Why AstraZeneca is betting on innovation in China

The CEO of CBBC member company AstraZeneca, Pascal Soriot, has said that China is “completely open” for pharma investment, and added that there has been an “explosion” of biotech companies in China.

“It’s hard to not be impressed by the progress that has been made in China over the last few years,” he said in April.

Some Western governments have been publicly decrying the threat of “economic coercion” from China, with countries including the US scrutinising Chinese investment into its biotech centre. However, for AstraZeneca, the geopolitics of the situation is secondary to the market potential.

“When you are a global company like AstraZeneca you have always to cope with geopolitical risk and you have to try to manage that without getting too involved,” Michel Demaré, the company’s new chair, told the Financial Times. As long as there were no legal or sanctions issues, he added, “you just try to take care of your patients and try to reach the most patients you can”.

AstraZeneca is the largest overseas pharmaceutical company by sales volume in China. A large, ageing population with chronic illnesses due to environmental and lifestyle issues ensures that China is a target market for many drug makers. AstraZeneca, however, is also interested in the scientific expertise in China and the financial support available. “The innovation power has changed,” Demaré told the FT. “It is no more ‘copy, paste’. They really have the power to innovate and put all the money in. There’s a lot of start-ups and we are a part of that.”

In 2021, AstraZeneca opened a major R&D centre in Shanghai and launched a health tech incubator in Wuxi the year before that. And last month, it signed a partnership worth up to US$ 600 million (£484.5 million) with Shanghai-based LaNova Medicines for the global licence for a potential cancer drug.

“When you are a global company like AstraZeneca you have always to cope with geopolitical risk and you have to try to manage that without getting too involved”

Since Soriot took over the company a decade ago, AstraZeneca has continued to invest in research and development in China and seen its success grow. Global executive vice-president Leon Wang, who joined in 2013, has also been credited for his innovative approach and has overseen the building of thousands of centres within hospitals to deliver AstraZeneca’s Pulmicort, a drug for asthma and chronic obstructive pulmonary disease.

Soriot said that AstraZeneca’s presence in China enables it to “tap into this innovation and help those companies develop and commercialise their products globally”.

AstraZeneca is not seen as a purely foreign company in China because of the sheer number of acquisitions and partnerships with local companies, and they create incubators that support local start-ups.

The Chinese approval process for getting new medicines onto shelves has reduced significantly in recent years, and the regulatory changes regarding insurance coverage have also helped pharmaceutical companies find success in China. Moreover, AstraZeneca’s ability to operate with freedom in China without restrictions from head office has enabled it to act in many ways like a local company. And without the distraction of geopolitics, AstraZeneca is going from strength to strength.