How to get approval in China as an European Dx Startup?
The Middle Kingdom has managed to do what other emerging markets are still far from doing: In just a few decades, the country's increasingly flourishing economy has almost conquered the markets for itself, for Europe and the USA are in no way inferior in terms of innovation, quite the opposite: Hotspots such as Dream Town in Hangzhou, Shenzhen or Beijing could soon seriously set Silicon Valley back as a pioneer. Their advantage: Ubiquitous information and communication technologies, deeply integrated into the everyday lives of their users, whereby among the nearly 1.5 billion people in China there are currently around 720 million Internet users, according to forecasts even 300 million more in the coming years.
In contrast to Western nations, digitization is no longer an issue in China. Instead, the innovative spirit is free and has almost evolutionarily recreated entire ecosystems. Apps such as WeChat have ubiquitously expanded the understanding of socio-technical systems. They offer their users the opportunity to manage all their areas of life (e.g. health, mobility free time and finance) within a single platform with just a few clicks. This was made possible by financial state support: The last limitations of the innovative spirit are gradually being overcome in the government as well, at least as far as the market conquest of modern ICT-based sectors is concerned. To this end, incubators have been created – efforts that have been linked to university education and to make it as easy as possible for young people to enter the lucrative system. The favourable domestic breeding ground also limits competition in the country as far as possible to domestic representatives, because due to the complex legal and bureaucratic framework conditions for international companies, the Chinese market remains largely unaffected by these, while the doors are wide open.
Opportunities into the Middle Kingdom
Especially the founder scene usually finds it difficult to gain a foothold in China. But there are exceptions. The young German company Kitchen Stories, for example, founded by Verena Hubertz and Mengting Gao, was able to win the market giant Apple as a marketing partner with its sudden success on the Chinese market. A win-win situation, because both sides become gatekeepers.
For those who don't get this great luck in the beginning, other forces can help them to move into the Far East: azoya, for example, is a Chinese e-commerce startup with a focus on cooperation support between retail companies and consumer markets. Different consulting and management options can be obtained here with appropriate financing and used for further strategic action.
Of course, the gatekeeper principle also works with Chinese mammoth corporations. If the German high-tech product has a considerable shortage on the Chinese market, such a partner can usually be found quickly. For example, the German molecular diagnostics start-up oncgnostics. The young company specializes in cancer diagnostics and uses a special algorithm to detect biomarkers in cancer cells. In 2017, it was able to obtain GynTect licenses for early detection tests in cervical cancer specifically for the Chinese market, Hong Kong and Macao. The Chinese partner here is Changchun Jienuo Medical Technology (CJMT), a subsidiary of the state-owned Sinopharm Group. 550 million Chinese women with a corresponding cancer risk can be treated preventively through this partnership in the future. In order to close this supply gap, oncgnostics has promised upfront and milestone payments as well as future revenue sharing, whereby the detailed contract guidelines (milestones) are to be worked out in three years and approval by the China Food and Drug Administration (CFDA) is to be made possible.
Curetis is another example of strategic partnerships in the life science sector. The company, which is also active in molecular diagnostics, entered into a research and development cooperation (Memorandum of Understanding, MoU) with MGI, a company of the BGI Group in Shenzhen in China, Taiwan and Hong Kong, in 2017. Their product, the Unyvero HPN cartridge for microbial infections, represents an automated solution in the field of molecular microbiology (sample preparation technology) based on Next Generation Sequencing (NGS) and thus a major benefit for the Chinese market. The Chinese partner company Beijing Clear Biotech (BCB) is responsible for the necessary approval by the CFDA using domestic clinical studies. With its patient-oriented diagnostics, it stands for products in the area of point-of-care testing and has so far made solid progress with regard to the approval application required for Curetis as of October 2018. In addition, since 2017, with legal safeguards, foreign study data may also be included in the application process in order to facilitate faster market integration. This will increase the chances of Curetis being able to do so on the basis of existing American study results.
China is the world's largest and currently most attractive market for international startups.
A sales area that attracts and is still unattainable for most people. Regardless of the type of partnership, young companies are fundamentally dependent on the right contacts, which not only come through constant network activity as well as cost and time investment, but often also simply based on luck. In order to help this to take a leap forward, one usually participates willingly in the aforementioned development process, attends conferences, such as the DxPx, with integrated network events, startup meetings or, as described above, uses the support of specialized companies. Institutions such as the Bundesverband Deutsche Startups e.V. also help with German-Chinese networking and advise on financing options for entry into China, in order to find one's own middle in terms of one's own business vision as soon as possible.
Join DxPx, Nov. 17th in Dusseldorf or with your digital ticket and talk to participating corporates, investors and startups from all over the world.