Demystifying China: Start up



People read a lot about China these days. There is the booming economy, maintaining over 8% GDP growth in the midst of a slow global recovery. The Chinese pharmaceutical market is projected to climb into the world’s top three in 2011. The healthcare reform plan is supposed to inject US$128 billion into the healthcare system between 2009 and 2011, and has already helped double pharmaceutical sales one and a half years into the plan. We also hear trendy phrases such as the globalization of drug development, the new paradigm of drug development, FIPnet (Fully Integrated Pharmaceutical Network), superpharma, virtual biotech…and they all seem to be related to China one way or another.

But for many people just starting a company, China might seem at most a remote possibility. Surely it is fine for large global pharma companies to enjoy double digit sales in China. Surely there are good reasons that all the top ten pharmas have opened R&D

centers in China.

But wouldn’t you first need some product to sell, a few million dollars to invest and a sizable on-the-ground team? Wouldn’t results in the lab and in clinic, an M&A deal or another VC investment be more concrete and relevant than learning how to start a biotech company in China?

It leads to this question: How could a startup or an entrepreneur take advantage of the world of resources in China?

What is offered to large pharma in China is also available to small biotech and device companies (click here for more on opportunities in China). The factors making it difficult for a smaller player a decade ago – the requirements of a large investment in time, money, government relations and other human resources – is hardly there. Through two decades of rapid adaptation and adjustment, the Chinese drug development system has largely come into line with international standards, from the enabling infrastructure of regulatory approval process and intellectual property protection, to the quality of service providers and general operational excellence. It is getting easier and easier for little companies to take advantage of what China has to offer.

How the international biotech community uses these resources may have to be different from how large pharma uses them. Indeed, as small biotechs enter China, each seems to be taking on a different strategy and is slowly figuring out how to succeed in this new market.

For most of us, starting a biotech company is hard. In addition to being challenged with the long-term investment, low success rate, and risky nature of the new technology, we struggle with all the other things small business owners struggle with, such as limited resources and lack of experience in areas outside our field. We need all the resources we can find, and in this regard, China can be an additional resource, another tool in the tool chest. It is something you keep in mind when you need solutions, at times tactical, at time strategic. Figuring out when and how to use it is something that needs the creative and resourceful mind of an entrepreneur.

Chloe Liu

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