The biopharmaceutical ecosystems in Korea and China initially focused on generic drugs and subsequently introduced globally recognized drugs.

However, China is transforming itself from “best in class” to “first in class” and becoming a leader in innovative drug development. Korea, on the other hand, lags behind China in most indicators, including speed of development, new modalities, clinical infrastructure, and investment capacity, most Korean analysts acknowledge.

'Returnees' with Big Pharma experience become key players in China's innovative drug development

When talking about the rapid growth of China's biotech industry, there's one group of people not to be left out. They are the “returnees,” who have returned to China after studying abroad in the U.S., Europe, and elsewhere to pursue degrees or gain experience on the front lines of the industry. Chinese people call them “sea turtles” and consider them the most powerful change agents in China's drug discovery ecosystem.

With experience in academia in the U.S. and Europe, as well as in clinical development, technology transfer, and regulatory strategy at global pharmaceutical companies, they return to China to lead the founding of local biotech startups, attract investors, and design global clinical trials.

This is why the biotechs they founded are not just Chinese biotechs but global drug discovery biotechs. They are the key pillars that have transplanted first in class drugs into the Chinese drug development ecosystem.

“Returnees are people who have lived in the U.S. for 20 years, earned their degrees in the U.S., and worked for global pharmaceutical companies before returning to China,” said a Korean expert familiar with Chinese drug development.

These individuals tend to start Chinese biotech companies, leading technology transfer based on their relationships with global pharmaceutical companies, as well as attracting large-scale global investment easily by utilizing various business dynamics, the expert added.

A case in point is BeOne Medicines (formerly BeiGene). Co-founder John Oyler founded BeiGene with Xiaodong Wang, a biochemist with academic experience in the U.S., after returning from a career at a global pharmaceutical company. The company developed the PD-1 immuno-oncology drug Tevimbra, which was approved by the U.S. Food and Drug Administration (FDA). The company was listed on the Nasdaq and Hong Kong stock exchanges simultaneously, attracting the attention of global investors.

Another example is Zai Lab. Founded by Dr. Samantha Du, who has extensive experience in the U.S., the company initially focused on licensing global drugs to China. It expanded its presence through rapid clinical entry and the commercialization of technology. Today, the company has transitioned to exporting its pipeline internationally.

Zai Lab's transformation into a rapid drug development company has a significant connection to Dr. Du's background. She has experience in business development at Pfizer, encompassing not only drug discovery but also licensing.

Many other biotechs have been founded by returning talent, including I-Mab, Innovent, and Harbour BioMed. These companies are not only developing new drugs but also nurturing bio-ecosystems, including clinical research organizations (CROs), contract manufacturing organizations (CMOs), and the bioprocessing industry, reshaping the entire Chinese biopharmaceutical industry to meet global standards.

What is particularly noteworthy when compared to their Korean counterparts is that they initially raised significant amounts of funding and hired dozens to hundreds of professionals in the early stages of their business. This shows the difference in market confidence in founders with global networks, not just the amount of funding.

“For companies that have already leaped into global biotech by being listed on Nasdaq, the difference in all capabilities is more than 30 times greater than that of domestic companies,” a Korean industry executive said. Although there have been recent political and diplomatic issues between China and the U.S., they do not seem to impact the industry significantly. Even under the Donald Trump administration, Big Pharma remains very interested in Chinese biotech.”

Big Pharma's interest in Chinese biotech leads to the latter’s various outstanding modalities and diseases

Chinese drug development companies are becoming global drug developers not only in terms of quantity but also in terms of quality. In terms of pipeline, Hengrui Pharmaceutical is particularly noteworthy, with a pipeline of 147 new drugs as of 2023 and an investment of 30 billion yuan (approximately 5.65 trillion won) in R&D alone, including more than 90 products developed in-house.

Based on these development capabilities, Hengrui Pharmaceutical is also actively engaged in global out-licensing. It has conducted five global technology transfers in antibody-drug conjugates (ADCs) alone. In particular, the company signed a strategic collaboration agreement with Merck worth about 1.6 billion euros, securing an exclusive license to develop, produce, and commercialize SHR-A1904, a Claudin 18.2 ADC, and HRS-1167, a potent and selective PARP1 trapping inhibitor, outside of China.

In addition, Hengrui Pharmaceutical signed a $6 billion technology transfer agreement with Hercules in the U.S. for GLP-1 therapeutics and cardiovascular therapeutics, securing a 19.9 percent stake in Hercules and accelerating its global expansion.

Given this, Chinese drug development companies are actively targeting the global drug development market through technology transfer with Big Pharma, as well as developing their innovative drugs. According to data published by the Korea Health Industry Development Institute (KHIDI), 40 technology transfer collaborations between Chinese drug development companies and global pharmaceutical companies were reported by the third quarter of last year.

Global licensing collaborations were primarily carried out in various modalities, including antibodies, with deals for ADC drugs and small molecule compounds, which have been in the spotlight in recent years, traditionally being strong. By disease, the most significant number of deals were in the oncology space, where ADCs are primarily targeted, followed by autoimmune diseases and central nervous system (CNS) diseases.

“Chinese companies initially adopted a pharmaceutical industry structure that relied on the introduction of foreign drugs, but recently, they have been actively developing their new drugs as well as licensing out to global pharmaceutical companies,” said an insider from the Chinese pharma and biotech industry. “Although the pipeline is still dominated by ‘me better’ drugs rather than ‘first in class’ drugs, the expansion of new modalities and diseases is progressing rapidly through collaboration with global pharmaceutical companies.”