Put China in Your 2010 Travel and Business Plans
By Terri Somers
BIOCOM Director of Communications
Now is the time for Southern California companies to consider creating relationships in China, where changes in the health care system, continuing support from the government and increasing affluence are fueling a life science boom.
BIOCOM will do its part in 2010 to help its member companies create those cross-Pacific relationships through at least two trips to China, San Diego meetings with delegations of Chinese government officials and business executives and the annual CalAsia conference in October.
The China initiative is the evolution of work that BIOCOM has done in the last several years to lay the foundation for relationships that will allow our members to be a part of a market that is growing at an exponential rate with full support of the nation’s government. That work includes a recent two week mission to Beijing, during which BIOCOM President and CEO Joe Panetta accompanied the nonprofit California Biotechnology Foundation and several of California’s elected officials.
“What I took away from the jam-packed trip was a better understanding of the tremendously valuable opportunity that BIOCOM members have to be a part of an exponential growth opportunity,” Panetta said.
As chairman of the CBF, Panetta worked with State Senator Lou Correa of Santa Ana and CBF Executive Director Patty Cooper to plan the trip. Also joining the delegation were State Senator Denise Ducheny and Assemblyman Marty Block, as well as Co-CEO of San Diego-based Althea Diagnostics Magda Marquet.
The trip took the delegation from Shanghai to Beijing, and included visits to several life science parks, which are actually small, self-sufficient towns. There are a total of 57 science parks throughout China. The group also visited the most advanced cardiovascular hospital in China, and had meetings with economic development and investment promotion organizations in Beijing. The California delegation also toured biotech and pharmaceutical companies, and were briefed on the regulatory environment in China by members of a California-based law firm that has had offices there for more than a decade.
“Because our delegation included legislators from California as well as BIOCOM, I think a lot of doors were opened for us,” said Magda Marquet, Co-CEO of AltheaDx. “Rather than coming from a small biotech company, we were representing 800 or so life science companies from Southern California and it made a major impact in opening doors,” Marquet said.
It was her first trip to China. The experience, Marquet said, helped to erase preconceived notions she had of the country’s life science and research communities.
“What really changed is that I now think it is extremely dynamic and they are moving extremely fast to catch the biotech wave. The Chinese government has every clear, very strong objectives and are putting a lot of resources into biotech,” she said.
“While (economically) it’s been gloomy here, the sky seems to be the limit there,” she said.
The Beijing and Central (what we call Federal) governments have for a few years now placed a significant amount of emphasis on the life science industry. Even with the current financial crisis, life science industry investment in China is up 31 percent for the year.
In Beijing, there is comprehensive government support for and investment in biotech and medical device companies. The Beijing Municipal Science and Technology Commission invests $43 million annually to support the industry there.
The Chinese see life science as a collaborative opportunity in many way, including academic exchange programs; joint R&D projects; in-licensing of products and as a clinical trials resource, Panetta said.
Meanwhile, the executives and government officials Panetta met with said China has a significant interest in accessing digital medical devices and components made by U.S. companies.
Health care reform is beginning to become a major thrust of the Chinese government. While big hospitals in large cities have dominated the medical care scene, the government plans to shift focus to include clinics and rural health care facilities. As this happens, there will be a need for basic products, especially generic drugs, for mass consumption.
There is a growing role for niche products within the growing high income population, regardless of whether health care insurance provides coverage, Panetta said. Nutritional products, diabetes treatment, smoking cessation, cancer diagnosis as well as the consumer cosmetic side such as dentistry and vision care are all growing rapidly.
Marquet cautioned that there are still reasons to be concerned about intellectual property issues. And even after 20 years of doing business in China, some U.S. firms that the delegation met with said the landscape remains a challenge to navigate. “The rules are very different,” Marquet said.
However, if a company proceeds with caution, there is opportunity, she said. Marquet especially saw opportunity for her company’s diagnostics capabilities. And there is also market potential for US device and diagnostic companies that have products to sell, she said.
“The government wants to buy these products and the people want these products. There’s a huge and growing middle class and it wants to concentrate on quality of life and will invest in these products,” she said.
Marquet said she wants to get back to China in 2010, preferably through one of BIOCOM’s planned trips. “Let’s see if we can do a small collaboration and test the waters,” she said.
BIOCOM is not waiting until the New Year to continue building bridges to China. Panetta met with a delegation of China’s government officials on Friday, December 18.
“Our members should take a long view toward moving into China.” Joe said. “Some of today’s players in the Chinese market have been there for 25 years. But Chinese biotechs/biomeds see themselves at a disadvantage in the immediate future in translating basic science into products. They want to improve their quality control and brand recognition. They are looking for partnerships here in the U.S. In the next year BIOCOM will be looking toward creating more opportunity in China for our member CEOs as we return to China with Sen. Correa.” Panetta.
Members seeking information on the initiative or planned trips should contact Joe Panetta at 858-455-0300.