China biotech's stunning advance is changing the world's drug pipeline

Business Times

11 hours ago

[HONG KONG] The biotechnology industry is experiencing a tectonic shift, driven by Chinese drugmakers who have come a long way from their copycat days to challenge Western dominance on innovation.
The number of novel drugs in China, for cancer, weight-loss and more, entering into development ballooned to over 1,250 last year, far surpassing the European Union and nearly catching up to the US's count of about 1,440, an exclusive Bloomberg News analysis showed.
And the drug candidates from the land once notorious for cheap knock-offs and quality issues are increasingly clearing high bars to win recognition from both drug regulators and Western pharmaceutical giants.
The findings, gleaned from an analysis of a database maintained by pharma intelligence solutions provider Norstella, show a fundamental shift in medical innovation's centre of gravity. With US President Donald Trump already threatening tariffs on the pharmaceutical sector, China's biotech advances, the scale of which is slowly coming into view, risk becoming another realm of superpower rivalry such as artificial intelligence and electric vehicles.
'The scale itself is not something we have seen before,' said Helen Chen, managing partner at LEK Consulting in Shanghai, who has advised healthcare companies on their China strategy since 2003. 'The products are here, they are attractive and they are fast.'
This shift has occurred at an unprecedented pace. When China began to overhaul its drug regulatory system in 2015, the country had just 160 compounds to contribute to the global pipeline of innovative drugs, or less than 6 per cent of the total, behind Japan and the UK. The reforms helped streamline reviews, enforced data quality standards and improved transparency.
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The government's 'Made in China 2025' plan to elevate manufacturing in 10 priority sectors also helped spur a flurry of investments in biotechnology. Altogether, they unleashed a boom led by foreign-educated and -trained scientists and entrepreneurs.
'Not only is it now almost at parity with the US but it has that growth trajectory,' said Daniel Chancellor, vice-president of thought leadership at Norstella. 'It wouldn't be sensationalist to suggest that China will overtake the US in the next few years purely in terms of numbers of drugs that it's bringing through into its pipeline.'
Bloomberg News' data analysis focuses on innovative drugs, excluding generic combinations, reformulations and biosimilars.
Numbers aside, the more stunning leap is in the quality of Chinese biotech innovation. While there's constant debate in the pharmaceutical industry on whether Chinese firms are capable of producing not just effective but needle-shifting new therapies, there's growing recognition on multiple fronts.
The world's strictest regulatory agencies, including the US Food and Drug Administration and the European Medicines Agency, increasingly view Chinese drugs as generally promising enough to justify devoting extra resources to speed up their review, handing them coveted industry designations such as priority review, breakthrough therapy designation or fast track status.
The country is now slightly ahead of the EU in earning such expedited reviews as of 2024, the data shows, a remarkable edge over a region that previously produced drugs such as Wegovy.
One of the early exemplars of Chinese innovation is a cell therapy that has shown promise to potentially cure a deadly blood cancer. First developed in China by Legend Biotech, it is now marketed by Johnson & Johnson, having won a few expedited review designations along the way, and considered superior to a competing US-originated therapy.
Still, the absolute number of China-originated drugs winning these designations trail their US counterparts by a large margin.
Risk-aversion remains a factor holding back Chinese pharmaceutical innovation: So far, top companies tend to focus on making better versions of existing therapies or new iterations of older ideas, and few are pioneering novel treatment approaches that have never been tried before, an endeavour that comes with a high risk of failure and is still led by the US, Europe and, to a lesser extent, Japan.
Nevertheless, the biggest Chinese breakthroughs are increasingly being snapped up by pharmaceutical giants for record sums, a sign that the perennial competition for the next blockbuster drug is also shifting East.
A novel cancer drug from Akeso, which came out more effective than Merck's Keytruda in a Chinese study last year, has been likened to China biotech's DeepSeek moment, spawning a new wave of global interest. The promise of topping Keytruda, the world's top-selling drug, also swelled the valuation of Summit Therapeutics, which in 2022 paid US$500 million upfront for the development and marketing rights in the US and other regions.
Other multinational players such as Merck, AstraZeneca and Roche Holding have also scooped up Chinese assets. In May, Pfizer set a new record as it announced a US$1.2 billion upfront deal with 3SBio for a cancer drug similar to Akeso's. These deals are increasing in both value and frequency, according to biopharma deal database DealForma, signalling confidence that China-originated drugs are competitive internationally and can bring in substantial revenue.
The volume of potential candidates coming out of China means multinational companies, who have a constant need to add new products to the mix, can 'cast their net wider than ever before', Norstella's Chancellor said.
A key advantage that has fuelled the rise of Chinese biotech firms is their ability to conduct research cheaper and faster at every step of the way, from lab experiments and animal testing to human trials.
Creating a new drug from scratch is notoriously time-consuming and expensive, and China's massive patient pool and centralised hospital network have become a significant accelerator. An analysis of the time taken for drugs to conduct various testing stages shows that doctors in China can recruit for trials much faster, for early trials for cancer and obesity drugs, they can complete patient enrolment in half the time compared to the US.
The difference in costs means Chinese companies can afford to run multiple trials simultaneously to find a winner, or quickly launch new projects once a scientific idea is validated by other groups.
Since 2021, China has become the top location for clinical research, initiating the largest number of new trials globally, according to GlobalData.
'They can leapfrog competitors in other countries,' said Andy Liu, head of China at Novotech Health Holdings, which helps companies run clinical trials.
To be sure, clinical data in China is just a start. US regulators have made it clear that China-only trial results, no matter how positive, are not sufficient to support drug approvals. Chinese biotechs with the ambition to sell their drugs overseas must prove that their treatment benefits can be replicated in non-Chinese patients, through complex and slower-moving global studies.
It may still be a few years before a critical mass of drugs sourced from China wins US and EU approvals, the gold standard for high-quality treatments, and become widely used in the Western world, but many in the industry believe that's inevitable.
China's innovators comprise both cutting-edge biotech startups founded by foreign-educated entrepreneurs and old-guard Chinese pharmaceutical companies such as Jiangsu Hengrui Pharmaceuticals, which used to be one of the country's biggest generic drugmakers.
The company poured billions of US dollars into shifting to innovative research and development after Beijing's campaign to lower generic drug prices made that sector less profitable. It's now the world's top-ranked pharmaceutical company for the number of new innovative drugs added to the research pipeline in the period of 2020 to 2024.
Of the 50 companies that generated the highest number of innovative drug candidates between 2020 and 2024, 20 of them were Chinese, compared to five in the five years before.
'As we move forward, the fact that there's high-quality innovation in China in terms of biotech will no longer be a novelty,' said Ali Pashazadeh, founder and managing director of healthcare advisory firm Treehill Partners in London. 'It will just be an accepted part of the norm.'
At a time when China and the US are engaged in renewed geopolitical spats, the growth of China's biotech ecosystem is causing alarm among some American politicians and business leaders. A congressional commission warned that the US risks losing its leadership position in yet another industry critical to national security.
'Biotech is one of the forefronts of the US-China tech rivalry,' said Jack Burnham, research analyst at the think tank Foundation for Defense of Democracies. In addition to economic implications and possible military applications of biotech, China's leverage on innovative therapies may be weaponised in a future conflict, he said, if Americans become dependent on those medicines.
The perception of threat has spurred calls for the US government to stymie China's biotech growth, through restrictions such as export controls on scientific equipment and barriers to investment, and boost the domestic biotech sector, including by changing the regulatory environment to emulate countries where clinical trials are run more quickly. Robert F Kennedy, the US Secretary of Health and Human Services, recently pledged to 'Make American Biotech Accelerate'.
Despite the risks of the newly combative relationship between the world's two biggest economies, Chinese drugmakers such as Akeso have set their sights on bringing their therapies to developed Western markets.
'The pharma industry is the best industry in the world,' Akeso chief executive officer Michelle Xia said. 'At the end of the day, what we do benefits patients in China, in the US and all around the world.' BLOOMBERG