China's Pharma Industry Is Booming — Here's Why | China Decode

The numbers of US dependence on China are startling. You know, China has 50% of the world's API advanced pharmaceutical imports capacity globally, but you know, around about half of the US's APIs imported come from China.

And that's continuing. I think there is competition from India and from other countries too. But China remains a core global, you know, source of basic drug building blocks.

Yes, I mean I do Alice. I think at the time when Trump and Xi met in May, I think I was saying that I thought China was now the senior partner in this relationship and you know that was somewhat controversial at the time. Some people contacted me to say that that was not the case. I think that's even more the case now than at that time. And I think the reason for this is that as you mentioned, the US has been botching several of its policies around the world and obviously it's now much more bogged down in the Iran war than it was previously. I don't think that this has to be the end of the story. Obviously these are two huge hugely powerful superpowers. The US could start to get things right and could take the initiative in the future. But as we move towards this summit on September the 24th, you have to say that China is making more of the diplomatic running around the world.

And the thing that's particularly interested me over the last few days has been the Shanghai Cooperation Organization meeting which took place in Kyrgyzstan which is a Central Asian Republic. And what we've seen there is another sense that China is trying to show Trump, also to show the American people and probably most importantly show the rest of the world that China's offering better global leadership than the United States. I think we'll probably remember that around this time last year at the last Shanghai Cooperation Organization meeting, Trump said quote that the US had lost India and Russia to deepest darkest China. And I think that you know probably in New Delhi and Moscow they would respond by saying that India and Russia never belonged to America or Trump in the first place. But certainly the element of truth in Trump's statement is that things are slipping China's way and out of the grasp of American influence to some extent at least. And I think that if we look at this the Shanghai Cooperation Organization, we can see this in real time. This is 10 countries and none of them with the possible exception of India is an ally or even really a friend of the United States.

This group consists of China, Russia, Iran, Pakistan, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and Belarus. You may say well you know these are all also-rans in the global nexus of power but if you look at what these countries together represent they represent 3.4 billion people. They represent about 24% of the world's area. 42% of the world's population. And in 2024, the nominal GDP of all of these countries together was around 23% of the total world's GDP and approximately 36% of the world's total GDP if you calculate it by purchasing power parity. India is also in that group. India is much more of an ally of the United States and much more of a friend to the west than the other countries that I just mentioned there. So that's a little bit of a swing factor. But when we look at what the Shanghai Cooperation Organization could do, it is fundamentally anti-western. A lot of people talk about the idea of an eastern NATO. And while I think that is going too far, this is not a coordinated military bloc so far. But the Shanghai Cooperation Organization does military cooperation already. It does joint military exercises. It's moving into political, logistical and economic areas as well. And it repeatedly stresses the west as a problem and the western-led global order as something in decline.

The last thing I'd say about it is that obviously China always leads its multilateral organizations through the prism of trade and economic development and within this grouping the Shanghai Cooperation Organization there is a trade of 523 billion US in 2025. So you can see it's already a big chunk of world trade and the organization is setting up its own bank the Shanghai Cooperation Organization Development Bank. The aim of that bank according to Vladimir Putin is to act as a bulwark against financial sanctions from the west. So what we can see is a whole panoply of efforts by China in leading its multilateral organizations. The SCO is just one of them to counter the west or counterbalance the west or portray a world vision that is very different from that of the west. To me that's the essential essential background as Xi prepares to meet Trump. But what are you seeing Alice? How do you see its importance?

Yeah. I must say I think you're really astute to point to AI and the ability of AI to run rogue which I believe is focusing the minds of people in Beijing and people in Washington and potentially this is one area of cooperation between the two countries where they really can do something. I'm not going to say that the US and China are going to agree a legal code or a regulatory code for AI globally, but I think in certain key areas where both countries are really at risk potentially by biotech or the weaponization of biotech to create, you know, bioweapons and, you know, AI agents such as what you just described with the attack on Hugging Face running rogue and getting out of control and what to do in that kind of type of situation. I believe it is quite possible that we might begin to see some cooperation between the US and China in that regard and maybe this summit between Xi and Trump will further those efforts. But returning to the big picture, the issue of whether or not China is now the senior partner to me the crucial big stick that China has really that runs through the whole relationship now is rare earths. China is accounting for about 70% of global rare earth mining. And as we've often discussed on China Decode, its dominance of the processing of rare earth is around more than 90% of the production of rare earth globally. And so it has the ability to choke the supply of rare earth to the United States. And many of those rare earths are used in the production of weapons by the Pentagon or by Pentagon affiliated companies. And as the US burns through its arsenal of weapons in Iran, its need for rare earths that are used in the production of weapons is becoming more and more acute and that strengthens the chokehold that China has or the potency of the chokehold that China has in this regard. And if you ask me that changes the whole complexion of the summit between Xi and Trump. In other words, China holds the biggest stick. Therefore, I don't really see that much of a bust up. I think both sides will try to manage, you know, their differences and their points of conflict and the rivalries and the competitions, etc. fairly well in the run-up to this summit. But we'll see. We'll see. Maybe I'll be wrong about that.

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Thank you so much, Alice, and thanks to you and James for having me on the show. I'm a big fan, so it's great to be here. Well, so I've worked on health all of my life. I'm a doctor. I was working in health policy, as you said, for the UK government and the UN, and now we're in a consultancy, and I'm a writer. But, you know, my professional life is focused all around health and all about China and how it interacts with the rest of the world on health, too. But as you said, it's only recently in the past few years that China's biotech strengths have really risen into global attention. But the story is actually decades old. I would go back as far as the 1980s, over four decades ago, under Deng Xiaoping when he was trying to develop and open up China. He visited Japan, the US, saw the technical and science capabilities of other countries and realized that China had a long way to go in terms of developing its own internal science and technology capability. But he recognized that it was a necessary move to make and so then began sort of this long strategic vision in building up China's S&T. So he initiated industrial park building, incentives, support for science and technology, talent and returnees over the following decades then what we call huayu or sea turtles. So scientists trained in the best US, Europe universities coming back to China to integrate and build. Having tax exemptions, having funding support, having the density and the synergy of industrial parks bringing together skill set but also capital. And that kind of escalating through time with the you know under Hu Jintao and then under Deng Xiaoping. And then I think another big moment was in 2015 to 2017 when China entered kind of global regulatory standards, which meant that China's regulatory capabilities in determining which drugs and medical products were safe for patients were up to global standards whereas before they weren't really as much so. So firstly kind of building up the talent and the pool and the skill set and the trainees but then regulatory reform and then as China developed its healthcare infrastructure developed too. So the hospitals, the access to the patients of which China is a huge advantage in you know a massive population with a huge and rich potential data pool set and then I think finally in recent years the intense competition that you know I'm sure you both have expertise across you know multiple sectors that intense commercial competition has meant that you know companies small and big are pushed to move, iterate, try to win. And though there might be a lot of waste along the way, there's a forward momentum driven and supported by top down and bottom up long-term vision and governance. So I think all of these factors on top of that I think in the healthcare sector and in life sciences there have been various crises that have even further driven the pace including SARS in 2003 including vaccine scandals where fake vaccines were found to have been sold the melamine scandal where babies were given fake milk. So each of these crises also pushed for reform and iteration and a transitioning landscape creating what we see today which is a cost-effective scaled very very fast biotech ecosystem where it has been sort of brewing but only in the past couple of years we've seen sort of the tip of the iceberg break through the waves to western narratives, western media, western investors. And now it's kind of no turning back. There's just too much good quality products and drugs in China that the rest of the world really has no choice but to work with, partner with, sign deals with because these drugs are potentially beneficial to patients all around the world.

Ruby, I very much enjoyed reading your book, The China Cure. It's beautifully written. And there's a lot of personal detail from your family there. But the one big thumping overarching theme that there's no turning back and that China's innovation in pharmaceuticals these days and in biotech is really startling. China's climbing the tech ladder so quickly. And I just read a recent report that says that by 2030, China could be responsible for creating 30% of pharmaceutical innovation globally. So in other words, if I read that correctly, it could be creating 30% of the world's newly innovated drugs. Do you agree with that? Do you see that future emerging? And perhaps you can give us a little bit of a flavor of what type of drugs or what specific drugs you think are really eye-catching that are coming out of China.

Yeah, I think 30% is a huge number and it feels impossible to imagine today, even in 2026, not that many of the world's drugs for patients populations around the world are from China. But it's definitely set to change. If we look at the percentage of out-licensing deals of Chinese drug assets and pipelines to global markets signed with global multinational companies, the numbers have just been exponentially accelerating. So the often quoted impressive figures are something like in 2021 or 2020, five six years ago it was Chinese out-licensing drug and biopharma deals were about 5%, the ones above $50 million, and then last year so 5 years later it jumped from 5% to 30% which is huge and then now this year we're only about halfway through 2026 but also already in the first half of the year it's 42% so another 12 13% increase which is more than 90% of what was there the total last year so the numbers of out-licensing deals are truly impressive and you see these multinational companies AstraZeneca, Pfizer, Merck and so on sign huge huge deals in March of this year when ex-Prime Minister Keir Starmer of the UK visited China AstraZeneca signed the biggest global deal to date with CSPC there was like 18.5 billion so you know huge numbers but I would say whilst the numbers represent assets and potential drugs in biopharma it is well known that the chances of success are always low there's no predictions this is biology this is nature and medicine and so perhaps 90% of those deals won't go anywhere they will fail along the way at you know some phase of the clinical trials and they will never come to market. But because of the momentum and the scale and the number and frequency of these deals, it means that of course some of them will go through to the final stages and will reach patients around the world. So I would say 30% sounds ambitious. I personally can't predict what a number might be but you know it can be likely and this is one of the reasons why I wrote my book. I just felt like there was not yet an accessible narrative focused on China and health even though it's such an important and urgent sector. There's lots of books on China. There's books about global health and about pharma maybe but not one which looks at this intersection and James as you said I try to make it more accessible because I do think in technical spaces like health and life sciences sometimes the lingo the terms the technicality of it might put people off I guess I'm always thinking you know having trained and still practiced as a doctor I'm thinking about this at the end of the day will impact us as patients for us for our families when we might fall sick. So it's a really important topic to better understand what is going on and coming out of China.

When you say out-licensing, what are we talking about there? Are we talking about drugs that are developed or innovated in China and then are licensed to users outside China or is that right?

Yes. So out-licensing from China would be a drug asset. It might be at any stage from phase one to more mature phase two or three. And what's interesting is now even pre-clinical are being licensed or even the talent teams in Chinese biotech companies are you know signing collaborations with foreign companies. So they will sign a deal to bring that product to an ex-China market. It might be just the US or it might be ex-China global. And the idea is that the foreign company can then be the one to take that drug from whatever stage they signed at to maturity and then commercialize it.

When they work with some of these clinical companies in China, what is it that they are attracted to?