Globally leading biopharmaceutical companies favoring city as place to set up regional operations

Shanghai, as one of the pioneer cities in China to foster the biopharmaceutical industry, has witnessed substantial growth in both the market scale and comprehensive strength of such enterprises, with many indicators ranking highest nationwide in recent years.

In 2023, the overall market scale of the biopharmaceutical industry in Shanghai reached 933.7 billion yuan ($128.95 billion), an increase of 4.9 percent year-on-year. The total industrial output value increased from 131.9 billion yuan in 2019 to 186 billion yuan in 2023. There are seven industrial parks for such businesses scattered across Shanghai. They include Pudong New Area, Fengxian district, Songjiang district and Baoshan district.

Since 2021, companies in Shanghai received the approvals to market 26 first-in-class innovative drugs and 42 innovative medical devices. In 2024 alone, six first-in-class innovative drugs received marketing approvals, ranked second in China.

The city also saw an influx of investment projects established by globally leading pharmaceutical and medical device developers. Figures from the Shanghai government show that 18 of the top 20 international pharmaceutical and medical device companies have established regional headquarters, production facilities or research and development centers in the city.

Over the past few years, Shanghai has been accelerating steps to become a globally influential innovation hub and industry cluster for biopharmaceutical businesses.

In 2022, the biopharmaceutical industry has been recognized as one of three pioneering industries of the city.

In July, Shanghai unveiled a slew of measures to support innovation along the entire industry chain of the biopharmaceutical sector. For instance, the city will strengthen efforts to develop cutting-edge biomedical technologies, such as gene and cell therapies, mRNA, synthetic biology and regenerative medicine. The city will also support artificial intelligence technology to empower drug R&D, and provide more intelligent application scenarios.

At the end of September, Shanghai released a three-year action plan to help biopharmaceutical businesses to enhance their global competitiveness between 2024 and 2027. Shanghai also introduced a slew of measures to support related business development, for instance, setting up a fund of funds for the biopharmaceutical industry.

It is forecasted that biopharmaceutical enterprises in Shanghai will have a stronger presence in the international market by the end of 2027. The export value of medical devices from Shanghai will exceed 50 billion yuan, with two or three enterprises achieving overseas sales exceeding 10 billion yuan.

Long-term investment

Thermo Fisher Scientific has been in China since 1982. In 2008, Thermo Fisher marked its expansion by setting up its China headquarters in the Pudong New Area of Shanghai. Over the past 16 years, the company has been increasing investment in the city to better embrace emerging opportunities in China.

In 2013, Thermo Fisher established the China Innovation Center in Shanghai to strengthen local R&D for China and emerging markets. In 2018, the company established the Bioprocess Design Center in Shanghai to accelerate localized innovation.

In 2020, Thermo Fisher's largest and most advanced Customer Experience Center settled in Shanghai. This demonstrates the company's commitment to working with customers and local academic and research ecosystem partners to enhance R&D capabilities, according to Miguel Faustino, president of Thermo Fisher Scientific China.

Faustino said that factors such as Shanghai's robust policy support, comprehensive biopharmaceutical industry ecosystem, abundant clinical resources, skilled professionals, a gathering place for leading players and thriving capital and data-related industries have all played roles in encouraging Thermo Fisher to expand its investments in the city.

Thermo Fisher said it will continue to bolster development of the biopharmaceutical industry in Shanghai by providing advanced products and services. It will use its expertise to support local partners to accelerate pharmaceutical innovation across all stages of drug development, helping customers simplify all stages of drug development and provide treatment plans for patients more quickly.

"We believe that with the implementation of a series of industrial support policies and the further opening-up and internationalization of the market, Shanghai will play a more important role in global economic development and technological innovation," said Faustino.

"Thermo Fisher also looks forward to establishing closer cooperative relationships with governments in Shanghai and other enterprises to jointly promote the high-level development of the city," he added.

Serving as a cornerstone

Straumann Group, a global leader in oral health, wellness and aesthetics headquartered in Switzerland, has increased its investment in China in recent years. One of its key projects involves establishing a production, academic and research base in Shanghai's Minhang district.

This is the group's largest investment project in China, with a total investment exceeding 1.2 billion yuan. It focuses on production, research and education related to dental implants.

The first phase of the project has been completed and the second phase is being planned, according to the company.

"We chose Shanghai for this high-end integrated implant project due to the city's favorable policies for foreign enterprises. We selected Minhang because of the excellent services provided by the district government and the substantial policy support it offers," said Li Congzhen, general manager of Straumann China.

Shanghai is also a city that can quickly access the most advanced academic directions and concepts from abroad. The local government encourages innovation and supports and promotes innovative enterprises and projects, she added.

Li said that the company's decision to establish the base in Shanghai is forward-looking.

"The base currently focuses on local manufacturing but, in the future, we will certainly engage in local innovation, developing implants suitable for the anatomical structures of Asians.

"This requires not only manufacturing talent but also research talent to drive local R&D, and Shanghai has many nationally renowned universities that can cultivate such talent," Li said.

She believes that in the next three years, through local manufacturing and innovation, the group will be able to introduce more products suitable for Chinese consumers.

"We hope this base will facilitate collaboration with more research institutions and universities. Once local products are launched, we also hope they will first be used and receive feedback from hospitals and institutions in Shanghai," Li said.

This year marks Straumann's 25th anniversary of development in China. The group's main business areas in the country include implants, orthodontics, digital healthcare and biomaterials, with implants being the largest segment.

China introduced an implant system volume-based procurement policy in 2023, providing an effective way to enhance the affordability of dental implants for the public and promoting implants as the most effective treatment for missing teeth.

This has led to an increasing number of people choosing implants to address their dental issues. "The Shanghai base ensures that Straumann can better serve Chinese consumers with its product supply," Li said.

In recent years, the Shanghai government has also introduced a series of related policies, raising public awareness of oral health. These policies help people access excellent treatment services and options when they face oral health issues, which "presents an opportunity for industry development", Li said.

At the same time, "we recognize certain challenges within the industry that require collaboration among enterprises, various levels of government and educational institutions to overcome", she said.

For instance, there is a shortage of high-quality dentists capable of handling more complex procedures. This has created a significant demand for relevant professional education, and Straumann hopes to contribute in this regard.

With the development of digital technology, Straumann is also transitioning from a traditional manufacturing company to a digital enterprise. The goal is to enable more doctors to perform implant surgeries more easily through digital empowerment, leading to better treatment outcomes such as optimal implant solutions, restoration plans and aesthetic results.

"China has unique advantages in developing digitalization, with the largest pool of AI and digital talent in the world," Li said.

In 2023, Straumann acquired a digital product line in Pudong New Area; a local startup company specializing in intraoral scanners. The company's products have received recognition in many countries for their technology and cost-effectiveness.

Contributing expertise

The 2024 Forum on Innovation of Shanghai Foreign-Invested Pharmaceutical Enterprises was held on Nov 18.Mohammed Tawil, president and CEO of Boehringer Ingelheim Greater China, delivered a keynote speech at the event. He introduced Boehringer Ingelheim's innovative concepts, as well as the company's practices and achievements in using digital technologies to aid drug R&D, explore digital therapeutics and promote the digital transformation of the supply chain.

He said that China is one of the focus markets and an innovation hub for the company. Operating in China for nearly 30 years, the company has achieved a full value chain footprint including R&D, manufacturing, commercial operation and external innovation collaboration.

The company is pleased to see Shanghai utilizing pilot projects to promote cross-border data flows and explore the application of big data in drug R&D, healthcare and medical insurance, he said.

"Boehringer Ingelheim is willing to contribute our experience and practices to jointly promote the high-quality development of the biopharmaceutical industry," said Tawil.