technology expertise" and "reputation as one of the pioneers of this industry," combined with "market forces" that will expand the Chinese clinical market. The company is also planning to serve different regions by opening medical labs there, with sites planned in the cities of Chengdu, located in central China, and Shandong, a coastal province south of Beijing.

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