Taiwan Is Sea Fortress Against China, Minister Tells US Audience

Updated: September 15th, 2021 09:40 PM IST

How China quietly grew into a biotech powerhouse that will shape the future of the drug industry

Taiwan Is Sea Fortress Against China, Minister Tells US Audience

Just last month, BeiGene said that it would build a 42-acre research and development campus in the small borough of Hopewell. Other Chinese drug companies like Hutchmed and Legend Biotech have set up operations in New Jersey and are hiring aggressively, with plans to bring their drugs to the US market as well.

The growth in New Jersey — where the majority of the 20 largest pharmaceutical companies have a footprint — is one of many signs that the Chinese biotech industry has arrived. These companies are raising record amounts of capital and researching innovative drugs. Insiders said the Chinese biotech scene, which some analysts have projected will more than double drug sales by 2030 from $30 billion now, could soon compete with the US.

"Even if you dont care about China, you need to know about this because these companies are going to be global competitors, and there may be global implications," said Brad Loncar, a biotech investor who launched in 2018 the largest index fund tracking the China healthcare industry.

Loncars fund, which tracks 66 biopharma companies and trades under the ticker CHNA, is up 21% year to date in 2021, even as the leading biotech index is down 7% on the year. The fund is worth $16 million.

This new market, which is highly controlled by the Chinese government, is introducing drugs that are significantly cheaper and may shift the global biotech landscape.

But in 2015, Chinas leaders highlighted biotech as a priority as part of a wide-ranging "Made in 2025" vision, which hopes to build up Chinas presence in certain strategic areas, including drug development.

Over the next few years, the country put in place several reforms that insiders credited with spurring the biotech boom. China beefed up its version of the Food and Drug Administration, hiring regulators who previously worked in the US and Europe. The government also joined a key international regulatory body in 2017 that sets standards for the quality, safety, and efficacy of medicines. That same year, it started updating the list of medicines it pays for annually, adding more newer medicines on a routine basis.

As the government started paying more for newer drugs, it also introduced ways to lower the prices of generic medicines. China has continued to expand a program called volume-based procurement, where companies compete on price to get their generics covered by the government. The result has been drastic price cuts, which have led many Chinese drugmakers to pivot to where the profits now are: newer medicines.

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