Organogenesis, one of the pioneering tissue engineering companies, is partnering with China’s National Tissue Engineering Center (NTEC) to bring Organogenesis’ regenerative therapies to the Chinese marketplace. NTEC is a Shanghai-based private company that is funded by the Chinese government, and it was launched by a Harvard/MIT-trained plastic surgeon, Dr. Yiling Cao. The two companies look to have a three-phase agreement in place that starts with Organogenesis exporting it’s tissue products into China for distribution by NTEC. If certain milestones are met (likely based on sales and successful deployment of the living tissue product to patients), phase II would see the transfer of manufacturing to NTEC for distribution throughout Asia. Phase III would include joint development of new products, which Organogenesis would retain certain regional rights to outside of Asia.

This is the first move by a major regenerative medicine player into Asia, although Theravitae started in Thailand due to the ease of the local regulatory processes. There is most definitely a market for regenerative therapies in Asia due to the huge population and problems with smoking, but there is also tremendous business risk associated with the region. The business risks stem from several factors including intellectual property, government involvement in the businesses, and lack of financial infrastructure (among others). Organogenesis must see this move as a strategic way to establish manufacturing within the Pacific Rim, and Shanghai is an ideal hub for quickly getting their short shelf-life products distributed throughout Asia.

Organogenesis has built a profitable business here in the US, and it is possible they believe that the manufacturing process is sufficiently robust to transfer to another country. If this is true, they may be able to leverage some of the cost-cutting strategies that comes with moving to China, and if they can maintain a high quality product and extend the shelf life of their living engineered tissues, then one could predict that all of Organogensis’ manufacturing could eventually be centralized in China, creating long term competitive advantages. I am sure that scenario is a long way off, but I also bet that many of Organogenesis’ regenerative medicine peers will be watching closely to see what develops out of this partnership on the other side of the world.