Large biopharma companies looking at China assets right now, says Goldman Sachs Salveen Richter

SHARE COMPARES TO THE ESTIMATE OF $11.71. THE COMPANY, ALSO ANNOUNCING IT IS BUYING SPIKED AID FOR $350 MILLION. >> THE U.S. AND CHINA MAY BE RACING AGAINST EACH OTHER WHEN IT COMES TO AI, BUT WHAT ABOUT BIOTECH? LAST MONTH, THE CHINESE GOVERNMENT RELEASED A FIVE YEAR PLAN TO CEMENT ITS PLACE IN BIOTECH INNOVATION THAT INCLUDES OBTAINING 25% OF GLOBAL SHARE, FIRST IN CLASS DRUGS. SO HOW WILL THOSE PLANS AFFECT WESTERN BIOTECH COMPANIES? JOINING US NOW IS SALVEEN RICHTER. SHE IS THE LEAD U.S. BIOTECH ANALYST AT GOLDMAN SACHS WHO JUST RETURNED FROM A CHINA BIOPHARMA TRIP, A WHIRLWIND ONE AT THAT SALVEEN. GREAT TO SEE YOU. WHAT DID YOU FIND IN TERMS OF WHAT THEY'RE FOCUSING ON NOW? IT SEEMS LIKE THEY PLANTED THE SEEDS FOR THIS SORT OF BURST OF INNOVATION BURST OF ACTIVITY A LONG TIME AGO. YES. >> I AGREE. I MEAN, I THINK WE'VE SEEN A AN ACCELERATION HERE IN INNOVATION COMING OUT OF CHINA. BUT I WOULD SAY THAT MOST OF THE WORK THAT THEY'RE DOING NOW ARE REALLY FOCUSED ON ME. TWO ME BETTERS AND THEN REENGINEERING OF KNOWN TARGETS. BUT I THINK IT'S A MATTER OF TIME BEFORE WE SEE MORE NOVEL INNOVATION THAT'S PLAYING OUT. AND YOU'RE SEEING REALLY A FOCUS ON, ON WHERE THE THE WESTERN COUNTRIES, WHETHER IT'S THE US, EUROPE OR EVEN JAPAN, ARE LEADING IN AREAS OF ONCOLOGY AND INFLAMMATION AND IMMUNOLOGY. AND THEN ALSO MODALITIES LIKE ANTI-DRUG, ANTIBODY BASED DRUGS OR, YOU KNOW, CANCER VACCINES. WE'RE SEEING A MOVE INTO THAT. AND THEN, YOU KNOW, REALLY FOCUSING ON CREATING A STRONGHOLD IN AREAS LIKE OBESITY. >> THE FOCUS BY CHINA'S PHARMA COMPANIES ON THOSE KIND OF ITERATIONS OF EXISTING PRODUCTS HERE, WHAT DOES THAT MEAN FOR THE DURABILITY OF THOSE PRODUCT CYCLES? WHAT'S THE TAKEAWAY FOR FOR WESTERN COMPANIES? >> YEAH, I THINK THE TAKEAWAY IS THAT YOU MIGHT HAVE SHOT SHORTER PRODUCT CYCLES, RIGHT? BECAUSE YOU'RE GOING TO HAVE REALLY KIND OF THESE BETTER ASSETS THAT ARE COMING AND FLOODING THE MARKET. AND SO YOU HAVE TO THINK ABOUT HOW QUICKLY YOU'RE COMPETING, NOT JUST, YOU KNOW, THE LIFELINE TO THE END OF IP. AND SO WE ARE, WE DO THINK THAT WHEN YOU LOOK AT LARGE BIOPHARMA COMPANIES RIGHT NOW GLOBALLY, THEY ARE LOOKING AT CHINA AS A SOURCE OF ASSETS FOR THEM, PARTICULARLY GIVEN THERE'S ABOUT 440 BILLION WORTH OF DRUGS GOING OFF PATENT INTO 2032. BUT OVER TIME, I THINK IT'LL BE MORE A FUNCTION OF COMPETING. AND SO I THINK THE COMPANIES ARE TRYING TO FIGURE OUT HOW TO BE NIMBLE AROUND THIS AS WELL AS, YOU KNOW, LOOKING AT THEM AS A SOURCE OF BD. >> WE'VE HAD SO MANY DEALS SO FAR, CROSS BORDER SORTS OF DEALS, WHETHER THEY BE LICENSING DEALS OR BUYING SPECIFIC ASSETS. AND WE HAD ELI LILLY, WE HAD PFIZER, WE HAD ASTRAZENECA. ARE YOU ANTICIPATING A LOT MORE? DO YOU THINK THAT IT'S GOING TO BE A REAL SORT OF SOURCE OF OF COMPETITION ON THE M&A FRONT IN TERMS OF ACQUISITIONS TO SOME OF THE BIOTECH COMPANIES HERE? >> YES. I THINK THE WAY THE COMPANIES WILL VIEW IT IS, IS THERE A DISEASE AREA YOU WANT TO FOCUS ON? AND THEN WITHIN THE DISEASE AREA, ARE THERE TARGETS THAT WE WANT TO FOCUS ON. AND THEN THEY'LL LOOK AT THE FOUR GEOGRAPHIES AND DECIDE WHO'S THE, YOU KNOW, WHERE THE BEST ASSET LIES. AND SO I DO THINK THAT YOU WILL SEE THOSE PREMIUMS FOR THE BIOTECHS THAT ARE EX-CHINA, YOU KNOW, PULLING BACK POTENTIALLY. BUT I DO THINK THAT BEST IN CLASS, FIRST IN CLASS INNOVATION AROUND THE WORLD WILL STILL GET REWARDED. >> AND IN TERMS OF THE APPLICATION OF AI IN CHINA, WHAT DOES IT FOCUS THAT IS, IS IT AN ACCELERANT IN TERMS OF THE COMPETITIVE THREAT, OR IS IT USED IN OTHER WAYS? >> SO THEY'RE REALLY FOCUSED ON ON REALLY EXISTING TARGETS RIGHT NOW AND HOW THEY CAN IMPROVE UPON THEM. AND THEN THEY'RE DOING WORK, WHETHER BE IT USING AI, MACHINE BASED LEARNING TO KIND OF DETERMINE HOW THEY CAN CREATE NEXT GENERATION DRUGS OR GO AFTER TARGETS THAT WHERE WE HAVEN'T HAD DRUGS EXIST. AND SO WE'RE, WE'RE WORKING IN THAT DIRECTION. YOU'RE ALSO SEEING ROBOTICS BEING PULLED INTO THESE WET LABS, WHICH IS REALLY INTERESTING TO, TO SEE. AND, YOU KNOW, I WOULD SAY THE BIGGEST AREA IS REALLY ONCOLOGY HERE WHERE BASED ON ALL THESE ALMOST NOVEL NOVEL COMBINATIONS THAT ARE BEING CREATED, THAT REALLY CHINA HAS TAKEN A LEAD HERE. WE ARE SEEING A BIFURCATION OF INDICATIONS WITHIN CANCER, BUT THEN ALSO SUBPOPULATIONS WITHIN THOSE INDICATIONS. SO WE'RE GOING TO START TO SEE A LOT OF VARIED TREATMENT OPTIONS FOR PATIENTS. >> IN TERMS OF WHAT YOU SAW THE USE OF ROBOTICS, FOR INSTANCE, IN WET LABS. HOW DOES THAT RIVAL WHAT IS BEING DONE HERE WITH AI AND PHYSICAL AI? >> I THINK WITH AI, CHINA IS CLEARLY USING IT TO MINE IP, RIGHT? AND TO THINK ABOUT DRUG DEVELOPMENT, THEY'RE USING IT A LOT FOR EARLY STAGE DISCOVERY AND DESIGNING MOLECULES, LESS SO FOR NEW TARGET DEVELOPMENT. I THINK THAT WILL BE THE NEXT ITERATION. THE US IS ALSO DOING THAT. AND THEN I WOULD SAY, YOU KNOW, THEY'RE BRINGING IT IN OTHER WAYS IN TRIAL DESIGN IN MANUFACTURING, WE ARE SEEING INPUTS OF ROBOTICS HERE IN THE US. SO I THINK I THINK BOTH COUNTRIES ARE JUST BRINGING IN ALL THESE NEW TOOLS AS, AS A WAY TO, YOU KNOW, COMPETE AND STAY AHEAD IN, IN TERMS OF INNOVATION. >> DID YOU COME AWAY WITH ONE OR A COUPLE OF KIND OF ACUTE INVESTMENT IMPLICATIONS FROM, FROM WHAT YOU FOUND THERE? >> YEAH, I WOULD SAY SO ONE OF THE, THE FIRST, ONE OF THE BIG EVENTS WE HAVE YET TO SEE IS REALLY TRANSLATION OF CHINA DATA TO WESTERN DATA. AND THERE'S A COMPANY CALLED SUMMIT THAT WILL HAVE DATA GOING HEAD TO HEAD VERSUS KEYTRUDA, READING OUT IN FRONT LINE LUNG CANCER THIS YEAR. AND SO I WOULD SAY THAT WOULD BE A BIG EVENT FOR THE CHINA TO WESTERN TRANSLATION ASPECT. SO WE'RE WE'RE BULLISH ON THAT BASED ON, I THINK, WHAT WE'VE SEEN OUT OF THE CHINA DATA SET. WHAT I WOULD SAY IS THE LEADERS THAT ARE IN CHINA, YOU HAVE HUNGRY TO. HAN. SO YOU HAVE A SLEW OF COMPANIES THAT HAVE REALLY BEEN DOING PARTNERSHIPS WI