Editor's note: The following is an edited excerpt combining questions from interviews with our Executive Editor, Greg Scott, who is also President of ChinaBio® LLC, conducted by CCTV in Beijing, and Windhover Information in the U.S.

Q. With all of your activities at ChinaBio®, you’re obviously well positioned to understand the pharma industry here in China. Tell us about the market size and potential growth of the industry.
Scott: The global pharma market is approaching $700 billion a year now, and growing at 8% to 10% per year. China is only about 5% of the market, but it’s growing at over 20% per year. That means that over 1/10th of the total global growth is coming from China, making it a market that can no longer be ignored.

What are some of the changes you've witnessed in the marketplace and how has China played a role in those changes?
The world has suddenly become aware of the China biotech industry because of WuXi PharmaTech’s (NYSE: WX) IPO last August. Every big pharma is now investing in China and VC investment in biotech here has grown four-fold in just the last year.

What is the most highly anticipated policy for the next year and why?
While it hasn’t been announced yet [at the time of this interview], China is committing an additional $1.5 billion to biotech innovation over the next five years. This doubles the current rate of investment. You can literally see the level of excitement increasing in the major life science parks here.

Given the growing trend to outsourcing using CROs and CMOs in China, what benefits does this provide to big pharma and what can we expect in the future?
You can reach human proof-of-concept in China much more cheaply and quickly than almost anywhere in the world, and the quality of the data is rapidly becoming world class. This is one of the reasons we founded ChinaBio® Therapeutics: to quickly build value in highly promising molecules that would be ignored in the U.S.

Outsourcing will likely continue to grow significantly for the next 5-10 years in China. But there will be fewer players. Charles River’s (NYSE: CRL) acquisition of BioExplorer is just the first of many we expect to see over the next 2-3 years as the industry consolidates.

Where do you see the industry in the short-, medium-, and long-term?
The short-term focus is still on services, as evidenced at our ChinaBio® Investor Forum last December in Shanghai. And there will certainly be several more CRO IPOs – watch for ChemPartner, Pharmaron, and maybe Shanghai Genomics to come out in the next 12 to 24 months. But we’re also seeing a trend toward more VC funding of early and mid-stage biotechs.

Medium-term, we’ll start to see more novel, China-developed drugs reaching the clinic, and eventually the global market.

Long-term, China will become the #1 player in the pharma industry in 15-20 years.


Disclosure: none.