Why Patient-Centric Innovation Holds the Key to Long-Term Business Success for Companies in China’s Booming Biotech Sector

Jonathan Zhu

China’s biotech industry has entered the global spotlight. Over the past 10 years, the country has seen tremendous growth in the biotech and MedTech industries, with hundreds of new domestic startups rising to compete with established global counterparts. The Chinese pharmaceutical market tripled in size between 2013 and 2019 and is expected to be valued at 833.2 billion yuan by 2025, with China-based biotech now leading in IPO fundraising and hitting record numbers.

The government’s plan to achieve health standards on par with developed markets by 2030 has prompted a wave of investment in innovation, entrepreneurship, and the overall well-being of society. China currently accounts for around 40% of active pharmaceutical ingredients (API) produced globally but is lagging way behind in the innovative drug development sector. It will undoubtedly continue to eat into the global market share with the heightened focus on the sector.

The question now remains: Will these companies last and truly succeed in the long term? What are the leadership and business challenges, and how can China’s biotech leaders navigate them to emerge as winners?

Addressing the management and talent gap

The industry’s strong emphasis on R&D has meant that scientists often step into leadership roles in the startup stage, even if they do not necessarily have the people and management skills to lead. Of all the CEOs leading Chinese biotech companies, 82% are scientists, of which 86% are first-time CEOs.

Despite bringing core technical expertise, they are often less experienced leading a full-scale organization, spanning drug development, manufacturing/supply chain to commercial. For these biotech companies to be successful, they must become more self-aware and build a leadership team with diverse skills sets, ranging from science to management skills. Even current domestic biotech CEOs have echoed this sentiment, emphasizing that translating scientific findings into innovative therapies requires a comprehensive understanding of the drug development process as well as business acumen, including research, preclinical studies, product manufacturing, regulations, and clinical trial designs, which take many years of experience—and that is only the R&D piece. Ultimately, the long-term strategy and structure of the company is dictated by talent, and choosing people with the right skills and mindset is paramount.

Leading innovation by putting patients first

In the current domestic landscape, patients’ needs and interests as a strategic priority for innovation doesn’t feature as prominently as in other markets. There is often little differentiation for patients among biotech companies beyond price, and this focus on tactical development is hindering domestic biotech companies from being truly innovative.

More so, expanding reach beyond China remains crucial for domestic biotech companies. Many of these in-licensed companies continue to target Chinese patients rather than aiming for patients globally as they don’t have true innovation.

For biotech companies to be innovative in the pharmaceutical space, patients’ interests need to be central to their purpose, vision, and strategy. Investing time to understand the patient journey is central to achieving better health outcomes and improving patient experience. This stands true for not just the China market, but other global markets as well.

To expand their reach, China’s biotech companies will need to ensure they invest in building in-house research capabilities, in addition to development capabilities, to compete with Western counterparts. After all, novel drug development will be the difference between the winners and losers in the long run.

Focusing on patient outcomes over IPO ambitions

We’re seeing a record number of China’s biotech companies rely on IPOs as an exit strategy, but short-term goals and quick wins leave little room for true success.

Over time, patient outcomes always outweigh chasing personal and organizational success. The end goal for the most successful biotech companies is not an IPO but to make a difference in patients' lives. The real challenge lies in developing a vision and strategy, and structuring a leadership team that is focused on developing products which will stay relevant and provide true benefits to the end user.

Take the case of the developments we are seeing in disease management. The growth of telemedicine and virtual care programs has enabled healthcare professionals to monitor patients remotely using sensors that track vital signs, health records, and other data. Keeping pace with changing patient needs, such personalized solutions in the hybrid world have proven key to staying relevant and increasing access.

Biotech companies must earn the trust of empowered patients, and that will take time. Investing energy to understand the perspective across the patient journey to achieve better health outcomes results is much more sustainable compared to quick wins. The end goal should always be to create the best product available at an affordable price rather than a mediocre product available at a low price.

The future of China’s biotech

To become a global leader in biotech, it all boils down to the patient and patience. Putting the patient at the core is the strongest determining factor for success, and having the right people in place to champion this patient-centric mindset is equally important.

In addition to bringing patient-centricity to the forefront, being patient will separate the winners from the losers. Having a long-term vision and cultivating deeper connections with patients will ultimately improve resilience and build trust that prevails over tempting quick wins.

Jonathan Zhu, regional practice managing partner – healthcare & life sciences, APAC & Middle East, Heidrick & Struggles