Last week, a number of news items underscored the growing importance of China to the world’s life science industry -- a bullish outlook for China's R&D.

A Thompson Reuters report showed that China currently ranks number two in the world for scientific research output – as measured by the number of scholarly papers published (see story). Its output is, in fact, only one-third that of the US: 112,000 papers last year for China versus 340,000 for the US. Those statistics, however, obscure the fact that China is catching up quickly. If both countries continue at their current pace, China’s research output will surpass that of the US in just ten years. The research output in life sciences is one of the fastest growing of China’s scientific interests.

Showing a continuing commitment to innovation, China’s National Development and Reform Commission, together with the Ministry of Finance inaugurated an Emerging Industries Venture Capital Program with 9 billion RMB ($1.3 billion) to encourage high-tech emerging industries (see story). The NDRC and the MOF signed the agreement with seven local governments to set up 20 venture capital funds. The 20 funds plan to raise a total of 9 billion RMB, of which 1 billion RMB will come from China’s central government, 1.2 billion RMB from local governments and the rest from private investment.

Just after announcing a $1.25 billion investment in China R&D, Novartis (NYSE: NVS) said that India is not a place to do R&D because its IP laws are not strong enough to protect discoveries (see story). In 2006, Novartis made a commitment to build a $125 million R&D facility in Hyderabad. The next year, after the company lost a patent battle over its blockbuster cancer drug, Gleevec (Glivec outside the US), Novartis reneged on the center. In contrast to India, China’s IP laws had made tremendous progress, according to Novartis’ CEO.

Pfizer (NYSE: PFE) announced it would close six out of its 20 R&D facilities around the globe as part of its post-Wyeth-acquisition consolidation (see story), but the company’s Shanghai R&D operation is not affected – an implicit endorsement of China’s R&D. Pfizer did not disclose how many of its R&D staff would be fired, though it said R&D square footage would be reduced by 35%.

JOINN Laboratories (昭衍新药研究中心有限公司) expects China to become the R&D source for big pharma in the future, and the company is building a 1.2 million square foot facility to accommodate them (see story). “In the near future, pharma will outsource 75% of its pre-clinical work, up from a level of about 25% today,” said John Gong, PhD, VP and CTO of JOINN in an exclusive interview with ChinaBio® Today. JOINN is positioning itself for a CRO environment dominated by large, multinational pharmaceutical companies. “We would like to have preferred relationships with big pharma where we do 10-20 projects for a single company and have guaranteed income and maybe have a dedicated building for them,” said Gong.

WuXi PharmaTech (NYSE: WX) (药明康德) continues to expand its contract operations. The company signed a letter of intent with the Wuxi Outsourcing Area for Bio-Medical Research and Development to establish a facility that will provide R&D services (see story). So far, WuXi PharmaTech has not made a formal announcement of the LOI, though company officials did confirm its existence to ChinaBio® Today. They caution that WuXi PharmaTech has not begun construction, nor committed itself to a specific timetable.

Turning to product news from the past week, BMP Sunstone Corporation (NSDQ: BJGP) (美国美华太阳石集团公司) and Pfizer China (NYSE: PFE) formed a strategic partnership to distribute and promote Depo-Provera (Medroxy-progesterone Acetate), a Pfizer product used to treat endometriosis, in China (see story). Endometriosis is a medical condition in women of childbearing age that can cause significant pain. Financial details of the agreement were not disclosed.

D-Pharm Ltd. (TASE: DPRM) of Israel outlicensed the China rights to its treatment for ischemic stroke to Wanbang Biopharmaceuticals (see story).The drug, DP-b99, is currently in a Phase III multi-national clinical trial. D-Pharm and Wanbang will co-develop DP-b99 in China, with Wanbang underwriting the cost for the first 450 China patients in a Phase III trial. D-Pharm will be responsible for any additional patients.

Simcere Pharmaceutical Group (NYSE: SCR) (先声药业) acquired the manufacturing license of Rosuvastatin from Tianjin Tianda Pharmaceutical Co. (see story). Rosuvastatin, a statin drug, is marketed as Crestor by AstraZeneca (NYSE: AZN) as a treatment for high cholesterol. Simcere will acquire equity in Tianda to gain control of the manufacturing license, though specifics of the transaction were not disclosed.

Lijun International Pharmaceutical (Holding) Co. (HKEX: 2005) reported that its Enerxin Capsules, an antiviral drug, was recognized by the State Key Laboratory of Virology for effective restraint of the growth of influenza A (H1N1) (see story). The effects of the drug were similar to Tamiflu. Enerxin was developed by a subsidiary of Lijun, Shijiazhuang No.4 Pharmaceutical Co., Ltd.

China Medical Technologies (NSDQ: CMED) (中国医疗技术公司) received SFDA approval for its Leukemia BCR/ABL fusion gene detection FISH Probe (see story). The probe uses DNA probes to detect Philadelphia translocation, a chromosomal abnormality associated with three forms of leukemia. Detecting Philadelphia translocation is a critical diagnosis and prognosis tool for selecting the different treatment protocols appropriate for chronic myelogenous leukemia, acute lymphoblastic leukemia and acute myelogenous leukemia.

And finally, earnings season has now arrived, and China life science companies are reporting financial results from their most recent quarters. Although Mindray Medical (NYSE: MR), the medical device maker, announced a flat quarter, four small biopharmas had the pleasure of telling investors that revenues and profits are back on a significant upswing (see story). All China life science companies may not follow this pattern, but it is a refreshing change to read earnings reports that do not have to mention the unsettled conditions caused by a worldwide financial crisis.

Disclosure: none.