McKinsey Global Institute<\/a>.<\/p>\nThe country may well foster new models of innovation, but success will require a long-term commitment and talent development.<\/h2>\n
The health challenges\u00a0of China and Asia offer big opportunities for multinational pharma companies. Cases of chronic diseases, such as diabetes, are on the rise in the region, as are lung, gastric, and liver cancers. China alone is likely to be the world\u2019s third-largest pharmaceutical market by this year, with sales of more than $50 billion.<\/p>\n
AstraZeneca, the largest multinational pharmaceutical company in China\u2019s prescription market, has positioned itself to take advantage of this growth\u2014it has more than 4,700 employees in the country, in manufacturing, sales, clinical research, and new-product development. In particular, AstraZeneca was an early mover there in research and development: in May 2006, it announced a $100 million R&D investment, which included the establishment of the AstraZeneca Innovation Center China, in Shanghai. The center\u2019s initial research mandate was \u201cIn China, For China,\u201d but it now has a broader mission as a full-fledged discovery center focusing on diseases more prevalent in Asia.<\/p>\n
These heavy investments in China should give AstraZeneca\u2019s innovation efforts a boost by providing closer access to China\u2019s scientific talent pool and to potential external partners, says Steve Yang, the company\u2019s vice president and head of R&D for Asia and emerging markets. Yang, who joined AstraZeneca in January 2011, recently discussed the challenges of pharmaceutical innovation in China in an interview with McKinsey\u2019s Jeremy Teo at the Shanghai headquarters of AstraZeneca China.<\/p>\n
The\u00a0Quarterly<\/em>:\u00a0How is China\u2019s environment for innovation in pharmaceuticals different from the environment in other markets?<\/p>\nSteve Yang:\u00a0In many areas, doing pharmaceutical R&D in China is similar or identical to the West. We basically have the same quality and compliance standards throughout our R&D efforts. We are a regulated industry, and we try to follow local and global regulations.<\/p>\n
Still, three factors differ from other markets and present a unique opportunity for China. First, the current macro environment of China is very favorable, in terms of the growth of the pharmaceutical market, the investment of the government in infrastructure and basic research, and the availability of talent.<\/p>\n
The second advantage is timing. Our industry globally is facing a tough R&D productivity challenge. That means we have to do things differently out of necessity\u2014and that particular mandate is very, very strong across all the companies. We\u2019re not going to replicate what has been done in the West. We will try to innovate and transform how we do R&D.<\/p>\n
The third advantage is, to some extent, a double-edged sword. There has been limited innovative pharmaceutical R&D work done in China, so we are starting with a clean slate, both in terms of the experience of local talent and the environment. But that could be an opportunity. It could remove many of the existing constraints of organizations, allowing us to experiment more and to try different things with the hope that, ultimately, new R&D models will emerge. These could prove to be innovation driven, but different from and more effective and efficient than the model that\u2019s been used in the past.<\/p>\n
The\u00a0Quarterly<\/em>:\u00a0In this environment, how do you approach innovation in China?<\/p>\nSteve Yang:\u00a0I can offer three specific facets. The first one, which is fundamental, is that we can leverage what our industry has learned painfully over the last few decades. There is high attrition at each step of the R&D process, and we learn from all the companies and all the products across these areas about what didn\u2019t work. For example, we have learned that patient selection is critical to reducing the attrition rate. Selecting the right biomarkers and patients is pivotal to the success of a drug. This is a new insight, but one that is widely available to whoever wants to start a new drug discovery operation.<\/p>\n
The second is that there are many unique disease mechanisms in China. Gastric and liver cancers, for example, have high prevalence and, in many cases, could have different populations or different disease etiologies. That presents a white space on which R&D innovation can focus. We can use what we have learned in the West to understand this situation and try to develop new medicines against those diseases. I hope that will open up new markets and help us meet unmet medical needs of patients in China and the rest of Asia.<\/p>\n
The third, which is also very important, is that China and, to some extent, India have shown the world the importance of conducting R&D with more resource efficiency, particularly by focusing on externalization. This could mean strategic outsourcing of certain R&D functions. It could also mean collaborating with academics or biotech companies, and that\u2019s an area in which I believe China can offer tremendous potential not only for our local R&D operation but also for our global R&D.<\/p>\n
The\u00a0Quarterly<\/em>:\u00a0There are some skeptics who say that pharmaceutical innovation in China is a long shot, and any efforts will take many years to materialize. How do you respond to that?<\/p>\nSteve Yang:\u00a0We are a regulated industry, so our product-development time line is very long. Look at the traditional hot spots of pharmaceutical innovation in Europe and the United States and at some of the R&D sites in the West. How long does it take for a site, from its establishment, to become productive, to discover and develop new drugs? We are looking at decades. On the other hand, that\u2019s the type of long-term commitment a company and a nation need to reap long-term benefits, economically, through knowledge development and innovation that will eventually benefit patients.<\/p>\n
The\u00a0Quarterly<\/em>:\u00a0How far has AstraZeneca gone in achieving its aspirations for innovation in China?<\/p>\nSteve Yang:\u00a0We have made great progress and built a solid foundation. But if you use as a measure the time needed to develop a new drug, we still have a long way to go. It takes 10 to 15 years to take an idea all the way from a scientist\u2019s hypothesis to products on the market.<\/p>\n
Our Innovation Center China was announced in 2006 as a part of a $100 million investment we made in China, and it was launched in October 2007. During the four years since then, we have accumulated a lot of data, contributed to global oncology research in the area of biomarkers and translational science, and built credibility and a strong team locally. We are ready to expand our mission to become a drug discovery center, with a special focus on cancers prevalent in Asia, such as gastric and liver cancers. But the journey has just started.<\/p>\n
The\u00a0Quarterly<\/em>:\u00a0What are the bottlenecks to successful R&D in China?<\/p>\nSteve Yang:\u00a0There is a Chinese saying that you may have a destiny, and that final destiny may be very bright, but the road that leads there is inevitably windy and full of challenges. That\u2019s the case at both the strategic and operational levels. The intellectual property\u2013protection environment has been improving, but there is always room for further improvement. Also, the industry needs to work with government stakeholders to improve and bring more clarity to regulatory policies on drug development.<\/p>\n
On a day-to-day basis, managing turnover and retaining and developing talent can be challenging, although in AstraZeneca R&D we are fortunate to have a turnover rate well below the industry average. Above and beyond these, AstraZeneca is a multinational company, and the majority of our senior leaders, our resources, and our stakeholders are thousands of miles and many time zones away. Constantly gathering their support and commitment is very important. From my experience at AstraZeneca, we have received top-level support and have good stories to tell. But we can never really rest on our laurels.<\/p>\n
The\u00a0Quarterly<\/em>:\u00a0How do you rate the quality of R&D talent in China\u2019s pharma industry?<\/p>\nSteve Yang:\u00a0There are a large number of scientists available, trained either overseas or locally. We have seen significant quality of talent both in the returnee population and in the locally educated population. There are disciplines\u2014for example, chemistry and general biology\u2014that tend to follow this trend. There are also disciplines that are highly specialized and require decades of training. In those areas, the talent, particularly those with experience, is in short supply. Examples would be toxicologists, pathologists, statisticians, and clinicians. That\u2019s one dimension to look at: the technical competency of the talent.<\/p>\n
The other dimension, given the fast growth of the markets, includes the leadership and management capabilities of the talent. In many cases, companies like ours need to ramp up our efforts quickly, so we are giving the scientists\u2014particularly the scientific leaders\u2014the mandate not only to do good science and to drive projects but also to become good leaders and good managers. If we use those criteria, the number of individuals who possess all these skills is smaller.<\/p>\n
But in general, we are optimistic. From our own experience, we can recruit talent overseas and locally. And to support our portfolio, our mission, and, more important, the Innovation Center China, we have an excellent record in retaining and continuously developing those colleagues.<\/p>\n
The\u00a0Quarterly<\/em>:\u00a0Would you elaborate on your views about intellectual-property protection in China?<\/p>\nSteve Yang:\u00a0We have seen a significant improvement in the IP environment. But, because of the rapid development of the legislative environment and the regulatory framework, there is a constant flow of amendments to policies on the IP law. In many cases, it took some time for the government, the legislature, and enforcement agencies, as well as industry, to understand fully what those new regulations meant. That\u2019s just natural growing pains. In IP law, there has been a recent commitment reflecting the government\u2019s increasing understanding of the importance of IP, but we hope to have more clarity around how those new laws will be interpreted and enforced.<\/p>\n
The\u00a0Quarterly<\/em>:\u00a0What will innovation in China look like in the future?<\/p>\nSteve Yang:\u00a0One aspect is the view of the Chinese government. They have identified seven pillar industries that have strategic importance and should be innovative, including life sciences, medical, and biomedical. It is from those areas that the seeds of innovation will likely come in the future.<\/p>\n
Another aspect is China\u2019s urbanization. There are consequences to the migration to megacities with populations of more than 20 million. In these environments, people will increasingly have a more sedentary lifestyle. In such an environment, with high-density living, how do we continue to help people live a healthy lifestyle, prevent disease, and improve the quality of living? And the challenges and opportunities go beyond just inventing the next pill or vial for injection, to fundamentally thinking about what, with so many people living together, is the best way to prevent disease or at least slow down disease and some of the chronic-disease progressions? That is something I don\u2019t think the world has really tackled before. The scale of such innovation is where China can offer ground for experimentation and, ultimately, a marketplace where the impact can be shown.<\/p>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"advgb_blocks_editor_width":"","advgb_blocks_columns_visual_guide":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[],"tags":[],"blocksy_meta":"","yoast_head":"\n
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