It’s not just AI. China’s medicines are surprising the world, too

In recent months China’s progress in artificial intelligence has stunned the world. A quieter yet equally significant shift is under way in biotech. China has long been known for churning out generic drugs, supplying raw ingredients and managing clinical trials for the pharmaceutical world. But its drugmakers are now also at the cutting edge, producing innovative medicines that are cheaper than the ones they compete with. China has become the second-largest developer of new drugs, behind only America.

As a consequence, Western drugmakers are increasingly looking east for ideas. Because of expiring drug patents, they stand to lose as much as $140bn a year in sales by 2030. Last year nearly a third of the large licensing deals they struck—those worth $50m or more—were with Chinese firms, triple the share of 2020. LEK, a consultancy, estimates that during that time, the total value of drugs licensed worldwide from China rose 15-fold, to $48bn. In November Merck paid $588m to LaNova Medicines, another Chinese biotech firm, to secure rights to a therapy similar to that produced by Akeso.

China’s government identified biotech as a strategic priority nearly two decades ago. But it was not until 2015 that things really took off, after the drug regulator launched ambitious reforms. It took on more staff and cleared a backlog of 20,000 drug applications in two years. Clinical trials were streamlined and brought into step with global standards. A study by Yimin Cui of Peking University and colleagues found that the time taken to approve the first round of human trials fell to 87 days, from 501 days before the reforms.

The changes coincided with a wave of returning “sea turtles”, the term for Chinese people who studied or worked abroad. China’s vast domestic market helped to attract big drugmakers to its shores, bringing know-how and talent. Easier listing rules gave biotech investors a clearer path to exit. Private funding for Chinese biotech firms rose from $1bn in 2016 to $13.4bn in 2021.

With more brains and money, Chinese firms moved beyond copying Western drugs. Instead of waiting for patents to expire and making generics, they adopted a “fast-follower” strategy—taking known drugs and modifying them to improve safety, efficacy or delivery. Drug development typically starts by identifying a target, usually a protein or gene linked to a disease. Scientists then search for molecules that can either block or boost the target’s function. Since fast-followers are not starting from scratch, they can run speedier, cheaper trials.