Increased China R&D Spending will Create More Competition for the Western Medical World

Ten years ago, China’s domestic firms were producing second class drug eluting stents and primarily generic drugs. However, as a result of a huge increase in Chinese venture capital, strong government support, and other financial resources, Chinese R&D in the medical space has exploded. Today, for example, oftentimes sophisticated exported Chinese medical devices compete directly with Western device exports to Europe, South America, and other global destinations.

Chinese innovation has also been particularly strong in drugs. While many Western drug companies still out license new unique drugs to China, more large Western drug companies are now looking to in-license assets from China. According to a McKinsey report from last year, the number of new drugs being developed in China is three times the number from five years ago. Experts claim that China has become the second largest market in the world for developing new medicines. Generally, Chinese drug R&D budgets are growing (about 15% per year) and in 2021 BeiGene Biotech spent over $1.4 billion dollars on its R&D – comparable to large Western drug R&D budgets. Chinese drug companies have had good success with PD-1 inhibitors and are looking for breakthroughs with gene and cell therapies too. Even for Chinese medical devices, the number of devices receiving breakthrough designations from the US FDA has increased dramatically. Several years ago, only a few Chinese medical device companies got US FDA breakthrough designation whereas over 25 Chinese devices will receive breakthrough designations this year.