China's Biotechnology Sector
* China's biotech industry has been growing rapidly in the past decade but still remains less than a tenth the size of the US biotech industry in terms of market size. China's biologics market is estimated at 30 to 40 billion yuan ($4.7 to $6.2 billion) and their agricultural biotech market is around $8.1 billion, while estimates places those US markets at $118 billion and $110 billion, respectively. Overall, the US maintains its lead through worldclass research training and strong governmental support of R&D, but China is seeking to close the gap through its top-down government strategy and coordination, talent recruitment programs, high R&D spending across the industry, and capacity for high-tech R&D.
* China's biotechnology sector is dominated by biologics and other medical technologies. The segment is growing quickly due to increasing demand and the high value of the products relative to traditional pharmaceuticals. While Chinese biotech companies develop few innovations (instead producing biosimilars or performing contract research and manufacturing), they still provide a high-tech and high-skill foundation for future innovation, with potential demonstrated in some cutting-edge technologies like CAR-T and CRISPR.
* China's drug approval policies create advantages for Chinese developers of biopharmaceuticals and other drugs. Drugs manufactured in China and drugs not previously approved outside of China receive fast-track review. The duration of market protection via data exclusivity for newly approved biologies is maximized when clinical trials are performed in China and the drug is not approved elsewhere.
* Investment in the agricultural biotechnology segment is low in China, despite a stated goal of developing the technology. China does not grow much GM crop, with the exception of cotton for export. Regulatory burdens and lack of consumer support have led to a lack of GM commercial activity, although China is investing in GM research. The recent purchase of GM seed producer Syngenta by ChemChina may signal a turnaround in this market, although catching up to the US in the foreseeable future is not likely due to the size of the lead the US has.
* The development of China's biotech sector is fueled by many commercial factors--such as a massive future market, cheap labor, and abundance of talent--but industrial and technology policies play an important role as well. China is pursuing a comprehensive, long term strategy to become a leader in biotechnology, especially medical biotechnologies. Biotechnology is named as a Strategic Emerging Industry, and plans such as Made in China 2025 and the 13th Five Year Plan prioritize its development. As a result of these and other policies, the Chinese government is supporting the biotechnology industry through investment in infrastructure, development of research parks, and recruitment of overseas talent.
* China is following a strategy of using international resources to further the advancement of China's own industries, including biotechnology, as emphasized in Made in China 2025. China is specifically targeting foreign capital as a mechanism to increase investment in Chinese technology companies, including biotechnology, to broaden their international footprint.
* As China's biotechnology industry develops, we are likely to see continued advancement in medical biotechnology, especially in biologies, genomics, and molecular diagnostics. Chinese biologies companies may move further toward producing innovative drugs. Given investments in agricultural biotechnology R&D, this segment may begin to see commercialization should restrictive policies and attitudes change. Due to a sizable lead, though, the US is not likely to lose its standing in the global biotech sector provided it maintains its investment in the industry
Source: U.S.-China Economic and Security Review Commission
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|Date:||Sep 25, 2019|
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