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 It's early days, but firms like Hua Medicine and Innovent Biologics
embody China's hopes for competitive biomedical innovation. And
their Chinese-born, Western-educated founders represent the
long-awaited return of the nation's brightest life scientists.
From school in the late 1970s and 1980s, when only elite students
gained entry into China's few biochemistry and molecular biology
programs, they left China, graduated and worked their way up to
senior positions in the world's top pharmaceutical companies.
For decades, China tried to woo them home, but they were reluctant
to return to a cloistered, politicized scientific establishment
where winning research funds and promotion often depends on who you
know. It took the jobs squeeze of the 2008 global financial crisis
and fresh government incentives - from state-of-the-art research
labs to grants, loans and government venture capital - to prise them
from international careers to launch their own start-ups in China.
"To obtain major grants in China, it's an open secret that doing
good research is not as important as schmoozing with powerful
bureaucrats and their favorite experts," returnees Shi Yigong and
Rao Yi wrote in a 2010 editorial in Science.
"If returnees want to do innovation, in academia there is
traditional resistance and old practices," said Huiyao Wang at the
Center for China & Globalization. "It's the private sector that
really attracts people to start new ventures."
China has committed more than $300 billion to science and
technology, with biotech one of seven pillar industries in the
latest Five-Year Plan. Biomedical research investment jumped more
than four-fold in 2007-12, though it is still dwarfed by spending in
the United States and Europe, according to a 2014 study in the New
England Journal of Medicine.
Returnee firms have listed in New York and London, work closely with
'Big Pharma' and attract investment from U.S. venture capital and
multinationals.
"China is coming up, especially with returnees coming back. The
innovation will come with the people," said Jimmy Zhang, a
vice-president at Johnson & Johnson Innovation, which opened a
regional center in Shanghai last autumn.
CHINA CALLING
"I sometimes ask myself, 'why did I return to China?' I had a very
comfortable life in the U.S. and my family's still there," said
Michael Yu, Innovent's founder and CEO. "But for lots of Chinese
men, there's always something in the heart ... a desire to go back
and do something. Biotech has only just started in China so you can
have significant impact for a whole industry, for a country."
After completing postdoctoral training at the University of
California, San Francisco, Yu spent a decade at U.S. biotech firms
before going home in 2006 to co-found Kanghong Biotech, which
developed the first homegrown innovative monoclonal antibody to be
approved by China's regulators. He later launched Innovent with
funding from Chinese and U.S.-based investors, including bioBAY, a
government-funded biosciences park in Suzhou. bioBAY spent $140
million on Innovent's 1 million square foot (92,903 square meter)
laboratory and production facility.
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Another returnee, Li Chen, was chief scientific officer at Roche's
China R&D center when, in 2009, he was invited to dinner by
U.S.-based ARCH Venture Partners, which encouraged him to go out on
his own. "It wasn't something I was expecting," Chen said. He
launched Hua Medicine in 2011 with $50 million from U.S. and Chinese
investors. Last month, it closed another $25 million in series-B
financing.
The returnee start-ups are leveraging shifts in the global R&D
landscape. The financial crisis, expiry of blockbuster drug patents,
and mega-mergers have forced major drugs firms to reprioritize,
giving newcomers a chance to develop promising compounds already in
the pipeline.
Hua is about to launch Phase 2 trials for a novel Type 2 diabetes
drug in-licensed from Roche. Zai Laboratory, another returnee firm,
has an in-licensing deal with Sanofi to develop two compounds to
potentially treat chronic respiratory diseases.
By focusing on diseases that are on the rise in China, these firms
can recruit from a vast patient population, speeding up the time it
takes to conduct clinical studies.
However, China's regulatory environment, especially for drug
approval, "has been quite inefficient and often inadequate," says
Jonathan Wang at OrbiMed, a global healthcare-dedicated investment
firm. Getting approval for human trials can take over a year,
compared to just weeks in the United States.
"Everything else being equal, you'd go where the approval process is
easier," said Wang.
EMPTY NESTS AND ANGEL MONEY
For some, coming home is as much a personal as professional issue.
Many are 'empty nesters' whose own children are now at college, or
they have ageing parents.
"In the U.S., people have family and friends who can support them
with 'angel money.' As first-generation immigrants, we don't have
that kind of access there," said Zhang at J&J Innovation.
For the returnees, it's just the beginning.
"We've planted the seed for a fast-growing, innovation driven
environment in China," said Steve Yang, chief operating officer at
WuXi AppTec. "The impact of this group will be better measured in
another 10-20 years."
(Editing by Ian Geoghegan)
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