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Biopharma R&D in China: Making Bets Pay Off

Related Expertise Biopharmaceuticals,

Biopharma R&D in China

Making Bets Pay Off

November 7, 2011 By Michael Choy ,  Lee , and John Wong

Five years ago, only a few global biopharma companies had made significant R&D investments in China. But the growth potential—in terms of both the quantity and quality of investments—was unmistakable. We predicted that most major biopharmas would steer more of their R&D activities to China, mainly to access the domestic market but also to tap greater efficiencies—the standard fare of offshoring opportunities. As public and private investments swelled, multinationals would inevitably set their sights higher. They would focus not simply on sourcing but on partnering, and not only on curbing costs but also on spurring innovation.

In many respects, the development of biopharma R&D in China has exceeded our expectations. Virtually every major biopharma company has made substantial investments, while the country’s R&D ecosystem has continued to become more vibrant, providing new opportunities for multinationals to expand the depth and breadth of their work. Medical journals and newspapers are full of stories about the great things to come, acquisitions and partnerships are regularly announced, investment dollars are flowing, and China is one of the hottest topics in biopharma boardrooms around the world.

But with the new possibilities come new risks. The first wave of foreign R&D investments was focused on a small set of clear-cut opportunities. The second wave, now under way, is characterized by a well-placed eagerness to leverage the benefits of a more advanced R&D sector. In pursuing new avenues of innovation, however, biopharma companies may be propelled more by the momentum of a burgeoning R&D sector—or concerns about losing a step to the competition—than by a well-defined strategy. Multinationals should continue to push the boundaries of R&D in China, but they need to apply at least the same rigor that guides their research projects elsewhere in the world.

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