End of the First Cycle, 2022 and Beyond: A Drastic Reset, Increased Challenges But Also New Opportunities

Sven Agten () and Ben Wu ()

A chapter in Biopharma in China, 2024, pp 113-142 from Springer

Abstract: Abstract In the biopharma sector, China has experienced its first boom and bust cycle. Prior to 2017 there was an emergence phase with a wave of innovation. Between the period 2018–2022 we witnessed a growth phase, catalyzed by even more funding and new IPO channels in Hong Kong and Shanghai. 2022 saw the start of a reset phase characterized by a drastic market correction, in line with global biotech trends. Companies and healthcare funds alike need to reposition themselves for the future, as funding is more difficult and budgets get tighter. The downturn also challenges the fundamentals of value creation and reveals major ecosystem gaps in China. At the same time government policies promote ‘Common Prosperity’, which is pushing prices for innovative drugs down, which in turn decreases profits, and hurts investors’ sentiments. Affordable innovation is now key. Geopolitics also play an increasing role, hurting prospects of Chinese companies to become global players. That being said, the long-term perspectives look good. The Chinese innovation ecosystem is showing signs of resilience, and Chinese biopharma companies are moving increasingly to real first-in-class drug development, hence slowly but steadily becoming globally competitive. A clear ‘going global’ trend is prevalent. The Chinese innovative pharma market is also still a growth story and has ample room for expansion. Despite this however, the internationalization of Chinese homegrown innovative drugs will still have many hurdles to take. But China is increasingly playing an important role in global drug competition and innovation. As such Western biopharma companies will face new challenges in their home markets. If Chinese biopharma companies succeed in developing the same quality medicine, but at a much more affordable price, they can sell their drugs in foreign markets and compete head-on with the competition abroad. This however doesn’t mean that Chinese drugmakers are in a position to set up large organizations abroad, like the Western MNCs. The most promising way now for them to launch China-originated drugs abroad, is via international partnerships. This means that foreign companies should embrace a strategy of ‘innovating with China’, or ‘in China for global’.

Keywords: Affordable innovation; Anti-corruption; Boom and bust cycle; Common prosperity; Global potential; Geopolitics; Going global; Health economics; Protectionism; Reimbursement (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-97-1471-1_6

Ordering information: This item can be ordered from
http://www.springer.com/9789819714711

DOI: 10.1007/978-981-97-1471-1_6

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().