Podcast: What explains China's biotech rise?
A conversation with Prof. Abigail Coplin at Vassar College
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In this episode, I speak with Abigail Coplin, Assistant Professor of Sociology and Science, Technology, and Society at Vassar College, about China’s rapid rise as a global biotech powerhouse. We discuss the policy, talent, regulatory, and data advantages driving China’s biotech sector, the role of companies like BGI, the future of gene and cell therapies, and what U.S. policymakers should understand about competition and cooperation in biotechnology.
Links:
Abigail’s academic profile
Abigail’s policy paper for the Penn Project on the Future of U.S.-China Relations: “Getting Biotechnology Right: Managing Risk and Reward Between the U.S. and China in the Life Sciences”
Yu Zhou and Abigail Coplin. 2022. “Innovation in a Science-Based Sector: The Institutional Evolution behind China’s Emerging Biopharmaceutical Innovation Boom.” The China Review.
Transcript
Kyle Chan (00:00)
Welcome to the High Capacity Podcast. I’m your host, Kyle Chan, a fellow at Brookings. I’m thrilled to be joined today by my guest, Abigail Coplin, who is an assistant professor of sociology and science, technology, and society at Vassar College and an expert on biotech in China. She’s done outstanding research on the rise of Chinese biotech players and China’s efforts to accelerate biotech development through policy. Welcome, Abigail, and thanks for coming on the show.
Abigail Coplin (00:26)
Thanks so much for having me, Kyle. It’s a pleasure to be here.
Kyle Chan (00:31)
China’s rapid progress in biotech has been grabbing headlines lately, with a wave of multibillion-dollar drug licensing deals and a boom in innovative drug development, especially in areas like oncology, cell therapies, and advanced biologics. What explains China’s rise in biotech, and what have been some of the most important factors in your view?
Abigail Coplin (00:52)
The first point I would make is that although the surge seems sudden in DC, biotech has actually been a long-term priority for the Chinese government. It sits at the intersection of key governance goals. It’s about food security, population control, public health, and contending with an increasingly large and vocal middle class that wants access to cutting-edge drugs. While it is partly about wanting to be a global leader in an innovative field, it is also about these key domestic governance concerns that are central to the party-state’s legitimacy. These are the kinds of things that keep leaders in Zhongnanhai up at night.
It has been a long-term priority all the way back to the 863 Program, when recent returnees, people like Chen Zhangliang, were actively advising the government to prioritize biotech as a key industry where China could get in at the forefront rather than having to catch up, as in semiconductors. Why I think it was not on a lot of people’s radar was that until about 2015, most of the investment was actually going to agricultural applications because of China’s deep food-security concerns.
Starting around 2015, you do begin to see the addition of investment in many more biomedical applications. We see Made in China 2025, and we see a lot of reforms in China’s drug regulatory structure. That is where this current surge in areas like biologics and genomics starts to take off.
The other thing you have to understand about China’s rise is how biotech differs from an industry like semiconductors. In semiconductors, the key choke point is whether you know how to build this immensely complicated fab. There is an immense first-mover advantage and a very high barrier to entry. Biotech is not like that. The three key inputs are basic science, patient capital, and human capital: scientists and their ideas. Those are intrinsically opportunity-seeking.
If we look at China, particularly since the early 2000s, it has made key investments in each of these major areas. In terms of basic research, China now, by most measures, surpasses the U.S. in basic science funding. It keeps escalating at a time when the U.S. is cutting funding to the NSF, cutting funding to the NIH, and really devaluing basic science.
In terms of human capital, biotechnology is an industry in which a lot of the early talent, and a lot of the talent programs, are always looking to seek out opportunity. The talent programs were able to offer people higher salaries and solve a lot of logistical concerns. There has been a movement of researchers in the life sciences moving to China for various reasons.
When you look at the biotech industry, the vast majority of CEOs, CSOs, and key players are recent returnees, people who came back to China mostly around the 2010s. That is true both of industry and academia. If you look at the deans of the life sciences colleges at most elite universities, they are recent returnees and very established, well-credentialed people. This is not the graduate student who could not get a job in the U.S. These are mid-career and late-career academics, NAS members, HHMI investigators, people like Wang Xiaodong, Shi Yigong, Rao Yi, and others. They are being given a voice in crafting China’s basic research ecosystem and changing it for the better.
When it comes to patient capital, as in the U.S., private venture capital has started to dry up following its peak around 2021. Companies have increasingly turned to state capital, which is a mixed blessing. It can depend heavily on whom you are partnering with, but it can also be very patient. There are definitely facets of the government and individual localities that are more interested in the technology than they are in return on investment, and they are willing to wait and reinvest to do that. Across those three inputs, you have seen major improvement in China.
I will say China also enjoys a few key structural advantages when it comes to the biotech industry. One is human capital. There are a lot of highly qualified STEM graduates in the labor market. Whether you are looking at raw numbers or at the percentage of university graduates who major in STEM, both are quite high in China. Science is sexy in China in a way it is not in the U.S. People want to go into it. It is high status. It is cool to be a nerd.
Kyle Chan (05:49)
Right.
Abigail Coplin (05:57)
That actually matters. In the U.S., one of the problems is that people do not want to become scientists. Even people with PhDs in biomedical engineering leave the field. I went to dinner with a friend of mine the last time I was in DC who has a PhD in biomedical engineering from Yale, and he is the only person in his cohort still working in biotech. Everyone else has gone to consulting because it pays more.
Kyle Chan (06:22)
That’s telling.
Abigail Coplin (06:24)
The human capital element is a key structural advantage. Manufacturing costs are also lower. When you talk to recent returnees on the industry startup side, they say that for the same amount of investment, it goes farther in the Chinese ecosystem. Whether it is hiring people, manufacturing, land, or other costs, those are simply lower. That has a particular market dynamic driving people toward the Chinese ecosystem.
The other advantages are more biotech-specific. One is how the provision of healthcare in China intersects with practices in the biotech ecosystem. For example, it is faster and easier to generate large genetic data pools in China. This is not because the government is corralling people and forcing them to give up their genetic data, or anything nefarious. The data is often generated by doing genetic testing for data generation. Things like NIPT, non-invasive prenatal testing, are basically the business model of clinical data testing generally. These companies use the tests to generate data.
What happens in China is that a company like BGI develops its non-invasive prenatal test, partners with localities throughout the country, and gets the test incorporated into the local insurance scheme. Suddenly, it is able to generate immense data stores with very little effort, because everyone has the national insurance scheme. When you are the only company doing NIPT in Tianjin or in a particular province, you get a lot of data. In contrast, the U.S. is very cellularized, where Natera may be partnering with NewYork-Presbyterian, and Labcorp is doing Mount Sinai. No one is able to generate that kind of large data store as quickly.
Similarly, when you think about clinical trial speed, part of how China works is that if you have certain diseases, essentially the entire population ends up going to a very small number of high-status tertiary care centers on the East Coast. That is not great for the hospitals. The government would like to improve care and access throughout the country. But in terms of clinical trial recruitment, it is great, because you can suddenly find high numbers of people with these very rare diseases because this immense population is funneling into a very small number of institutions.
It is worth noting also that the deployment of AI is a little different in China. On one hand, it is used more broadly, but it is also much more focused. Rather than these big, generalized-intelligence AIs that are meant to do everything and anything, it is much more focused on creating an AI that will help with target identification, or an AI that will help with drug design and figure out what drug will best bind a particular pocket. That has been an immense advantage. It is what is driving the rise of companies like XtalPi.
Another key advantage is China’s technocratic governance. Officials often come from scientific backgrounds themselves. At the same time, despite the narratives that we often see in the U.S. of China as this highly centralized state, industrial policy priorities are not just handed down from on high from the brain of Xi Jinping.
Kyle Chan (10:12)
Right.
Abigail Coplin (10:14)
Partially because so many officials come from technocratic backgrounds themselves, there is a lot of engagement with key scientists and companies through both formal and informal connections. Frequently these people went to college together. They know each other. There are also many efforts to consult with key companies and key scientists and get their feedback. They are able to shape the priorities to some degree. This is not to say the state always does exactly what they want, but they are heavily involved in the process.
A great example is the China National GeneBank that is run by BGI. Most Americans and most people in the media look at it and say, “BGI (corrected from: China) runs the National GeneBank. This is clearly indicative of the fact that BGI is an arm of the Chinese state.” The history is actually the inverse relationship. It was Wang Jian and BGI’s idea to build this thing, and they went to their contacts in the Shenzhen government and the NDRC and sold the government on the idea that this was a key project it should invest in. When they built it, BGI fronted almost half the financing and all the technological know-how to get the project off the ground. You see that a lot: what ends up in industrial policy reflects some of the priorities of those on the ground.
The other thing I would say, especially as we get to things like gene and cell therapies, is that China does have a favorable regulatory structure. I am happy to talk about that more later, but those are the key drivers bringing about China’s current surge.
Kyle Chan (12:11)
That is very helpful, especially the point about the ecosystem: the biotech community, industry, regulators, and policymakers having this feedback loop, versus the stereotypical view that policy is made at the top and then everyone follows. If it were that way, I do not think we would see the results that we are seeing.
Abigail Coplin (12:33)
Part of it is about knowledge asymmetry. The Chinese state knows that it wants a “biotech sector,” but officials do not necessarily know what that is or what it means. Because it is a basic-science-driven field, they are intrinsically reliant on soliciting this feedback from those who have highly specialized knowledge.
In general, there is more interplay, feedback, pragmatism, and willingness to change things that are not working in the Chinese government than most Americans give them credit for. But specifically in biotech, there is much more of that because of the science-driven nature of the field. You need very specialized technical knowledge to understand its mechanics.
Kyle Chan (13:30)
How would you describe China’s “biotech strategy,” if there is such a thing? It seems like they are focused on certain areas, such as biologics, where you can catch up very quickly. A lot of biotech companies in China started more in low-cost drug manufacturing for foreign companies, so we have seen some of this story before. They seem to have moved up the value chain. How much is there a strategy versus everyone doing different things?
Abigail Coplin (14:01)
It is important to disaggregate firm strategy from state strategy. On the firm level, it is definitely the story you just described. A lot of firms initially started by in-licensing foreign drugs and manufacturing them there. That helped them gain a certain level of understanding and manufacturing expertise, which they then used at first to develop biosimilars and later to get into first-in-class drugs.
That being said, I think there was more R&D and more development of innovative drugs going on than they are often given credit for. It was more that they in-licensed drugs and worked on manufacturing in part to keep the doors open as early startups when they had products that would take 10 to 15 years to get from bench to market. That is definitely the story for firms like BeiGene. The plan was never to just be in-licensing and doing biomanufacturing. They knew they had drugs they wanted to develop, but they needed to keep the doors open and keep funding R&D initially.
When it comes to state strategy, specific priorities frequently come from feedback from actors on the ground. But China’s rise and focus on biologics especially has to be understood within a broader framework of how the state’s approach to health governance has shifted. Starting around 2015, you see a shift from the management of infectious disease to contending with chronic disease and preventative medicine. It starts to be less about people contracting schistosomiasis from snails and more about contending with a population that is living longer and has more diseases tied to an increasingly sedentary lifestyle. We are talking about cancer and various kinds of genetic disorders.
The rise of investment in biologics is partly within that broader context: a shift in which the state is looking to improve access to cutting-edge medicines. Again, you have an increasingly vocal and large middle class that wants access to the world’s cutting-edge drugs, but the state also wants to cut costs. Focusing on preventative medicine is a big part of that.
As part of this broader shift in the framework, starting around 2015, you see a number of reforms to China’s drug approval structure. You see changes to the definition of what constitutes a new drug. Until then, it had been “new in China.” Then they switch it to something closer to what the U.S. and the EU use: it has to be new to the world. This clears up the drug approval pipeline substantially.
What you start to see around 2015 is harmonization with global standards around drug approval. China joins ICH-GCP. The NMPA enacts policies that shorten the time it takes to get new drugs approved, and policies meant to incentivize firms to do R&D and invest in innovative drugs rather than just producing generics. The significance of joining ICH-GCP is that it incentivizes Chinese companies to adopt the same standards as their global peers, which in turn opens up global markets more to Chinese companies. All of this catalyzes the rapid growth in fields like biologics and starts pushing firms to do a lot more R&D themselves.
Kyle Chan (18:17)
I want to ask you in particular about one company: BGI, formerly known as Beijing Genomics Institute. Some folks might have heard of it. In many ways, you could argue it is China’s most important genomics company. It has played an outsize role in China’s genomics and genetic research. What is its story, and what role does it play today in China’s biotech industry?
Abigail Coplin (18:21)
It is definitely China’s largest and, at this point, particularly in the U.S., most notorious genomics company. It is China’s Illumina. By that I mean not only do those two companies have a deep pile of lawsuits against one another around IP theft, but they operate in a similar space. They are the dominant players in the sequencing industry in their respective ecosystems.
Similarly, they are regarded by people on the ground in a similar way. On one hand, both produce great products and are immensely innovative. They are also unavoidable if you are working in this space. They have respective monopolies, more or less, within their ecosystems at this point.
But BGI is also a fascinating company in terms of its history and its strategies for navigating the Chinese ecosystem. In some ways, like Illumina and like all of these companies, it is very particular. In other ways, it is exemplary of broader dynamics in the Chinese ecosystem: the complex relationship between firms and the state, and the very fluid organizational identity that a lot of these firms have, where they are simultaneously commercial enterprises and academic enterprises. That causes a lot of cognitive dissonance outside the Chinese ecosystem.
Their history is really interesting. They started in 1999, with Yang Huanming, Wang Jian, and a few others, basically for China to participate in the Human Genome Project. First of all, they decided to do this without really telling the state, to some extent. They were congratulated after the fact by the government for participating. They formed this organization by cobbling together financing from a variety of sources: their own finances, other researchers who thought China should get into the genomics industry, the mayor of Yang’s hometown, a loan from the Human Genome Project itself, and some space from the Chinese Academy of Sciences, though they were not formally affiliated with it.
They did sequence about 1% of the sequencing done for the Human Genome Project. That put them on the map. They continued to work on sequencing crops, animals, and so on in the late 1990s and early 2000s, when there was this approach of, “We just need to figure out what is going on in the genomes of all these organisms.”
They had a turning point in 2002, when SARS broke out. SARS was a huge crisis for China. They sequenced the genome of the virus, created at least a diagnostic kit, and gave it to the state. It started to be used broadly. Basically, as a reward for coming to the aid of the government, being a patriotic player, and helping the country during the SARS epidemic, they were formally incorporated into the Chinese Academy of Sciences. That was meant as a reward and an honorific in various ways. Unfortunately, it also came with a lot of red tape.
Kyle Chan (22:16)
Congratulations.
Abigail Coplin (22:22)
Exactly. Congratulations; now we are going to regulate how much you can pay your employees, how many employees you can have without a PhD, and all of these different things. That did not fit well with BGI’s organizational culture, which, like other biotech companies, had a bit of the Silicon Valley “move fast and break things” mentality. It ended up feeling very constraining to them.
In 2007, the Shenzhen government offered them an immense amount of startup funds and annual grants to relocate to Shenzhen. They essentially reorganized themselves and had this second birth as a private commercial company in Shenzhen in 2007.
They went down there, started doing sequencing for hire, and got a massive loan from the China Development Bank to buy 128 sequencers from Illumina. They started becoming this powerhouse of sequencing for hire. Simultaneously, they developed genetic tests: non-invasive prenatal testing, HPV testing, testing for genetic hearing loss, and other tools that would later become means of data generation. In 2012, they bought Complete Genomics, a California-based sequencer company. They transitioned from becoming Illumina’s main client to its direct competitor. They started to become a one-stop shop: you could get your equipment there, get sequencing for hire, and so on.
One interesting thing about them is that while they were doing all of this commercial work, partly because they had this massive loan to pay back, they were also deeply academic. They published tons of papers. They sometimes engaged in a practice of doing sequencing for authorship. They operate their own academic journal. They founded BGI College, which conducts training programs in genomics for high school students, college students, postdocs, and others. They are simultaneously a commercial, profit-oriented organization and a deeply academic organization. They can fluidly change which identity they are using depending on who they are talking to.
On one hand, they have clearly designated subsidiaries. But in practice, they can fluidly change their identity depending on context. That works well in the Chinese ecosystem. When they leave it, it causes cognitive dissonance and makes them very hard to classify. Policymakers abroad look at them and ask: what is this thing? Is it academic? Is it commercial? That is not distinctive about BGI; it is actually a model for a lot of Chinese biotech companies.
They also illustrate the tension between the global and the local in important ways. On one hand, they are a deeply global company and have been since the outset. Their founders are returnees. They opened their Massachusetts office as far back as 2010. They are globally engaged in all of their projects, including philanthropic and service-oriented work. At the same time, when you look at how they frame themselves in the Chinese ecosystem, they are careful to maintain their nationalist and patriotic credentials to some extent.
Like other Chinese firms, they engage in what, in my academic framework, I call symbolic, discursive, technological, and action-based performances of nationalism. They talk about their business model in terms of state policy, saying that what they are doing helps with Healthy China 2030. They show their proof of concept for new sequencing techniques, such as shallow sequencing, using narratives about the differences between the Han population and Western populations, or between the Han population and different ethnic groups in China. They are producing science that is in line with the ecosystem in which they operate in various ways.
Likewise, they step up and help the state solve problems, both in normal times and in times of crisis. When COVID hits, Wang Jian himself, along with a BGI team, very quickly goes into Wuhan and opens the first Fire Eye lab, the first large-scale automated lab that can process around 30,000 tests a day. We see many Chinese companies engaging in similar nationalist performances within the Chinese ecosystem.
I think American policymakers look at them and say this is indicative of state control. They assume the company would not be doing this if it were not to some extent controlled by the state or an arm of the state. That is not actually true. Engaging in this kind of performance within the Chinese ecosystem is strategic and helps firms get things. Far from showing that they are controlled by the state, it is often an effort to attract state attention and potential investment. It helps them in some cases leverage the state’s own infrastructure for their own purposes. It gives them legitimacy. It is economically rational behavior within this ecosystem. The problem is that when they try to go abroad, ties to the state are problematized.
Kyle Chan (28:36)
It is interesting. Not to draw too many equivalencies, but in the U.S. we have companies that position themselves as almost American champions. NVIDIA is the leader of the American AI tech stack. Now you have some startups like Skydio, the American drone maker. There are differences as well, but it is interesting when companies use nationalist or patriotic framing, often for strategic reasons.
Abigail Coplin (29:08)
Totally. One thing I would say is that BGI illustrates that the dynamic is generally not that the state chooses you and then you become a national champion. Frequently, you become a national champion after you have already proven yourself in the market, scientifically, or in other ways.
Kyle Chan (29:24)
I think about DeepSeek. They were not created as a national champion, but once they made the big splash, it became, “Actually, you are really important.”
Abigail Coplin (29:46)
Yes. With DeepSeek and BGI, you see that it can be a somewhat tempestuous relationship. On one hand, it can be very symbiotic. I should talk a little bit about how the data is generated in that firm-locality symbiotic relationship. At the same time, it can result in the state stepping in and restricting companies in ways they would really prefer not to be restricted.
BGI has many incidents throughout its history where it goes and does something and the state either retroactively congratulates it and makes it look like it was the state’s plan all along, or BGI runs afoul of the state. In 2015, BGI was penalized for sharing data through an academic collaboration with Oxford. The rules on genetic data had been on the books since 1998 for complicated reasons I am happy to get into, but they had never been enforced. In 2015, all of a sudden BGI, because it was the leading company, was made an example of and penalized for sharing Chinese genetic data without state permission. Being the leader comes with some downsides.
Kyle Chan (30:59)
So it is not so straightforward. This is fascinating. Next, I would like to ask you about data, which you have touched on already. What is China trying to do to improve the collection and usage of biological or medical data, such as the China National GeneBank? And how do China’s efforts compare with other countries like the U.S. or the UK?
Abigail Coplin (31:41)
China regulates genetic data through a very different framework than the U.S. In the U.S., we generally look at genetic data exclusively as a form of private, sensitive health information. Likewise, we under-regulate it in general. The kinds of protections your genetic data has in the U.S. depend on how it enters the system. You have different protections if you do direct-to-consumer genetic testing than you do if you are participating in a trial, or if it is clinical testing with your doctor. It also varies state by state. Essentially, we do not have a coherent framework for governing genetic data in the U.S.
Much of what we are seeing, such as Biden’s executive order and efforts by the Trump administration to block Chinese researchers from NIH genetic databases, is very much reactionary to China. It is not creating a coherent framework about who should have access to genetic data and under what circumstances. It is basically just batting China’s hand away in various ways. It becomes important to make sure China does not get access to this data.
In contrast, in China, genetic data is seen as a form of sensitive personal health information, but it is also recognized as having a second valence: it is a national resource that should be utilized to develop new technologies. It is treated as a national natural resource. You see this in a lot of genetic data governance. Simultaneously, there is an impulse to collect the data, store it, and facilitate transfers between academic and industrial institutions, while also preventing it from being shared abroad without state permission.
This goes all the way back to the human genetic resources regulations, which have been on the books since 1998. In 1998, they were more like guidelines. They came about because a Harvard researcher was accused of taking blood samples from individuals in rural China without permission. This caused immense fear that pharmaceutical companies would come in, gather up all of China’s data, use it to develop drugs, and then try to sell those drugs back to China at prices it could not afford. This fear is not unique to China. It is also why there is a claim of genomic sovereignty in Mexico. India has discussed similar policies in various ways. But it results in policies saying that you cannot export Chinese genetic data without state permission, and foreigners cannot collect Chinese genetic data without a partner.
Those rules were on the books from 1998 after that incident. In 2019, they were strengthened immensely. They went from guidelines to regulations on the management of human genetic resources. They basically say that if you want to collaborate with a foreign researcher or export Chinese genetic data, you need to get permission. The 2019 regulations created an immense chilling effect on international collaboration in fields like genomics. They resulted in institutions like the China National GeneBank, which had originally been fairly open in its data-sharing practices, imposing more restrictions.
At the same time, it is not about cutting off the flow of data completely. If you look at the revisions of the regulations over time, there are implementation guidelines that come out in 2023, and then rewriting as the governing organization moves from the Ministry of Science and Technology to the National Health Commission. These efforts create a pretty fast turnaround time on decisions from the governing agency and are meant to streamline the process. It is not about totally ending collaboration or cutting off the flow of data. It is more that the state wants to be read in on who is getting access to the data and when, and to have tools at its disposal to stop data flows that it deems particularly sensitive.
Regardless, China sees data not just as sensitive health information, but also as something that can be used to develop new technologies. When you want precision medicine, you need to build data sets with millions and millions of samples.
China has multiple projects trying to compile massive genetic data stores, not unlike other countries. One that has gotten a lot of publicity is the Y-STR project, which is trying to collect samples from many bloodlines in China, largely by collecting samples from male members of families. That is more for forensic use and is less the focus of my research. What I am more familiar with are the data stores being built for R&D purposes. That is the China National GeneBank and a lot of what BGI is doing.
Similar efforts are going on in the U.S. and the UK. In the U.S., we have the All of Us project. In the UK, they have the UK Biobank. They are meant to be very open-access and very inclusive of genetic diversity, racial diversity, and other forms of diversity. But they are on a much smaller scale. I think All of Us has around 800,000 to 900,000 samples as of the last time they published. The UK Biobank is around the 500,000 to 600,000 range. In the last BGI annual report I read, which is now a couple of years out of date, they had over 26 million samples, most of which were generated by NIPT testing.
The other group that has that number of samples in the U.S. is some of the direct-to-consumer testing companies. This is why, even after 23andMe went bankrupt, it was bought up and still had value: it had one of these massive genetic data stores.
If you want precision medicine, if you want to figure out the genetic and signaling cascade at the root of various diseases, you need massive data sets to find the signal in the noise. China’s dual understanding of what genetic data is really helps it do that.
The other point I would make, at least in the case of BGI’s data stores, is related to what I was talking about before: how a particular practice, the clinical testing model of testing for genetic data generation, interacts with healthcare provision. A lot of BGI’s genetic data is coming from what it calls livelihood projects, which are collaborative agreements between BGI and localities, ranging from districts within a city all the way up to entire provinces. BGI gets its genetic testing technologies, especially non-invasive prenatal testing, integrated into the local health insurance scheme. With signed consent forms, and I will say BGI is actually very good at doing that, better than American companies at having formal signed consent forms, they get the data generated from those processes. I say this as someone who went through NIPT testing myself.
What is interesting about these agreements is that, although the genetic testing component is the center, they frequently also involve BGI taking on various other responsibilities within the locality. They may do cadre training, build a hospital, or do agricultural extension. It depends city by city. But as BGI gets involved in more and more of these agreements, it becomes not controlled by the state, but entangled with the state, connected to different facets of the state through different kinds of relationships: education, training, agriculture, health, and so on.
It is a complicated relationship for both parties. They are symbiotic, and both are getting something out of the arrangement. BGI is getting subsidies, cheap land to build new research centers, and data. Officials are more than happy to outsource the solving of really complicated social problems in health and agriculture to a private company. But they do want different things, and their interests do not always align.
As of 2022, BGI had 101 of these agreements with localities throughout the country. If you sum the data produced through all of those agreements, you have an immense data generation system. It is stable: you are getting samples from every pregnant woman coming through the local health insurance scheme in all these localities. It is diverse, because everyone has state healthcare. It is incredibly systematic. It is a powerful infrastructure.
But it is also part of how BGI ends up running into problems. This is true of other companies too. These relationships that help you in the domestic ecosystem become problematized when you try to become global, because they tie you to the local ecosystem and to the local state.
Kyle Chan (42:55)
What about cell and gene therapies? Why are they taking off in China?
Abigail Coplin (43:09)
There is some history here. Things like stem cell therapies are a little less morally loaded in China than they are in the U.S. Back in the era of George W. Bush, when there was increasing regulation around stem cell therapy, a number of researchers chose to relocate to China because of its more favorable regulatory structure.
The story now, I would say, is driven by two key factors. One is how the economics of gene therapy, especially for rare diseases, is evolving in the biotech sector generally. As the science gets better and we understand diseases on a deeper molecular and genetic level, we start to understand that breast cancer is not just breast cancer. What manifests as the phenotype of breast cancer is actually driven by a variety of different genetic signaling processes, each of which needs its own intervention.
Scientifically, this is great. In terms of economics, it makes things more complicated because you are talking about smaller and smaller patient populations for treatments that are ever more expensive. There is an example in the U.S. of the first gene therapy commercialized to treat a genetic disease. Originally, the company thought, “This is going to be great. These patients are going to come out of the woodwork.” They started doing free genetic testing at ophthalmology clinics. I tend to draw on ophthalmology examples because my husband is a vitreoretinal surgeon. But they did all of this genetic testing, and the patients did not come out of the woodwork. It turned out that the number of people who had the particular genetic variant in this way was actually pretty small.
You end up with this dynamic where scientifically we can do amazing things and make personalized treatments. There was the case at CHOP last year where a team was able to develop the first personalized gene-edited therapy for a child, KJ Muldoon, who had CPS1 deficiency. But it does not make sense for private venture capital to invest in these technologies, and consequently they are left to rot on the vine because there will not be returns on them.
A lot of localities in China, partly because officials are trying to distinguish themselves as policy entrepreneurs and get promoted, are figuring out creative ways to subsidize the commercialization of these therapies. They are including them in Huiminbao. They are subsidizing companies directly. They are finding ways to mitigate that economic friction in the development of some of these gene therapies.
The other really important piece is the regulatory story. In general, China has a distinctive approach to regulating gene and cell therapies. It has a dual-pathway structure. If a therapy is developed by industry, it is regulated through the NMPA and looks very similar to how the FDA regulates INDs. In contrast, if it is investigator-led, an investigator-initiated trial, it is regulated through a much softer-touch, decentralized process managed by the NHC, the National Health Commission.
In general, this led to over 90% of trials in China being investigator-initiated trials. There were not very high data standards. It was a bit of a free-for-all. As of May 1, this policy referred to as the 8/18 policy went into effect. It is interesting for two reasons. First, it regulates more. It says the trials have to be run by tertiary hospitals, and by PIs with a certain level of seniority and status. It significantly increases data collection standards and results in more standardization so that these small trials are actually knowledge-producing rather than one-offs.
Simultaneously, it creates a new category of approval. If your trial goes well, you submit your results to the NHC within, I think, about 20 days. With a really fast turnaround, the NHC can give you what is called translational approval, which is basically provisional approval for this gene therapy. The hospital that ran the trial, and only the hospital that ran the trial, is then able to commercialize the technology.
This gets around a problem we potentially have in the U.S. right now: how do you actually get these therapies into patients’ hands? Recently, I think in February, the FDA published that it was proposing to start using a plausible mechanism model, which is basically an attempt to get around running trials for diseases where the N is so small that there are too few patients to actually do a trial. That is great. However, if you actually want to bring that to market and start treating people with it, academic PIs and academic centers have to adhere to the same manufacturing and quality-control standards as an industrial company. That is not really viable.
This translational provisional approval is an interesting model for how you get around this. You say, “You have done it safely. We know that you can do it safely and that it works. You and your institution can continue to move forward with it, even if we are not commercializing it on the market broadly.” It also incentivizes PIs and academic institutions to make sure the trial runs very well, that all of the data is standardized, and that every detail is accounted for.
Currently, when you know as an academic PI that you are going to have to sell your drug or your project to a pharmaceutical company before it can be commercialized, you do not have the same level of incentive to make sure every i is dotted and every t is crossed throughout the whole trial. For these rare diseases where the economics are complex, it represents a really interesting model for solving the problem of how to get therapies into patients’ hands.
Kyle Chan (49:53)
This is fascinating. It is cutting-edge science meets regulatory flexibility and adaptability.
Abigail Coplin (50:15)
Exactly. This comes back to what I was saying about technocratic governance. You can fault the Chinese government for various things, but it is deeply pragmatic and iterative in policymaking. They try things out, and if they do not work, they scrap them, revise them, or reform them. I am not saying they are efficient by any means, but they are willing to try things out. That is what we are seeing here.
We will see what the impact is. It might not go the way researchers hope it will, or the way the state hopes it will. But it is a really interesting model at the cutting edge of biotechnology. When you talk about cutting American patients and American companies off from those therapies, and from being able to see what is going on with those trials, I do not think that is in the country’s best interest.
Another example is the Boao Lecheng International Medical Tourism Pilot Zone, one of what China calls medical special zones.
Kyle Chan (51:40)
In Hainan.
Abigail Coplin (51:47)
Yes, in Hainan. It is basically the special economic zone of biotech. Within this designated zone, drugs from abroad that have not been approved on the mainland yet can be used. Gene and cell therapies that maybe have not gotten full national approval can be used. One of the goals is to build up medical tourism in the region and build up biotech capacity. These local projects are always multifaceted: companies are getting one thing, and local officials are getting another.
As a tangent, there is BGI’s collaboration with Lhasa, where local officials want to build an entire tourism industry based on the local national gene bank they are building there and imaginaries of Tibetan flora and fauna and their distinctiveness. All of these local officials are trying to distinguish themselves and make things work. But it does create experiments. In China studies, we talk a lot about experimentation under hierarchy, and that is what this is: tinkering with new institutional arrangements and seeing what happens.
I do not know what will happen with the medical zone in Hainan, but it is an interesting idea. You loosen some of these regulations in one particular locality, partly to create a hybrid space between what is approved on the mainland and what is approved in the rest of the world. That is important if you are looking to grow as an actor in the medical tourism space. They are going to see if it works, but it is an interesting idea for cutting through some of the bureaucracy and allowing some therapeutics to reach patients more efficiently.
Kyle Chan (53:50)
In the U.S., there are growing concerns about dependence on China’s pharmaceutical industry, including active pharmaceutical ingredients for essential medicines and licensing deals for drug development. What do you think policymakers in Washington should understand as they consider increasing restrictions on biotech research and development with China?
Abigail Coplin (54:21)
Three points. First, anyone who claims to be interested in protecting American competitiveness while supporting cuts to the NIH and NSF and supporting immigration restrictions, particularly when it comes to going to graduate school, is being entirely disingenuous. As I said before, biotech competition is first and foremost about two key inputs: basic science and human capital. The U.S. has long led in those two areas, but a lot of current policy decisions are threatening our position and our ability to compete globally going forward.
We need the best and brightest from throughout the world to come do their graduate work in the U.S. and stay here. Similarly, over 90% of drugs commercialized in the past decade have drawn on NIH-funded research in some capacity. Cutting funding to those organizations, politicizing them, and shifting decision-making so that politicians rather than scientists decide what grants are given is a disaster for American competitiveness, much more than American pharmaceutical companies in-licensing Chinese drugs.
The other point I would make, not to sound Pollyannaish, is that biotech is an industry that first and foremost is about curing disease and feeding people. These are shared interests for humanity. When we have advancements in these fields, they benefit not just the U.S. and China, but the world, regardless of where they originate.
To put this in a more politically pragmatic way, when you are talking about potentially banning American companies from in-licensing Chinese drugs, restricting capital from investing in Chinese companies, or blocking trials conducted primarily using Chinese data from getting FDA approval, this is not like depriving someone of a DJI drone or saying you cannot have a BYD car. Those may be things people really want, but they are not necessities. This is saying you are going to force someone to continue to suffer with a horrific disease or potentially die over an abstract notion of potentially weaponized dependency, which is a big “if”: if China would do it, if it can do it. You are potentially talking about depriving American citizens of cutting-edge therapies, and potentially more affordable cutting-edge therapies. That is a different kind of political risk than a lot of other restrictions around high-tech sectors in the U.S.-China relationship.
The final point I would make is that it fundamentally misunderstands the nature of competition in biotech. Again, semiconductors are on the brain. They have a big first-mover advantage. Biotech does not. It has a much lower barrier to entry. You are not talking about building a fab that costs billions of dollars; you are talking about starting a lab that costs millions of dollars. One of the key inputs is scientists and their ideas. They are mobile. They move. They chase opportunity.
Rather than protecting your innovation ability, walling yourself off is going to stymie it. To stay competitive in biotech, you need to engage with the best science in the world. Increasingly, in a lot of fields, that means engaging with China.
Likewise, it is a field where fast followers often come to dominate. We are seeing that with China. A lot of the industry is focused on drugs being developed for pre-identified targets, but they are able to create fast-following drugs that have better risk profiles, better side-effect profiles, and so on. The idea that you are going to protect American competitiveness by walling off the American ecosystem is misguided. To stay competitive, you need to see what is happening on the ground in China.
The metaphor I often use is that biotech follows the pattern of competition you see in basic science and academic science. If someone is working on the same project as you, you do not build a barrier between you. You make sure you sit on every conference panel together, trade postdocs, and go out for a passive-aggressive coffee after the conference and ask, “So, what are you working on?” There is an idea that even if they beat you to the punch the first time, that does not necessarily mean they will next time, as long as you stay on the leading edge.
If we do not know what is going on on the ground in China, if we block venture capital from investing in these companies, if we stop in-licensing of drugs, we are just going to fall behind. The other point I would make in closing is that, in contrast to how biotech is spoken about by both DC and Beijing, the boundary between American biotechnology and Chinese biotechnology is not very salient in terms of the live mechanics of the industry. It is a deeply cosmopolitan industry. All of these people went to graduate school together. They are in the same social networks. They sit on each other’s boards. Companies are looking to collaborate and are focused primarily on complementarities. Regardless of where a company is located, they are looking for someone with expertise related to what they are doing, but not exactly what they are doing. The notion that the Chinese biotech ecosystem lives in a world separate from the American ecosystem is just not true.
Kyle Chan (1:00:46)
You put it beautifully. It is this thriving organic ecosystem that is global, interconnected, and builds on itself.
Abigail Coplin (1:00:53)
Yes. And the EU is a big part of it as well. A lot of the current dynamics are refracting biotech through the U.S.-China relationship, but that is not a good way of understanding it. It is a global industry. It is not just a U.S.-China issue.
Kyle Chan (1:00:57)
Totally. Abigail, this has been fantastic. I learned so much from you and your research. If folks want to follow your work, how should they do so?
Abigail Coplin (1:01:27)
My contact information is on my academic website through Vassar. My paper for the Penn Project on the Future of U.S.-China Relations is also up, and various publications are available.
Kyle Chan (1:01:43)
Thank you so much, Abigail, for a fantastic conversation.
Abigail Coplin (1:01:47)
Thank you so much for having me, Kyle. It was a pleasure speaking with you.
Kyle Chan (1:01:51)
If you liked this episode, please rate and subscribe on YouTube, Spotify, or Apple Podcasts. You can find more information on the High Capacity newsletter at highcapacity.org. I’m your host, Kyle Chan. Thanks for joining, and see you next time.