From joint ventures and licensing agreements Biotechnology is growing as a key bridge that connects China as well as Japan.
Chinese Presidency Xi Jinping proclaimed: “Biopharmaceuticals is a strategic emerging industry vital to China’s economic growth, public welfare, and national security.” For experienced China observers, this type of rhetoric triggers alarms. If Xi refers to “national security,” it generally indicates the following: massive mobilization of resources within the country as well as a more assertive approach overseas. While China’s Chinese Communist Party (CCP) has used the phrase more expansively lately, Xi typically reserves this phrase for his most important priority.
In the last few decades, the biopharma industry has risen to the elite group of other industries such as artificial intelligence (AI) semiconductors and rare earths – the pillars of Beijing’s quest for ” high-quality development” and self-sufficiency in technology. As China is attempting to bridge the gap in technology between itself and its counterpart in the United States, the life sciences have been pushed into the forefront of CCP’s strategy playbook.
At one time, it was viewed as a one-trick pony in the production of generic drugs, the biopharma industry in China has been consistently releasing innovative drugs with low cost and providing top-quality services and at competitive costs, and Chinese firms are beginning to establish themselves as leading players in the global integrated life sciences. BGI Genomics and MGI Tech have established themselves as the industry’s leaders in the field of human DNA sequencing. WuXi AppTec and WuXi Biologics are at the cutting edge of contract research and development for drugs.
However the Chinese pharma market across China’s pharma market in the United States is surging. According to the 2023 Atlantic Council report in the year 2020 it was estimated that the United States purchased only 1 percent of its imports of pharmaceuticals from China. In 2022, however China’s share had grown to nearly 8 percent an astounding increase in only two years.
As Chinese drugs gained ground within market U.S. market, U.S. policymakers started to voice their worries. The rise of China posed a double threat to big pharma as well as U.S. national security, increasing Thucydidean concerns about the escalating nature of competition in the world’s economy and geopolitics. Under the former president Joe Biden and now President Donald Trump, these anxieties quickly morphed into a flurry of tariffs, sanctions and other protectionist measures to protect U.S. interests against Chinese power.
The bill was passed through the House in September 2024 The Biosecure Act was a stern position in the field of Chinese biotech, which denied top companies having access the U.S. pharma supply chains. The bill required U.S. companies to cut connections with major contractors, including WuXi AppTec in the name of national security issues. WuXi was quick to fire back, blasting the move as an illegal decision to make and insisting the company is not a security risk for either the United States or any other nation. The bill hasn’t yet been approved through the Senate or become law, but it may be re-examined, particularly because Trump looks to develop ways to indigenize this U.S. biopharma industry.
As a result of U.S. decoupling, China’s biopharma industry is recalibrating itself and diversifying the risks of investing expanding its presence beyond the traditional market and adopting agile efficient, cost-effective strategies for business that are designed to stand up to geopolitical turmoil. In the words of the Carnegie China’s Xue Gong, Chinese biotech companies are turning their attention on Southeast Asia, eyeing the regions’ largely untapped market for pharmaceuticals. In the context of China-U.S. huge power rivalry this pivot raises an important question: Who is the next company that China select as their next supplier of biotech?
Enter Japan as China’s long-time rival and a biotech giant on its own. Since the mid 2000s, Japanese pharma giants including Takeda, Otsuka, and Eisai have formed alliances with Chinese firms to tap the growing market for drugs in China. However, as China’s biotech sector has evolved from imitation to cutting-edge the rate of technological innovation has begun to slow.
Take a look at fruquintinib an option for colorectal cancer discovered at the HUTCHMED’s Shanghai labs in the year 2018. After it was proven to be effective in the United States and internationally-based clinical trials, Takeda snapped up exclusive worldwide rights in 2023. A little more than a year later it was approved by the regulatory authorities in Japan as well as it was approved in United States, becoming a first-in-class drug for colorectal cancer on both sides of the market.
These license agreements allow for companies that are innovative to take their products to the world, and collect royalty without the burden of managing foreign markets or complex regulatory systems. For licensees, the advantages are equally clear with the exclusive right to manufacture and distribute, access to the latest technology and know-how, and the potential for more collaborations down the road and all of these offer the advantage of a competitive advantage domestically.
China’s huge market and the streamlined process for approving drugs makes China a more attractive destination for Japanese companies seeking large profits and fast move-to-market strategies. With China expanding its innovation the capacity of its company to develop highly-impact pharmaceuticals for export to the world is also growing at a rapid rate.
On May 20, 2023 Eisai inked an agreement for joint development together with the Hangzhou-based BlissBio to co-develop BB-1701 an antibody-drug conjugate that is promising for treating breast cancer and other types. The deal – which could amount 2 billion dollars in payments for milestones by Eisai to BlissBio it goes beyond traditional licensing. By incorporating IP sharing and a significant R&D collaboration this agreement signals a significant change: Eisai isn’t just relying on China to scale up and is betting on its innovation edge. The move is a sign of Japan’s awareness that China isn’t just trying to catch up in biotech. It’s aiding in setting the pace.
This imaginative approach is even more impressive given the fact that China is regarded as a hub for manufacturing. In the course of an conversation by Asia Society, Gary Rieschel co-founded Qiming Venture Partners – one of China’s most prestigious healthcare venture capital companies – will clarify the situation the reason for this phenomenon wasn’t triggered by strategic central planning or the early state investment. It was fueled by a daring generation of Chinese scientists who came back from the United States in the mid-2000s with Ivy League degrees and an “innate entrepreneurialism.”
Finding opportunities in China’s messy and underdeveloped healthcare industry in the early days They launched scrappy companies that focused on diagnostics, reagents along with contract research. Researchers and scientists with talent joined and then expanded to create their own companies. Venture capital came in. In the wake of the rapid growth of AI and big data This homegrown group of biotech entrepreneurs laid the foundation for an industry-leading innovation engine before the state was in place.
In the absence of entrepreneurialism, Beijing is no longer only cheering from the onlookers. Beyond its generous R&D support and a rousing speech and a plethora of other perks, the CCP has changed the domestic IP and regulatory landscape to draw foreign investment. What is the most significant change? The policy is taking to the streets. The government has launched joint innovation hubs as well as zones for development that aim to help Chinese and Japanese companies to work in tandem. This is a trend that is spreading throughout the nation.
On July 20, 2020 China along with Japan signed an agreement on 13 joint biopharma projects in Tianjin with a total value of fifty billion dollars ($7.1 billion) which led to the establishment of the China-Japan Health Industry Development Cooperation Demonstration Zone one of six clusters spread across China. In the past the local government in Chengdu has partnered with Takeda to establish the Takeda China Innovation Center – – a hub of digital technologies that will help the company implement its strategies in one the fastest-growing markets. “China is an important country for Takeda, and we are committed to advancing innovation in the country,” said the CEO Christophe Weber at this year’s China Development Forum.
Collaboration in biotech research in China with Japan isn’t just an effective plan – it’s a high stakes technology and growth accelerator to both nations. Partnerships across borders open the door for new market opportunities, alleviate the risk and cost and facilitate exchanges between tech and talent. In the real world the biotech hubs of China, their manufacturing strength, and ingenuous spirit are a perfect match with Japan’s precise manufacturing and R&D capabilities, providing the base of regional biotech pipelines.
When it comes to technology, their skills in different subsectors can accelerate future waves of biotech innovations. Japanese companies can boost their established clinical research frameworks through the use of the Chinese’s AI as well as big data technology to speed up the process of discovering drugs. In addition, Chinese firms can tap the Japanese experience in Regenerative medicine and stem cell science to boost the quality of stem cell therapy and biobanking efforts.
Both countries are facing at the same demographic cliff ageing populations with escalating health care requirements. Joint biotech ventures provide the chance to combat the gold economy squeeze by working together, as well as (if somewhat unpleasant) driving growth in the sector and driving forward new treatments for both markets. But there’s one problem that is: who will pay the price? With the fewer young people in the growing elderly population and insurers, policymakers, and biopharma will need to achieve a delicate equilibrium between innovation in products as well as profitability and affordability over the next decade.
The most important thing is that cooperation in the field of biotech among China and Japan is also a form of diplomatic diplomacy in the quiet. With the backdrop of tensions in the past as well as territorial disputes and maritime security concerns in the region and on the sea Biopharma provides a the only neutrality to China and Japan to work together in collaboration over conflict. This is due to Japan’s regulatory approach is more towards strategic rather than commercial and biotech – in contrast to semiconductors or AI isn’t yet used as a technology of the frontline in Japan’s security strategy. The shared economic interests of both parties as well as a shared need to address the issue of aging populations has been able to keep the door open. At present, a pragmatic demand for innovation – not an ideology is the driving force in biotech.
To China and Japan cooperating in sensitive research that involves genomic information, vaccine development and biomanufacturing isn’t just pushing the research forward, but also creates trust between institutions. A tighter integration of supply chains and sharing R&D encourages strategic interdependence creating tensions and facilitating more collaboration between scientists. With populations aging in both directions, the biotech’s intrinsic humanism is also able to alter public perceptions and soothe long-standing societal animosities. front.
Naturally, the human angle extends far beyond bilateral relationships. Instead of battling for supremacy in the region biotech offers China and Japan the opportunity to work together Asia as well as the rest of the world at large on critical issues that are universally resonant that include health and security of food. The shared goals convey a clear message to the region that collaboration rather than competition is what the future holds for Asian development. Recently, Chinese as well as Japanese Biotech initiatives that have been launched in Southeast Asia point to just that, highlighting the scaleable potential of ASEAN+3 collaborations and laying the foundation for an all-Asian biopharma pipeline.
Regional cooperation is becoming more important because U.S. isolationism picks up the pace. Beyond the specific industry-specific Biosecure Act, the Trump United States has shown an incessant desire to break traditional alliances and rules of engagement. The latest round of tariffs hasn’t only impacted China; Japan and other allies are also hit in the crossfire. While a 90-day break on “reciprocal” tariffs may offer Japan some respite however, specific tariffs for sectors like steel, automobiles and other items are an issue to be concerned about.
Asia Society’s Emma Chanlett Avery advised that this continuous “whipsaw of policy changes” could eventually undermine Tokyo’s faith within its Japan-U.S. Security alliance. In the midst in the face of U.S. unpredictability, Japan is in a position to intensify its relations with the region. In addition, with Trump not likely to ease his grip on China anytime in the near future, Xi would be equally smart to strengthen the position of his country in Asia in opposition to “America First” policies.
When Xi talks with Japanese Premier Ishiba Shigeru it would be wise to make biotech an upper position on the agenda. The stakes are very high in a global context in which U.S. decoupling is real and growing, biotech is Beijing’s chance to defeat Washington and consolidate regional power by one step.
