23 Sep 2009 10:24

Guest column: Biopharma and pharma industrial parks - development, difficulties and breakthroughs

In this week's guest column, Dr. Zhang Fabao, president and founder of biopharmaceutical and pharmaceutical consulting firm Shanghai Bioon Group Corp., discusses the development of biopharmaceutical and pharmaceutical industrial parks in China. Zhang also acts as the special adviser to 18 biopharmaceutical and pharmaceutical industrial parks across China. Translated from the original Chinese by Yu Chenxi.

By Zhang Fabao

Shanghai. September 23. INTERFAX-CHINA - The biopharmaceutical and pharmaceutical industrial park model has played a crucial role since it was first introduced in China. While the number of biopharmaceutical and pharmaceutical parks in China has exceeded that of the number in the United States, the output value of China's biopharmaceutical industry is just one-fortieth in comparison.

Lack of differentiation in developing bio-industrial parks

A park is a complex project to undertake from the planning to construction, investment and operational stage. Following the success of Wuxi AppTec Co. Ltd., many industrial parks have jumped on the bandwagon to groom similar world-class pharmaceutical, biopharmaceutical and medical device contract research organizations (CRO).

Indeed, even as the biopharmaceutical outsourcing market is hot now, it does not mean that all parks should focus on housing CROs. In the biopharmaceutical and pharmaceutical outsourcing industry, some companies may have high local talent pool requirements while others rely heavily on the local Western drug and active pharmaceutical ingredient manufacturing industry or on hospital resources.

In my view, parks should pay more attention to timing, geographical location and human resources. Notably, timing consists of national and local policy factors as well as the domestic and international investment environment. At the moment, this does not come by easily since neither the international nor domestic investment environment is in a good shape. Geographical location refers to the availability of natural resources and the location's proximity to other key regions. Last but not least, while human resources often are the least of investment considerations, it is important to note that companies need to factor in if parks are located near reputable colleges and universities, which can guarantee an abundant flow of well-qualified individuals to work in the parks.

Balancing outsourcing and innovation

It is necessary that the government encourage Chinese companies to be innovative. In the biopharmaceutical and pharmaceutical fields, it has been difficult for Chinese companies to develop world-class new drug products. While the National Key New Drug Creation Program is definitely a step in the right direction, a park's development strategy should be determined by market orientation rather than through a policy.

Unlike cities like Beijing, Shanghai and Tianjin, whose parks are at the forefront of China's biopharmaceutical and pharmaceutical development and have respectively accumulated capabilities and resources for new drug research and development (R & D), most regions in China are a long way from new drug development.

Rather, I believe companies engaged in outsourcing and production of diagnostic reagents, medical devices and medical software may be more suitable to develop in small and medium-sized biopharmaceutical and pharmaceutical parks in second-tier cities. As such, the government must not neglect to consider the local development situation and future development plan when setting a park's development strategy so as to find a reasonable balance between outsourcing and innovation.

Soft infrastructure as important as hard infrastructure

Domestic parks all have significant investment in hard infrastructure construction, especially in the biopharmaceutical field where R & D facility investment takes up a significant portion. However, soft infrastructure is important as well, particularly, companies are unable to grow without relying on three major factors - technology, market conditions and capital. The majority of small or emerging companies in the parks typically lack one of the factors or fail to link the factors effectively. For instance, a company may have a strong technical team but lack fundamental sales and marketing capabilities or does not maximize its capital utilization. Perhaps new business start-ups can engage third-party consultancies to assist in early stage marketing and financial planning while they focus on developing their product technology and R & D.

The above is a personal opinion piece by the author. Its publication in no way implies that Interfax shares the views expressed in the article.