Taizhou adds medicine to its harbor heritage with the construction of China Medical City.  

China's Science Revolution

To learn more about the explosion of biotechnology in eastern China, I take a trip to China’s largest production and export base of medicines, Taizhou, a third-tier coastal city almost 300 miles from Shanghai. Just three years ago, where the bulldozers and construction workers now shift piles of dirt, farmers once tilled 10 square miles of farmland. Construction for the massive China Medical City (CMC) began in 2006, and one fifth has been completed. As I visit just before the Chinese New Year break, the place is quiet. The only vehicle on the road besides ours is a lone electric bike.

Despite CMC’s beginning stages, many buildings already have popped up. China’s State Food and Drug Administration has opened offices here, and 200 companies have moved in. In 10 years, there will be 1,000. It’s an ambitious project; an entire city based on the biotechnology and pharmaceutical industries. A hospital, luxury villas, apartment complexes, R&D, cafés, a four-star hotel—it’s all in the blueprints. Taizhou’s biggest obstacle for now is bringing in the people who will transform the city into an innovation capitol. The city is far away from Shanghai but the government is tackling its transportation problem head-on. A new direct high-speed train line runs to the capital, Beijing, perhaps thanks in part to the fact that China’s President Hu Jintao hails from Taizhou. Hop on at 6 p.m. and you arrive the next morning at 7 a.m. Another high-speed train line is in the works and will be finished in two years, shortening the commute to Shanghai to one hour. In January, ground was broken for an airport that will be finished in 18 months.

My guide points out a scale model of the CMC, and tiny buildings light up in sync to the wide-screen video blasting out facts and figures behind it. It looks like a Lego dreamland, an entire city laid out below us. But it’s a dream that’s being made possible through the support of government leaders from the national on down. That becomes apparent just a few steps away, where large photos of politicians who have supported the CMC’s development line the room’s entryway. In case I haven’t gotten the message, my guide adds for emphasis, “I saw the vice governor of Jiangsu province walking around here today.”

Soon, I’m talking to He Rong, the “mayor” of CMC, and I can see that this dream is a well thought out one. “We’re not building a high-tech park—we’re building a city. It’s a complete package,” he says. He has been involved in the development of CMC from the start.

He talks fast. In the manner of many government officials in China, bullet points pepper his speech, which rises and falls in exaggerated cadences. The clubhouse where he entertains his visitors has four ornately decorated private banquet rooms, in Chinese, Japanese, American and European style to make sure his guests feel comfortable wherever they’re from. He walks briskly, with purpose, while juggling a banquet lunch with foreign business people with numerous phone calls and a visit from provincial government officials. Everyone wants a word with him, whether to give advice on how to develop CMC or to gain a foothold in the fast-developing park.

He wants to compete but doesn’t want China to be seen as a threat. “We want to catch up to the U.S. but not overtake them,” he says. “We are studying the U.S.’s successes and we have top government support at national levels—that’s really important.”

He Rong believes the CMC is attempting something new. “Why is everyone coming here?” he asks. “We’re doing something different here. Everyone [else] is doing high-tech parks, saying, ‘I’ll sell you a piece of land.’” But He Rong takes a different approach: “I have to take the dreams of the scientists and make it reality. We’re here to be the maids for the scientists.”

Scenery And Starbucks

Leaving CMC, I embark on a three-hour car ride to Shanghai. As we alternate between zipping past farmland and the occasional city and sitting in long lines of tra c, I pass the time by chatting up my fellow passenger, a Chinese-American doctor and CEO who met with He Rong that afternoon. “ is is my third time to CMC, he says. “I see both excitement and potential trouble.” He worries that it will be di cult to attract talent to stay long term at CMC because of its remoteness, and says the results won’t be visible for  ve to ten years. But regardless, he is jazzed up from his audience with the “mayor” because “you’re talking to the decision maker, and he has the same vision [as you].”

In Shanghai, I board a subway train and ride out to the last stop on Line 2. I’m heading to Zhangjiang High-Tech Park (ZJHTP), a government-associated development  lling up fast with biotech firms.

Passengers carrying laptops jump off the subway and onto a shuttle—one with a futuristic bullet train design— that makes stops around the high-tech park’s software, semi-conductor and biotechnology neighborhoods, spanning 25 square kilometers and crossed by streets named after scientists like Halley. Multinationals and local university departments are all within a short walking distance of each other.

Despite the fact that the park is a busy and bustling place, the six-lane roads around it feel empty except for the shuttle, a sign that I’ve made it to the edges of Shanghai, a teeming metropolis whose city center is usually packed with cars. I pass the large THanksgiving Church, but beyond that, a few convenience stores and a Starbucks are all I see that isn’t housing or o ce space.

In Zhangjiang, 80 percent of the workers are under the age of 35, and while Yin Hong isn’t quite one of them, I think he could pass for one when we meet. As ZJHTP’s vice general manager, he has seen the park grow from its start in 1996 and watched it switch focus from light manufacturing to the high-tech sector.

“As China’s economy develops, people’s needs for healthcare are becoming more important,” Yin Hong tells me. “Chinese want to have the same quality of medical care as Americans. We believe that American advanced technology and medicine can beneFIt Chinese people.”

China’s fast growing medical market is one reason for the swi development of the sector here. “tHe increased demands of people in China are a big opportunity for Western companies,” Yin Hong explains. “That’s the reason why overseas companies love doing business in China. They have the market and the right people.” But he believes that Chinese patients are savvy enough to not just look to a foreign brand name. “There’s a need for R&D in China for U.S. companies, because medicines need to be made more suitable for Chinese people.”

Zhangjiang has thrived, Yin Hong says, partly due to its location. “Shanghai has already become a very good place for biotech development. Management people have an international perspective. The rules and regulations are transparent,” he says. “We have built a good relationship with multinationals, so they feel safe doing business here.”

The environment at the park, he brags, is ripe for cooperation, with larger companies working together with smaller companies. “We have formed an ecology chain.” Innovation is starting to breed here, he says, pointing out that 119 new drug patents have been approved in the past few years.

Yin Hong certainly is a good salesman. He ends his pitch with a warning for those still in doubt: “Whoever doesn’t jump on this opportunity might lose out in the future.”

Pharma From Pfizer

When I ask Yin Hong who else I should talk to, Steve Yang’s name is one of the first to pop up. He’s the quintessential sea turtle—the nickname given to Chinese who went abroad for study and are now returning in droves to capitalize on opportunities here. As a young college grad, Yang left China for the U.S., and returned 18 years later as Pfizer’s vice president, head of R&D, Asia, in 2006. “At that point, China was very di erent,” Yang recalls. “When I went to undergrad in Shanghai, [Zhangjiang] was all farmland. It’s almost a miracle to see China’s economic development progress so fast.”

Yang says the environment reminds him of a different era in the U.S. “I think the environment is vibrant. It really feels like Silicon Valley [when] I was there in the ’90s. During that time there was a lot of optimism. Entrepreneurism was respected,” he remembers.

Today, Yang feels an excitement in China that the U.S. lacks. “In the U.S. the mood is sober because the biotech industry is facing constraints,” Yang states. “In China, there are several factors driving the growth. There’s government funding for basic research. It does feel like it raises the innovation level.” Biotech in China is not as strictly defined as in the U.S., Yang adds, and in China boundaries are blurred, incorporating contract research organizations (CROs), basic research groups and integrative research firms.

The sea turtles, Yang says, are an important factor to China’s biotech boom. “There’s a very strong sense of innovation and intellectual rigor. I often joke this is a mini New Jersey plus the Eastern Seaboard. You bump into people like myself, as many scientists—especially senior ones—have worked in the U.S., or in academia. Anywhere you have critical mass of high-tech R&D you see the returnees. It’s actually a very small and tight-knit community.”

Still, Yang emphasizes that there are some stumbling blocks that make working in China inconvenient for now. For one thing, importing sample reagents from the U.S. can take a few weeks. Space also poses a problem, because ZJHTP is full. “So new companies have to go somewhere else or wait for vacancy,” Yang points out. “We’re literally running out of space.”

Developing Devices After leaving Yang’s office, I return to walking around the park. Yin Hong’s assistant suggests that I speak with the CEO of a young startup. After spending close to 20 years in the U.S., Ty Hu returned to China to found a medical device R&D center with four colleagues. Tall and lanky and dressed in khakis, a long sleeved t-shirt and a pu y down Southpole vest, he’s laid back but speaks excitedly and candidly about his work. In the medical device sector, Hu thinks being an early player will give his company an advantage. “In five years, the market will be populated with devices from centers like ours,” he predicts.

Hu tells me that China’s possibilities pulled him back. “The sheer size of the population is incredibly attractive for any product,” he remarks. “The market for my area is growing at 30 percent year over year. Nowhere in the world can you find that.”

Moreover, Hu reaps the benefits of both his returnee status and U.S. citizenship. “We step on the boundary,” as he describes it. “It’s an important advantage. When we need legal protection we’re on the foreign side. When we want state grants we’re on the Chinese side.”

Cities in eastern China have been eager to jump on the biotech bandwagon, and different areas offer various incentives. As Hu explains: “If you’re in Suzhou or Wuxi, they give you a tremendous amount of incentives: low-cost, even free land so you can build your offices or use as equity to get bank loans, start up funds, grants. The further away from Shanghai you are, the more incentives you’ll get.”

Even with all the handouts, no company is guaranteed success. For example, Hu explains that operating in China is not always cheaper for smaller companies. Basic supplies are not available, so he has to rely on imports. Manufacturing, on the other hand, is cheaper because of lower labor costs, but technology costs more. Still, the challenges aren’t stopping Hu. “It’s really the market. We can’t afford to come in late. Being here earlier is the reason we’re here, not cost,” he says. “Our success depends on whether we can survive locally.”

At the same time, the local area lacks the needed talent in medical devices. So Hu depends on researchers from the U.S.

Exploring A Cro

I wanted to get a sense of how a local CRO’s experience differs from a multinational’s, so I headed over to Sundia for a talk with Wang Xiaochuan. Bundled in a winter coat inside her chilly office, Sundia’s CEO looks like your friendly auntie, and she speaks of her company as her family, yet she also possesses a straightforward business sense. After going to the U.S. as a UNESCO fellow in the 1980s, she entered the biotech field. When she felt the time was right, she returned to China. “I see the environment is changing, people’s minds are changing, government is changing, so I believe the historical opportunity is here, even though I had a decent job and good life in the U.S.,” she explains. “It doesn’t matter how ugly your mother is,” she puts it bluntly. “You still love her. So a lot of us are American citizens but we still have this connection. We have relatives and friends here. We still care.”

Chinese biotech has a way to go before it catches up with the U.S., Wang believes. Most of the local companies are just a few years old, she notes, and lack experience doing drug discovery and development. “For drug development you need experience,” Wang asserts.

Wang says the industry needs local innovation. “You can see how many new drugs come from Chinese pharmaceutical companies. That could be a good indicator. If they’re just doing generic drugs, just copies, that’s not a real pharmaceutical industry.” Although China has not produced many new drugs so far, Wang foresees a change: “In the pipeline, I hear there are lots, maybe hundreds.”

As a local company, Sundia has had a positive experience at ZJHTP. “The good part about Zhangjiang’s government group is that they really like to learn, and they want to help and support us,” Wang tells me. “They often come to our company and ask, ‘What can we do for you guys? How can we help you?’” But Wang isn’t so happy with the cultural desert that is the suburbs. “I wish that the cultural life here could be better and provide more convenience, and a higher level lifestyle for us. We need some life in addition to work. That’s important,” she says.

Should Americans be worried about China’s biotech boom? “I think America should be excited rather than concerned,” Wang says. “Science never has boundaries. Any country which has developed great technology is a benefit to the whole global society.” Spoken like a true diplomat.

From Rice To Roche

To understand the changes that have occurred in ZJHTP, I visited Roche, the first company to move into ZJHTP in 1994, back when the park was still in the midst of rice paddies. After studying in China, Andreas Tschirky returned to Switzerland but felt so bored that he was inspired to come back to China, this time as the Roche R&D Centre China’s general manager.

Working in ZJHTP has been a good experience for Roche. As Tschirky describes it: “We had much more proactive support and openness to problems … than I have ever observed previously in the West.”

Still, Tschirky expects even more ahead. “China will become a major innovator in the future,” he claims. “What I see at the moment is a very fearful attitude in the West. I think we should focus on partnerships [rather] than maintaining this very biased attitude,” Tschirky says, with a hint of chastisement in his tone. “The healthcare industry has to serve humanity. If we just emphasize competition, we miss a lot of opportunities.”

Speaking of China’s future in biotech, Tschirky keeps a measured tone. “I’m excited about this development, but I’m excited in a realistic way,” he says. “You are a partner here. You have to pay your fair share, to play your role to be a responsible organization in China. There are things that have progressed significantly in the last few years, and there are things that we still have to work on.”

A Risky Return

Before heading home, I cross the street to meet one of ZJHTP’s all-stars, Samantha Du, Hutchison MediPharma’s CEO. When I enter Du’s office, I see her Forbes cover shot hanging on the wall. She is standing by her desk, talking on her cell phone with a headphone attachment plugged into her ear. She speaks short and to the point, but full of depth. In 2001, she le a position at Pfizer to start this company in China.

Remembering that transition, Du says, “Back then, most people were very skeptical about China’s ability to do innovative research. Now people believe this is one of the places to do R&D. Because there is the supporting infrastructure, you see people coming back.” She adds, “VCs are coming to China too. The market itself also justifies it.”

It wasn’t an easy decision for Du to come back to China. “I never thought I would come back. It took me a good six months to decide to take [the job],” she says. “There was curiosity. I wanted to make an impact, do something different. So I became one of the first group of sea turtles to show up on China’s shore.”

It was tough at the beginning. “When we came back it was very remote,” Du recollects. “You felt you didn’t have many resources.” But there’s more to innovation. As Du points out: “What you have is less important than what you think you will have. That hope, that incentive, drives a lot people.”

Even after close to a decade back in China, she says being a pioneer takes a lot of energy. “You’re still paving the road for the industry. It’s an exhausting place to be.” The industry is bigger than a few high-tech parks can handle, Du believes, but some of the biotech high-tech parks sprouting in China are a bit misguided. “It’s not necessary, it may be a waste, she says. “From the political savvy point of view it’s a good thing for every local government to support. The bottom line is: Do you have the infrastructure, do you have sustainable funding, do you have the attraction?” Her advice? “Differentiate. Don’t do the same.”

As I walk back toward the shuttle train, I believe that Zhangjiang is a success story. But will other high-tech parks succeed the same way? And will Chinese biotech ever compete at a global level with the U.S.? It will take far longer than my ride home to answer those questions.