Strategic shift in perspective
To secure their future success in this transformed landscape, European and American players must adopt a strategic shift in perspective and approach. Engaging strategically within the Chinese domestic market is crucial. This entails recognizing China not merely as a market for finished products, but as an increasingly vital source of novel drug candidates, cutting-edge technologies, and scientific talent. Engaging confidently in times of geopolitical tensions requires balancing strategic agility in the short term with a clear, long-term vision for operating in this complex environment.
A critical imperative is to secure supply chains within China. This involves implementing "local for local" strategies, which include building manufacturing and sourcing capabilities within the country. This approach reduces reliance on imports and helps mitigate the impact of potential tariffs or trade restrictions. Beyond manufacturing, companies must leverage China as a dynamic innovation center. This involves actively utilizing the deep pool of local talent, particularly those with experience from multinational companies, and establishing a significant R&D presence. For instance, Roche established its first R&D center in China in 2004, followed by an Innovation Center in Shanghai in 2016.7 Further, Bayer has pursued deep collaboration with leading Chinese universities like Tsinghua, resulting in numerous joint research projects and the establishment of a life science incubator in Shanghai focused on cutting-edge areas like cell and gene therapies.8 Such investments allow international companies to tap into local expertise and accelerate their research pipelines.
Conducting clinical trials in China has also become essential. Leveraging the sheer volume of patients, harmonizing standards and regulations, and improving infrastructure allows for greater speed and efficiency in patient recruitment and trial execution, accelerating the overall drug development timeline. That’s why China is now the world’s leading trial location, with 39 percent of all trials started globally in 2023 having one or more sites in China, up from 25 percent in 2019.9 In fact, many companies are even launching drugs in China first to capitalize on the recent regulatory reforms and faster approval pathways. However, navigating the complex market access landscape remains a challenge with only 26 imported drugs included in the NRDL as of 2024. Securing inclusion within the Chinese economy is crucial for broad patient access and commercial success. This makes partnerships and joint ventures with local Chinese players who possess the expertise and relationships to effectively navigate the NRDL process an imperative.