The new kids on Montréals biopharma block

By Shawn Lawrence

Green Cross BioTherapeutics:

The new kids on Montréal’s biopharma block

From L to R : Dr. Eun Chul Huh (President of Green Cross Corporation), Mr. Alan DeSousa (Mayor of the Borough of Ville St. Laurent), Mr. Young Ho Kim (CEO of Green Cross Biotherapeutics Inc.), Mr. Jacques Daoust (Minister of Economy, Innovation and Exports), Dr. Il Sup Huh (Chairman of Green Cross), Mr. Pierre Desrochers (President of the Executive Committee of Montreal), Mr. Jin Hur (Consul General and Ambassador) andMr. Mario Monette (President & CEO of Technoparc Montreal).

There’s a new player on Québec’s life sciences scene with South Korean drug-maker Green Cross setting up shop via its new North American subsidiary, Green Cross BioTherapeutics (GCBT).

Not only does the company’s entry into the Canadian market mean the creation of new jobs in the manufacturing space, it represents one of the largest foreign investments in the province’s life science sector in over a decade, totaling $315 million. Moreover, the company has shovels in the ground at Montréal’s Technoparc constructing its new 225,000 square foot biologics manufacturing and plasma fractionation facility, the first plant of its kind in Canada.

GCBT is planning to recruit over 200 highly qualified scientists, engineers, microbiologists, chemical engineers and other professionals, who will all contribute to the production and distribution of plasma protein products from the facility. Once it reaches full operations in 2019, GCBT expects to generate annual revenue of over $300 million from its own manufactured products, exceeding $500 million in total sales turnover, including all distributed and imported goods.

According to Joon Hee Han, managing director of GCBT, the company’s Canadian expansion is about capitalizing on growing opportunities in the North American market as well as augmenting its business initiatives in Asia.

“We see a lot of opportunity for our technologies and plasmaderived medicines here, with the market for Immunoglobulin (IVIG) growing in Canada and North America representing 40 per cent of the global market,” he says.

He comments that the first phase of this project will include establishing a manufacturing presence with Intravenous Immunoglobulin (IVIG) for patients with infectious and immune disorders and albumin products to treat burns and bleeding disorders by replenishing blood plasma volume among the products to be produced at the plant. When complete, it will have the capacity to fractionate up to one million litres of plasma a year.

“This plant will supply the Canadian market but also export to other countries, including the U.S. and China,” he says. Han adds that because Canada currently relies mostly on imports for its IVIG, Canada will benefit from having Green Cross as a domestic manufacturer.

According to Han, the decision to come to Canada was the result of a long intensive review process for which Green Cross hired Deloitte.

“First our strategy was to acquire a company in the United States

and we found it wasn’t going to be easy, so we looked at companies to acquire in Canada but they too didn’t fit what we were looking for either. In the meantime, we discovered that there weren’t any plasma protein manufacturers in Canada and that the Canadian government relies 100 per cent on imports from the U.S and Europe. As such, we thought we might provide a great advantage to the government, and at the same time we felt we could capitalize on being the sole player in Canada.”

Negotiations commenced with the Canadian government, and then the company asked the provinces of Québec and Ontario what incentives they could offer. In the end Montréal was deemed the best fit.

“Montréal already accommodates many biopharmaceutical companies and is home to a great R&D cluster made up of a highly-qualified workforce. Its central location and proximity to the U.S. logistically were ideal as well.”

He mentions that the support offered by Hema Québec and the Québec Government including Investissement Québec sweetened the deal. In all, the Québec government intends to chip in an $8 million grant and has provided a $17 million loan, to be repaid in six years, to help pay for the new facility. He also adds that the Federal government supported this project.

The recent Free Trade Agreement reached between South Korea and Canada didn’t directly facilitate the deal, but it was helpful as well he says.

“I think it was a stepping stone to garnering Québec government interest in our project, and a big reason our project was well supported by the government.”

There were other factors in the choice to come to Canada that had to do with the company’s broader business strategy. Specifically, the parent company, which was founded in 1967, has built a very strong plasma-derived medicines business overseas in South Korea and China. However, these plants are having had a hard time keeping up with the high demand for Albumin, especially in China. In contrast, Albumin is abundant in North America. On the other side of the coin, when it comes to IVIG, the supply and demand is reversed, with Asia having the overabundance and North America and Europe facing shortages. Han says that establishing a North American presence comes down to meeting this supply and demand demographic on a global level. He likens this cost structure of producing various proteins from blood plasma to that of an oil refinery producing oil.

“Once you get the crude oil, the more products you make the more profitable you can be,” he explains. “Right now we have a leftover intermediate product for IVIG in the Asia market, and we believe we can sell this in the U.S. or Canada. Likewise we want to sell the albumin produced in North American markets in Asia. It’s about maximizing the utilization of a precious raw material.”

Going further, he says that Green Cross already has a leg up on its competition with its Asia presence. Expanding into North America only widens this gap.

“It’s not easy for foreign companies to penetrate into the Chinese market, however, Green Cross built a facility there in 1995 so we are very well positioned in that market. By having a very strong presence in China, we are able to pursue this kind of project. And like I said, penetrating into IVIG market in North America will actually improve the profitability of our business.”

This doesn’t mean the company won’t distribute albumin in North America. On the contrary, even though the Chinese market is big, Han says that the U.S market can be just as lucrative for albumin because there are premium prices for this product in the U.S. and still a very large population there as well.

In terms of Green Cross’s technologies and the manufacturing process, Han explains that there are three basic steps to producing IVIG and albumin. It begins with fractionation, subjecting plasma to various changes of temperature and chemical conditions, causing each of the proteins with therapeutic properties to separate out.

“We fractionate various types of proteins out of human plasma using what is called the Cohn-Ethanol fractionation method. When you make products out of human plasma, there is a risk of diseases being present and these can be transmitted. As such, these proteins have to be purified and formulated or processed through a series of virus inactivation/ removal steps before they can be used as medicines. In the case of the immunoglobulin and albumin, we use nano-filtration and solvent detergent. The last step is fill and finish, where after the formulation of these proteins, we put them in vials and package them as finished products.”

The new Canadian facility will have the means to perform the entire process says Han. In addition to manufacturing and providing fractionation services, Han says that eventually GCBT will also be the North American hub for distribution of a variety of other Green Cross therapeutics.

“The first product happens to be the plasma proteins; however we have vaccines, recombinant products, cell therapies and many other high value products.”

In terms of direct distribution deals, one of the partners that have already signed on with Green Cross Biotherapeutics is Hema Québec.

“We will be supplied with plasma and we will be providing them with our fractionation services,” Han says. “They have their own plasma collection centres where they will take what they collect and send it to us to process and then we deliver the finished product back to them. Additionally, they will have access to plasma we bring in from our collection sites in the U.S.”

According to Han, support from Héma-Québec was also a key consideration in Green Cross’s decision to establish its plant in Montréal. But in general, he has been pleasantly surprised by how the province has really rolled out the red carpet for Green Cross. He believes that Green Cross will repay this kindness by having an impact on the Québec economy.

“It goes beyond strengthening the province’s manufacturing and life science sector and keeping jobs here. Just building the facility has led to the hiring of engineering firms, construction companies etc.”

He’s also very excited about the potential collaborations that might arise by operating in Montréal, and he’s leaving an open invitation to those who wish to partner with Green Cross.

“We are manufacturing and making products, however, we are a big customer of technologies. So, if universities or research centres in Canada approach us with new technologies that help us with a process or improving our business, we’ll be happy to discuss these opportunities.”

To see this story online visit http://biotechnologyfocus.ca/green-cross-biotherapeuticsthe-new-kids-on-montreals-biopharma-block/