CAMBRIDGE, Mass – Nov. 17, 2010 – Today Monitor Group, a global management consulting firm, released a new report, China, the Life Sciences Leader of 2020, finding that China is poised to become the global leader in life science discovery and innovation within the next decade.

At a time when the global life sciences and pharmaceutical industries are beset by major challenges, including patent cliffs, skyrocketing costs of drug approvals and failures in key trials for potentially landmark new drugs, China has developed a strategy of targeted government investments. Through a variety of national and regional programs, China is spending billions on a new health care “safety net,” encouraging the growth of life science parks and startups, financing the development of a high-quality research infrastructure and luring back tens of thousands of Western-educated Chinese researchers.

“In just a decade’s time—a short-term horizon in the life sciences field—China will not only be a significant engine of innovation, but has the potential to create a new model for advanced drug discovery,” said George Baeder, who runs Monitor’s China life science practice from his office in Shanghai and co-authored the report. “Other industries have repeatedly failed to anticipate how quickly China can adapt and impact the global playing field.” Baeder cautions that the pharmaceutical industry must now also pay attention.

Based on research and interviews with dozens of life science professionals in both the U.S. and China, the Monitor report finds that China‘s life sciences industry is today gathering a critical mass of highly-skilled talent, savvy and focused venture investors and growing government support as its market for drugs and medical devices escalates. China’s domestic market is expected to overtake Japan and become the world’s second drug market by 2015, and as global pharma firms are forced to slim down and cut research staffs, many now see China as a compelling destination to conduct cutting edge new research.

Among other findings, Monitor says that:

• At least 80,000 Western-trained PhDs in the life sciences have already returned to China to work in the industry or in academic institutes. The pace of repatriation of these highly-skilled scientists is likely to accelerate over the coming decade.
• China will unleash US$124 billion between 2009 and 2012 alone to build new municipal as well as county-level hospitals as part of its broad-based health care reform.
• An exclusive Monitor survey of Chinese life science professionals now working in the United States finds that fully two-thirds contemplate either returning to China for good or becoming “sea turtles”—life science professionals who constantly circulate between China and the U.S. in pursuit of commercial and research opportunities. The report argues that such “sea turtles” and the “hybrid” firms they create will become important drivers of China’s life sciences innovation as the biggest pharma firms are forced to specialize on core strengths and reduce head counts in areas where they have not succeeded in creating new therapies.

The report also illustrates how key entrepreneurs, life science professionals and academics are developing innovative new models for pharmaceutical research and development in China, using Chinese-led clinical research organizations to fast-track their research in hopes of creating better drugs, more rapidly.  The report also catalogues a series of risks and bottlenecks that could limit China’s advance, however, including the ability of state regulators to encourage innovation while also ensuring that Chinese-made drugs are of the highest quality.

For media inquiries around the report, please contact Rachel Adam (monitor@racepointgroup.com).

George Baeder, based in Monitor’s Shanghai office, leads the firm’s Life Science practice in Asia, covering pharmaceuticals, medical devices, over-the-counter medicines and healthcare delivery. He helps clients anticipate fundamental changes in the market and competitive landscape, and has led numerous corporate market entry, product launch and in-line growth strategies across a wide range of therapeutic areas. Over more than three decades in Hong Kong, Singapore and China, George has worked across consulting, investment banking and private equity to advise senior executives of leading Western and Asian firms as well as government policy makers on the development and effective implementation of innovative strategies. He can be reached at George_Baeder AT Monitor.com.

Michael Zielenziger, a Pulitzer-prize finalist for his reporting from China, works with Monitor Group analyzing issues related to Asia and globalization and is a visiting scholar at the University of California, Berkeley. The former Tokyo bureau chief for Knight Ridder Newspapers, Zielenziger is the author of Shutting out the Sun: How Japan Created its own Lost Generation (Nan A. Talese/Doubleday) which described the social malaise and economic decline that now confronts an aging Japan. As a consultant, he advises corporations and governments on developing strategic priorities and discerning emergent trends. He is also a former John S. Knight Fellow at Stanford University’s Graduate School of Business. He can be reached at Michael_Zielenziger AT Monitor.com.