Helicon CEO Peter Abrahamson On Exploiting Niche Markets In China: An Interview With PharmAsia News

This exclusive interview is reprinted from PharmAsia News - May 27, 2008

Find out how one Australia-based company is making the most of the niche market opportunities in the specialty medical technology markets of China and North Asia in our exclusive interview with Helicon's CEO Peter Abrahamson.

Perth, Australia-based Helicon was established in 2003 to identify and exploit niche market opportunities in the specialty pharmaceutical and health care markets of China and North Asia. The company has licensed exclusive marketing rights for four products: Volplex, Collatamp, MedWrap with Microban and Recell. PharmAsia News' Australian bureau recently sat down with Helicon CEO Peter Abrahamson to discuss the company's business strategy in China.

PharmAsia News: Helicon is a fairly new company. Can you talk about your business model and what your strategy is in Asia?

Peter Abrahamson: Our focus is China. What we do is we license exclusively products that have regulatory approval in the U.S. and/or Europe, so they have gone through that process, and then we register them on behalf of companies and then commercialize them. So we deploy our own sales and marketing teams to generate demand and we take a cut from the sales.

PharmAsia News: So you apply for a license with China's State FDA. How long does that process generally take?

Abrahamson: A year to a year and a half.

PharmAsia News: And then do you work with Chinese distributors?

Abrahamson: Correct. We have an exclusive arrangement with a company called DKSH, which is a Swiss-based company that has about 140 years of experience in the Pacific, and they do the physical logistics. They clear the products through customs, they warehouse it and then they distribute it through the various hospitals all around China. And then they also do the collection. So Helicon has the guarantee that it will be paid at the end of the day for product that is distributed through these hundreds of thousands of hospitals right across the country.

PharmAsia News: So some of these products are coming from major manufacturers, is that right?

Abrahamson: Yes, Volplex is manufactured in Europe, MedWrap is manufactured in the U.S., ReCell is manufactured in the U.S., Collatamp is also manufactured in Europe.

PharmAsia News: It looks like you've licensed mostly devices. Is that the market you are focusing on?

Abrahamson: We've got one pharmaceutical at this point - that's Volplex, a plasma substitute. All the others are devices.

PharmAsia News: So how do these products fill a need in China?

Abrahamson: Volplex was our first product. It's a plasma substitute. The reason we sought that out was that the blood donation market is not as well controlled, as say the U.S. or Australia, and there were some pretty sad cases where donated blood was not properly checked for hepatitis and HIV, and needless to say there were some horrible consequences, so the demand for plasma substitutes, which are guaranteed to be infection free, is very strong in China.

We also sought out the product called ReCell, which was developed by an Australian, Fiona Wood. She developed this clever technology to treat wounds and burns and … we've seen an opportunity for cosmetic use in China where people who have birthmarks or scars, and this product is able to return the skin to its original state.

The incidence of post-surgical infection is very high, and that's why we went after Collatamp, which prevents the potential for severe post-surgical infection and also has a role to play in a topical sense for people with diabetic ulcers and the incidence of gangrene. This product has a high antibiotic potential and when applied properly can prevent that and fulfills an important niche segment in that market.

PharmAsia News: I was going to ask you about the intellectual property environment in China, but with your products and business model I assume you're not holding any IP are you?

Abrahamson: It's a good question. The whole issue of IP is a focus of a lot of attention by the Chinese authorities. But there is always the risk, and the products that we've chosen are very difficult to copy and that's one of the reasons we've chosen these products. But the risk is always there.

PharmAsia News: How does your company model fit in with that vulnerability in China?

Abrahamson: I was the company VP for a company called Allergan, and we had a contact lens solution product. … And one day one of our sales people in China presented me with a bottle in a box and on looking at it I had great difficulty in distinguishing it from the real thing. What we did in China was go to the commercial police and they went to the manufacturing unit making this product. There is a lot of support in China to support companies that are bringing in high-tech products to protect them from copies.

But things like Collatamp and Recell are extremely difficult to copy, and because we're talking about a fairly defined market in terms of the people who are using it, we will be able to monitor that very closely.

PharmAsia News: Is that one reason that the device market has really flourished in China because it is easier to protect devices than drugs?

Abrahamson: It is one of the reasons, absolutely.

PharmAsia News: And what about the venture capital environment in China?

Abrahamson: I am told it's booming, but we haven't accessed it.

PharmAsia News: So you haven't gone for those types of deals and partnerships? Is that coming for you?

Abrahamson: The company is fairly new, and as we develop and bring in more products, and as our profile is increasing we are getting approached in a number of areas.

PharmAsia News: You have distribution partners now in China, Hong Kong and South Korea. Anywhere else?

Abrahamson: No, but we are talking to a number of people, but those are the ones that we have signed.

PharmAsia News: Helicon is targeting tier three and tier two hospitals. What is the difference?

Abrahamson: A tier three hospital is a huge institution - 1,200-1,500 beds - highly sophisticated, well resourced, paperless systems that put through hundreds and hundreds of patients every day. They have the full range of services in terms of surgery. The concept of a general practice as it is in Australia or the U.S. doesn't exist. So if you have a broken arm or a common cold or you are going in for surgery, you go to one of these major hospitals.

Tier two hospitals tend to be smaller and may in some cases be specialized in a particular area.

And we are going after tier three hospitals because that is where the money is. That is where patients go who can afford to have sophisticated surgery, and also tend to be in the larger cities.

PharmAsia News: Since a product has already been approved in the U.S. and Europe, do you have to conduct clinical trials in China to get SFDA approval?

Abrahamson: If it's a pharmaceutical, yes. And certain medical devices. All the products that we currently have did not require trials. Volplex is still an open issue. It is a pharmaceutical and we have put a case to the SFDA that says we shouldn't need one by the virtue of what it is. And I don't know how you would run a clinical trial with a product like Volplex where you have people in ICU who have major trauma, and then choose who gets Volplex and who doesn't.

PharmAsia News: Yes, there have been a few cases in the U.S. where issues of informed consent were the core issue.

Abrahamson: But this product has European approval and it is guaranteed to be BSE- free of the sources of raw material, and we expect to hear back in four or five months.

PharmAsia News: When did you submit that application?

Abrahamson: We submitted in September. As part of the submission we had to show that the product was sterile and that it meets all the QA [quality assurance] standards, so we had to submit samples to a designated laboratory in Shanghai to make sure that what is in the product is what we claim it is.

PharmAsia News: So you spend half your time in Shanghai and half your time in Perth, Australia. What role does Helicon play in Australia?

Abrahamson: We're publicly listed in Australia. What I'm doing is speaking to brokers in Melbourne and Sydney.

PharmAsia News: What role does Australia pharma and biotech companies play in Asia generally?

Abrahamson: For example, one of our products, Recell, is an Australian invention, and we're talking to other companies in Australia, so this is where the growth is. Australia is just closer to Asia.

- Tamra Sami

Click here for a 30-day free trial of PharmAsia News: Drugs - Biologics - Devices