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Jun 1, 2012 (Vol. 32, No. 11)

Global Bioclusters Vie for Dominance in Battle Royale

China and India Pose Fierce Competition to U.S. Biopharma

  • Click Image To Enlarge +
    Both China and India have emerged in recent years as offshoring havens. China has invested heavily in infrastructure, while India has capitalized on a strong services sector. [zennie/iStockphoto.com]

    The U.S. may still be the world’s superpower, but its dominance in biopharma is eroding as China and India add more innovation to their booming life science industries. The result augurs years of growing competition for biopharma enterprises, and their jobs, just as all three nations are looking to the industry for future growth.

    To be sure, the U.S. continues to enjoy the world’s largest biopharma industry by establishments (48,059; Battelle); public-company revenues ($61.6 billion in 2010; Ernst & Young); size of prescription-drug market ($307 billion; IMS); jobs (1.42 million; Battelle); venture capital ($4.733 billion last year; MoneyTree Report); R&D research (just over $100 billion in private and public spending); and patents (6,601 within classes 424, 435, and 514 last year; USPTO).

    So Uncle Sam remains biopharma’s anchor—or more accurately, two anchors. California and Massachusetts are the top states in biopharma jobs, companies, venture capital raised, NIH grant funding awarded, and patents granted.

    But India and China have grown faster. Both emerged more than a decade ago as offshoring havens driven by lower wages and less red tape. India capitalized on strong chemistry, generic drug development, and a services sector, while China invested heavily in biopharma infrastructure, attracting more than $1 billion in investment from global giants and hundreds of new startups.

    “Both countries have a role to play in the global R&D footprint, and both countries have a role to play in the global commercial footprint as well. Obviously China is still the much larger commercial opportunity and will be, at least for the foreseeable future,” Simon Goodall, partner and managing director with The Boston Consulting Group (BCG), told GEN.

    With annual growth averaging 22%, more than triple the 6.2% global average, China’s drug market rocketed from $33 billion in 2007 to $126 billion in the first seven months of 2011. The 12th Five-Year Plan (2011–15) commits 2 trillion yuan ($317.75 billion) to biopharma, one of seven strategic sectors expected to comprise a combined 8% of GDP. China hopes to expand its biopharma workforce from 250,000 to 1 million jobs by 2015.

  • Major Chinese Program

    In January, China issued its National Program on Bioscience Technology Development 2010–2020. Goals include producing a “biotech talent pyramid” with three to five “worldclass” scientists in major diseases and biofuel; 30 to 50 innovators in teams focused on genomics, stem cells, cloned animals, and neuroscience; plus 300 to 500 “leaders”, 3,000 to 5,000 senior managers, 30,000 to 50,000 “specialists,” and 300,000 bioindustry “experts” in biomedicine, bio-agriculture, biomanufacturing, and bioenvironment.

    Many will fill positions at the new big pharma R&D centers, where they will be paid an average 60% to 70% of U.S. salaries. However, the wage gap is shrinking due to Chinese inflation and the demand by companies exceeds the supply of researchers, according to Jim J. Zhang, Ph.D., president and managing director of JZMed, which provides outsourcing consulting to Western biopharmas expanding into China.

    Officials will also need to upgrade the nation’s government R&D infrastructure over the next few years. Between 2006 and 2010, according to BCG, China’s biopharma industry nearly tripled its R&D investment to $3.5 billion.

    “I think there is a recognition that the SFDA [State Food and Drug Administration] oftentimes can be slower than companies in terms of their review times and the processes to begin clinical trials, particularly those related to first in human studies in China,” said Michael Choy, a principal in BCG’s Shanghai office.

    “While the 12th Five-Year Plan can certainly provide a boost to programs and companies, it’s also, I think, a signal of some of the things that are to come that will also be very important to unlocking innovation in China.

  • Click Image To Enlarge +
    Southern California Life Science Employment by County

    China’s biopharma boom has spawned efforts by industry groups in California and Massachusetts to engage—and, they hope, grow—with the world’s most populous nation. In April, BIOCOM, the industry group for San Diego and southern California, completed a trade mission to China aimed, in part, at persuading local biopharmas to expand into the San Diego region.

    Biopharma in San Diego County employed 41,937 in 1,705 establishments last year. University of California, San Diego and numerous research institutes anchor a region where Merck and Johnson & Johnson have created incubators to nurture startups alongside home-grown giants that include Gen-Probe, which is being acquired by Hologic, and Illumina. San Diego biopharmas won $835 million from NIH (FY ’11) and $498 million in venture capital (2011).

    Joseph Panetta, BIOCOM’s president and CEO, said his seventh trip to China in two and a half years left him most impressed with the advancement of Chinese biopharma companies toward innovation.

    “Two and a half years ago, you really wouldn’t see anything in the way of a startup that you would recognize as being similar to a biotech company over here,” he explained. “This year, we visited a couple.”


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