Gilead's Kite Parts Ways with Fosun in China over Yescarta Coverage Issues

Gilead’s Kite Pharma has decided to separate from its cell therapy joint venture with Fosun Pharma in China, transferring full control of the CAR-T therapy Yescarta to Fosun. This decision is part of a broader trend among foreign pharmaceutical companies, such as UCB and CSL Behring, who have also recently divested from their Chinese ventures. Kite’s move particularly highlights the difficulties in obtaining reimbursement for complex therapies in China.

Fosun will acquire Kite’s 50% stake in the venture, known as Fosun Kite Biotechnology, for $27 million, as per a securities filing dated September 13. This acquisition will grant Fosun exclusive rights to Yescarta and another related therapy, Tecartus, in China. Despite the transfer, Kite will continue to supply the viral vectors necessary for producing these cell therapies and will receive tiered royalties from product sales, ranging between 7% and 13%.

The partnership between Kite and Fosun was initially formed in 2017, with Fosun paying $40 million upfront and an additional $35 million contingent on meeting certain milestones, to secure the China rights for Yescarta. Yescarta, a treatment for B cell lymphoma, achieved the milestone of becoming the first CAR-T therapy approved in China in 2021.

However, the journey since then has been fraught with challenges, especially concerning access and reimbursement for the CAR-T therapy. According to the filing, Yescarta's sales in China amounted to just 242 million Chinese yuan ($34 million) last year. In stark contrast, in the United States, Yescarta generated $186 million in sales in the second quarter of the current year alone.

One significant hurdle is the cost of the treatment in China, which is priced at 1.2 million yuan ($170,000). This high price point makes it unaffordable for many Chinese patients and excludes it from coverage under China’s state insurance program. In comparison, Gilead initially set the list price for Yescarta at $373,000 in the U.S., which has since increased to approximately $424,000.

Fosun has attempted to explore various commercial insurance options to improve access to the therapy. One such initiative is a scheme in Shanghai, where insured patients can receive a 100% claim payment for CAR-T therapy, up to a maximum coverage of 500,000 yuan.

Kite is not alone in exiting the Chinese market; other pharmaceutical companies have similarly handed their commercial operations over to local entities. For example, CSL Behring recently sold its China subsidiary to Beijing Tiantan Biological Products for $185 million. Similarly, Belgium-based UCB divested a portfolio of its older products to CBC Group and Abu Dhabi’s Mubadala Investment Company for $680 million just a few days earlier.

This trend underscores the broader challenges that foreign pharmaceutical companies face in navigating the Chinese market, particularly in terms of securing reimbursement and affordability for advanced therapies.