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What’s China Doing to Be Innovative In Pharma, Biotech?

This is part of a series looking at China’s ambitions across innovation, commercialization and the entrepreneurship ecosystem in healthcare and life sciences that were the focus of my Eisenhower Zhi-Xing Fellowship.

The question of whether China can innovate in science and technology is one that is often debated and remarked upon. Having read so many (Western) opinions about China’s ability to innovate, I was interested in what I could learn from talking with leaders at R&D-intensive organizations in China. How do they characterize their own innovation abilities? Through an Eisenhower Zhi-Xing Fellowship, I was able to meet with more than 40 leaders at Chinese companies and universities to explore just this.

Conventional wisdom here in the U.S. has long been that China doesn’t innovate. After all, a lot of products in China are very familiar-looking (and I’m not even talking about blatant intellectual property violations – just good old-fashioned “me too” competition). Online marketplaces. Social media networks that let their users share photos and pithy opinions. Generic or almost generic drugs and medical devices. What’s really new?

China’s pharmaceutical companies, for example, have long been known for manufacturing and distributing generic and re-formulated drugs discovered and developed elsewhere. While once dismissed as a copycat industry, the Chinese seem to be starting to trade on this expertise with hungry foreign partners. Beijing Tide Pharmaceutical Company, for example, claims to have established manufacturing standards of sufficient quality that it has become the first Chinese pharma company allowed to export injectable drugs to Japan. They view this as a first step toward addressing the U.S. market. Their vertical integration means that Chinese pharmaceutical companies can hope to offer U.S. collaborative partners a turn-key option to bringing products into the China market, and ultimately turning them back more effectively to U.S. consumers.

But what about their own products? Historically China pharmaceutical companies have been viewed as overlooking research and development investment – after all, what did they have to gain when the China market was small and they couldn’t hope to address overseas markets? But today, with the Chinese pharmaceutical market estimated to be equal to or near the third largest in the world, companies like Chia Tai Tianqing Pharmaceutical Group in Nanjing claim to be investing double-digit percentages of their revenues into R&D – at least in relative terms this is on par with European and American counterparts.

China companies I spoke with estimate that up to one in four of their development programs relate to “innovation products” (as opposed to generics or reformulations). They are the first to admit that these products are not yet first-in-class, or even best-in-class. But I wonder how long it will take for one of them to get there? After that, how long will it be before a China pharmaceutical company joins the elite list of the world’s top 20 drug companies?

How about closer to sources of discovery, say in universities? When I was working in academia, the prevailing view was that Chinese research institutions were focused on volume, churning out reports of studies of incremental value in low impact journals. So I was interested that the Institute of Biophysics, part of the Chinese Academy of Sciences, for example, was proud to show me that the number of scientific publications from its faculty that had an impact factor at least equal to that of Proceedings of the National Academy of Sciences, had increased from less than 10 in 2005, to about 60 in 2014, roughly equal to organizations like the Max Planck Institute of Biochemistry. Similarly, Sichuan University described how the number of Scientific Citation Index publications produced by its faculty rose from 2,000 to over 3,000 between 2009 and 2013.

When asked, representatives of these organizations pointed to investment in talent as a key driver. The Thousand Talent program is a set of PRC initiatives established in 2008 to attract foreign expertise to China, including both short- and long-term engagement of experts with basic science and entrepreneurial interests. Almost all academic institutions I met with proudly cited the number of Thousand Talent scholars at their respective institutions. I find it interesting that China’s academic organizations are so deliberately investing in their talent. There are many U.S. universities that might do well to go back to the basics of “invest in talent first”. The talent pool in China is already broad – and now it seems that they are seeking to make it deep also.

No one innovates for the sake of it. We innovate when adequate solutions to our problems don’t already exist, and when someone has already solved a similar problem, we borrow. For me, the test of whether China can innovate can’t be answered from what it has achieved while still following modern economies like the U.S., Australia, and Europe – but rather by what it does when it is in the leading group. As China joins the global community, the time is rapidly running out when it can easily source innovations from outside – and will have to prove that it can innovate from within.

I have long found the assertion that China can’t innovate in the fields of science and technology illogical. It just seems inconceivable to me that a large, rapidly modernizing country with the resources, population, and determination of China can’t invent when it needs to. My experience in China suggests to me that they aren’t ready to concede this point either. However, while leaders of R&D organizations proudly describe their organization-wide innovation trajectory, my conversations with administrators and individual researchers about technology transfer and commercialization capabilities were less effusive.

Next in the series: University tech transfer and IP management changes.

Christopher Laing, MRCVS, PhD, is Vice President, Science and Technology, at the University City Science Center, where he oversees commercialization programs, startup investment, and business incubation. Since 2009, participants of these programs have collectively raised hundreds of millions in venture financing. His particular areas of expertise include life sciences and healthcare. Prior to joining the Science Center, Chris worked for a number of biomedical start-up companies, and was a practicing companion animal veterinarian in the United Kingdom, where he is a Member of the Royal College of Veterinary Surgeons. He completed his veterinary training and his PhD (in endocrinology) at the University of Sydney, and his post-doctoral training (in molecular biology) at the University Of Pennsylvania’s School Of Medicine. In 2015 he was invited to spend a month in China exploring the innovation economy as a Fellow in the inaugural Eisenhower Zhi-Xing program.

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