China is investing billions of dollars into growing its own biotechnology industry. So when a top executive from one of the leading Chinese drug companies came to the United States this month, she made a beeline to Boston to check out the thriving local life sciences hub.
Li Yan, general manager of Qilu Pharmaceutical Co. of Jinan, was more than an interested visitor. She was here to preside over her company’s opening of the area’s first Chinese-owned biotech incubator: the Qilu (pronounced chee-lew) Boston Innovation Center.
The new 25,000-square-foot center, located just off Soldiers Field Road in Brighton, eventually could house up to 10 early-stage drug discovery companies in its sparkling first-floor labs. They’re one floor down from the home office and research center of QLB Biotherapeutics Inc., a Massachusetts startup that is an arm of the big Chinese drug maker.
It’s all part of a growing trend by Chinese biopharma companies to expand their vision, and their operations, globally by tapping into US biomedical innovation. QLB Biotherapeutics plans to make small investments in some of the startups working in its incubator and acquire the rights to market their therapies in China if they clear the regulatory hurdles.
“We see the true value of entrepreneurial innovation,” said Larry Cai, head of New England business development for Qilu. “China invests a lot of money, but they don’t have the expertise in the US. Qilu wants to be the partner of choice for early drug developers locally.”
Pharmaceutical giants from other countries have long been active in the US market. Many well-known European and Japanese drug makers — from France’s Sanofi SA to Germany’s Merck KGaA to Japan’s Takeda Pharmaceutical Co. — have already established a beachhead in the Boston-area biomedical cluster by taking over local biotechs. Other big players, such as Switzerland’s Novartis AG and Great Britain’s AstraZeneca PLC, have set up research and development centers to capitalize on the region’s life sciences talent.
China has been late to the game but is catching up fast. The emerging economic powerhouse, which relied for centuries on herbal remedies without active pharmaceutical agents, has planted biotechnology research and office parks in Beijing, Shanghai, and the southern city of Shenzhen, where it has created the world’s largest genetic-research center.
It’s also spawned big contract research organizations, led by WuXi PharmaTech in Shanghai, which test experimental drugs and perform other services for drug companies in the United States and elsewhere. An affiliated Chinese drug company called WuXi Biologics is reportedly planning to raise more than $500 million in an initial public offering.
But now Chinese drug makers such as Qilu are reaching across the Pacific to invest in major US life sciences centers such as Boston, Seattle, and San Francisco.
“There’s been a pickup in interest and investment,” said Vicki Sato, a Harvard Business School professor who had top research jobs at biotechs Biogen Inc. of Cambridge and Vertex Pharmaceuticals Inc. of Boston. “China’s been a rich source of contract research capabilities. Now they’re trying to move up the ladder and the value chain in biomedical innovation.”
A particular focus for Qilu’s research and partnerships is cancer drug development.
“My goal is to put new innovative cancer drugs into research and development and, hopefully, we can bring them to [clinical trials] in a few years,” said Rijian Wang, the Chinese-born chief executive of QLB Biotherapeutics who previously worked at Harvard-affiliated Dana-Farber Cancer Institute and Beth Israel Deaconess Medical Center in Boston.
Qilu was founded in 1958 as a state enterprise but became a private company about 15 years ago through a management buyout. So far, it’s invested about $40 million in Boston, including $20 million to start QLB Biotherapeutics, which now has 16 employees and expects to expand to 25 by year’s end. The company also spent more than $10 million to renovate its Brighton building. Its executives have been talking to smaller life sciences startups about leasing space in its downstairs incubator — and about striking broader partnerships that involve the licensing of promising medicines.
“We are less interested in just being a landlord,” Cai said. “We want to provide value-added services where all the parties benefit. We understand the drug development process is long and tedious. Building a long-term relationship is the secret to success.”
Cai, a Boston-area biotech veteran who joined Qilu last August, said Chinese companies are best positioned to market drugs licensed from partners in China because they understand the workings of the Chinese regulatory agencies better than foreign firms. Smaller US drug makers often set up their own sales forces in the US market but license overseas sales rights to foreign companies in exchange for sales royalties.
“It’s about connectivity,” said Zen Chu, senior lecturer in health care innovation at MIT’s Sloan School of Management. “There’s a lot of money in China waiting to be put to work. These deals are aimed at acquiring the rights to the best molecular insights from Kendall Square. It’s hard to find examples of foreign companies doing well in China. You want a local partner.”