Geopolitics and 'Coopetition' Risks

Our China Healthcare Analyst Jack Lin discusses how China’s biotech surge is reshaping healthcare, investment and innovation worldwide.

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Jack Lin: Welcome to Thoughts on the Market. I'm Jack Lin, from Morgan Stanley's China Healthcare Team. 

Today, the boom in China biotech – and how it's not just a headline for China-focused investors, but a story that touches all of us. 

It is Friday, October 3rd at 2pm in Hong Kong. 

Many people might not realize this but some of the next generation healthcare innovation is being developed far from Silicon Valley and Wall Street. The medicines you rely on, treatment plans that could shape your family's future, even investment opportunity that can grow your savings. They are all increasingly influenced by China's rapidly evolving biotech sector, which is transitioning from traditional generics manufacturing into the global innovation ecosystem. 

In fact, China's biotech industry is set to become a major player in the global innovation ecosystem. By 2040, we project China's originated assets could represent about a third of U.S. FDA approvals – up dramatically from just 5 percent today. And the question isn't if China's biotech will matter, but how global patients could benefit; and how consumers and investors worldwide might engage with its impact.

What's driving this transformation? 

Three key components are driving the globalization of China originated drug innovations: cost, accessibility, and innovation quality. Lower cost in China's biotech sector enables more efficient development. Clinical trial quality is improving with regulatory pathways becoming more streamlined, promoting accessibility of China innovation for global markets. Finally, innovation in China's biotech sector is gaining momentum with more regionally developed medicines now eyeing market approval from leading overseas agencies like the U.S. FDA and EMA.

This is all to say China is on track to become a key force on the global biotech stage. 

That said, right now we're also at a crossroads moment as geopolitical tensions between U.S. and China pose potential risks to the flow of innovation. Despite these uncertainties, we see a likely outcome of co-opetition, a blend of competition and collaboration, as global pharma grapples with the dual imperatives of innovation and resilience. 

Of course, this rapid evolution brings both opportunities and challenges. It's prompting stakeholders around the world to rethink their strategies and collaborations in this shifting landscape of global medical innovation. As the China biotech industry evolves, the choices made by investors, policy makers, and healthcare communities, both within China and globally, will determine the therapies of the future. 

It is truly a dynamic space, and we'll continue to bring you updates. 

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