Biotechnological Innovation

Biotechnological innovations are rapidly reforming the pharmaceutical and agriculture sectors at home and abroad. With leading technological advances in the US and Europe, Chinese industries have been quick to follow with scientific discoveries, industrial applications, supply chain, legislation reforms, and administrative support. Despite high pharmaceutical demand, China’s manufacturing capability on the supply side is not yet globally competitive. The global pharmaceutical market is built upon the demand of unmet medical needs, health insurance, and extensive investment in new drug development. China is a leading pharmaceutical market in absolute size, but its pharmaceutical spending per capita is relatively low. Nevertheless, Chinese companies are catching up, and China’s contribution to global pharma R&D has started to shift from high-quality generics to gradual innovation. As for the agriculture sector, the overall supply in China is stable, but other countries’ experience in agricultural innovation is also worth studying. China typically maintains steady output growth and a relatively high self-sufficiency ratio. However, there remains room for improvement in the supply of some agricultural varieties and in the front-end sector of the meat value chain. We think China's overall biotech innovation in the agriculture industry is characterized by incremental innovation. Judging by China’s successful innovations in rice cultivation, we think policy support, appropriate government mechanisms, and public–private cooperation are important for agricultural R&D. Agriculture and pharmaceutical sectors are now at different stages of innovation, and therefore need different types of policy support. Major factors affecting China’s pharmaceutical innovation and status quo are basic science development, clinical R&D, and standardized production capability. Policy-wise, we believe: (1) Funds from the public sector could be used to support the development of basic and translational sciences, which are the foundation for innovation; (2) pharmaceutical payment reform could be accelerated, and incremental funds from commercial insurance be introduced (3) a tiered financing system could be built to enhance risk-resistance capacity; and (4) a new drug approval system could be optimized to encourage innovation. As for biotech innovation in agriculture, policy support may include the following. (1) Legislative supervision: We suggest that the government enhance the protection of agricultural intellectual rights and step up efforts in combating infringements. (2) Capital investment: We suggest that public sector investment in R&D be increased and cooperation enhanced with the private sector. (3) Talent education: We propose strengthening whole-procedure education and the cooperation between companies and research institutes.