In the global scramble to develop a COVID-19 vaccine, brand-name biopharmaceutical giants in the United States and Europe appear to have promising candidates. But there are also several lesser known companies playing a role in helping produce a potential vaccine.

Three of the 10-plus vaccines in advanced clinical trials globally are being developed by Chinese firms, which is quite remarkable given where the country had been. Party leaders just a decade ago embarked on structural reforms to modernise the country’s health care system, root out corruption, boost drug quality and create infrastructure to nurture the development of homegrown biopharmaceutical firms.

After living in Hong Kong and spending the past decade visiting and researching health care companies in China, it’s been fascinating to see development move at such a rapid pace. And we are only in the early stages of this potentially massive transformation. Looking back at the evolution of the U.S. biotech industry, China by comparison is moving at three times the speed. Everything in China is bigger and faster, powered by top-down economic policies.

Over the next decade, China’s strategic policy initiatives in biomedicine could have broad ramifications for investments in the global pharmaceutical sector and in China itself. Based on our current growth projections, China is steadily closing the gap between it and the U.S. market. This growth comes as China is already the largest global supplier of active pharmaceutical ingredients, a point that has raised concerns during the pandemic given rising geopolitical tensions and policies promoting domestic protectionism.

At the same time, China is beginning to export new and innovative drugs, too. BeiGene last year was the first company to secure U.S. regulatory approvals for a drug largely based on clinical data generated in China. So even in this tense geopolitical climate, I believe prospects remain encouraging for both multinationals and local Chinese firms as China makes a strong push to move up the value chain in health care. U.K.-based AstraZeneca might be one of those beneficiaries: It currently counts 20% of its global revenue from China through partnerships it’s cultivated with four local firms.

 

China’s pharmaceutical market has rapidly grown to become the world’s second largest

Sources: IQVIA, GLOBOCAN, World Bank. Data as of September 2020.

What’s fuelling innovation

Ageing demographics: China looks more like its western counterparts than the young and vibrant populations typically associated with emerging market countries. The median age in China, which was just 19 in 1970, reached 38 this year and will be 47 by 2040, according to United Nations projections. With this greying population has come a rise in medical ailments, including diabetes and cancer, which has forced the government into action.