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Western Pharma Groups Look East

According to a senior official at Johnson & Johnson, the company is negotiating cooperation agreements with two Chinese companies as it seeks to capitalise on the country’s biotech boom, which has been fueled by a rise in private investment and government assistance. The talks with the two businesses, which J&J did not name, come after a successful cooperation between the US drugmaker and Legend Biotech, a company created in China in 2014 but now based in New Jersey.

The two businesses collaborated on a groundbreaking cell-based cancer therapy that was just approved by US regulators. Several other major US pharmaceutical companies, including Eli Lilly, AbbVie, and Amgen, have signed similar partnerships in the last two years, as Western drugmakers seek to licence high-potential treatments from Chinese partners to market in other countries.

According to McKinsey, a management consulting firm, between July 2020 and July 2021, Western drugmakers signed a dozen big licence deals with Chinese biotechs, with a median deal worth of $900 million. Despite a steep downturn in global biotech stocks in 2021, the market capitalization of listed biopharma groups from China on the Hong Kong, Shanghai, and Nasdaq markets has risen from $3 billion in 2016 to $240 billion today, according to McKinsey.

The country’s central role in the drug supply chain — it produces roughly one-third of the world’s active pharmaceutical ingredients — has helped it forge a new role as an innovative drug hub, according to Bruce Liu, who leads the life sciences division for China at consultancy firm Simon-Kucher & Partners.

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