China: Latest Hotspot for Western Biotech, Pharma Firms

by: Douglas Cress

by Melanie McFarland

Asian countries such as India and Japan have gained notoriety for their talented scientists and innovative contributions to the life sciences. Now, a new contender is emerging as a potential industry leader. According to a report by Price Waterhouse Coopers, big pharmaceutical companies rated China as the best location for outsourcing in Asia. The country’s large population represents enormous market potential for Western firms whose domestic profits are coming to a standstill. Pharma companies are also drawn by China’s low production costs. The Wall Street Journal estimates that the total cost of a scientist in China is $30,000, compared to $250,000 in the U.S.

Cost isn’t the only factor attracting Western dollars to China. The country has a large, knowledgeable pool of scientific talent to draw from. John Olyer, founder of biotech startup Genta, cites the availability of skilled scientists as a major factor behind the decision to base his latest project in Beijing. In an interview with Chemical World, Olyer describes Chinese scientists as having “a real thirst for knowledge, and an incredibly humble, yet can-do approach to challenges. There is nothing that they cannot learn.”

Worldwide pharmaceutical firms looking to expand sales into emerging markets are contributing resources to China. Giants such as AstraZeneca (NYSE:AZN), Novartis (NYSE:NVS), and Abbott Laboratories (NYSE:ABT) could lend credibility to a domestic industry that has been marred by drug contamination scandals. Most recently, the FDA cited two Chinese firms for deliberately shipping tainted heparin to the U.S.

The Chinese government appears to support the development of the nation’s life sciences industry. The State Council recently announced that China will spend $9.2 on new technology in the next two years in order to stimulate economic growth. Biotechnology is key among the industries the Chinese government plans to invest in, Reuters reports. The government has also approved several policies intended to encourage the growth of both small and large biotech firms.

Two Chinese firms working in the life sciences are Bodisen Biotech (NASDAQ:BBC), a leading manufacturer of “green” fertilizer to improve agricultural yield, and China Medical Technologies (CMED), which has developed an ultrasound-guided ablation system for the noninvasive treatment of solid tumors. Sino-American Biomedical Services, based in Wisconsin, provides business solutions to help small- to mid-sized biomedical companies establish a market presence in China.