– David Wilson | nature.com blogs

I’ve been in China for a year working in a joint venture with the China Medical City Government and it has been a terrific education and given me the opportunity to learn the business practices undertaken by government officials, their close associates and partners.

I’ll start with the positive aspects of starting a business in China;

• The optimism and willingness to take risks

• There is a hardworking talent pool in the major metropolitan areas such as Shanghai, Tianjin, Shenzhen, Suzhou and Beijing. Salaries are not as low as one might think for people with experience in biotechnology and pharmaceutical sciences.

• The availability of laboratory space, although it typically needs more investment that one might expect to make operational.

Some of the negative aspects of running a business in China;

• Negotiating with a Chinese national typically is not focused on a “win-win” outcome. The perspective is that one hasn’t won unless the other party has lost.

• Contracts, even after signed, are continuously under negotiation.

• Contractually defined funding, linked to milestones, is never on time in spite of verbal commitments, and business is always in “start/stop” mode due to the availability of money.

• As part of normal business practice there is the tendency to revert to an inefficient bureaucratic process if one has not been defined at the outset.

At this point I have withdrawn my involvement with the joint venture until the government has tangibly demonstrated their commitment to consistent funding and government-imposed management processes are streamlined. I can be more specific if there is interest from the readers.

My experience may be tainted by my interactions with the China Medical City management, but I remain upbeat about China and the prospects for innovation, business development and biotherapeutics development for the international and domestic markets. My advice at this point is, if you want to start a business in China, don’t have the government as your investor at any level, because their system of incentives and political motivations are not aligned with what is typically needed to mitigate the myriad of risks that are inherent is starting a new business. However, don’t for a minute think that the local, provincial and central government can be ignored. Having someone in your organization devoted to working with the government employees, and developing collegial working relationships at all levels will be critical for your business. You will need their support throughout the evolution of your company.

Please feel free to post questions and comments, and I encourage all dialogue on this subject.

David Wilson

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In late 2009 a Chinese-American friend asked me if I might consider working on a project in China, to which I responded enthusiastically “yes.” The business concept is to develop a contract manufacturing organization (CMO) in China to capitalize on an emerging China market, take advantage of the lower costs of manufacturing that China’s skilled labor force has to offer, and produce products in compliance with FDA and EMEA standards for international and/or domestic distribution. As my simplistic generalization, I thought that since China manufactures so many products for the West, why not pharmaceuticals? At that time I was naïve in thinking this was a novel concept, because Big Pharma was already in China doing this and had been for years. (As an aside: I recently saw a quote from the new FDA commissioner stating that 40% of all prescription drugs sold in the US are produced outside the US.)

The difference is that there are no therapeutic monoclonal antibodies produced in China for international distribution. This is my focus, and the big initial hurdle was getting the financing to do this, which as it turns out, my business partner had already been scouring the landscape to find money. He looked for incentives in Beijing, Shanghai, and Suzhou with some success, but then he came upon China Medical City.

China Medical City is in Taizhou, Jiangsu Province, and is an initiative from the Central Government to build the largest Medical Science technology park in China. I was told that ¥100,000,000,000 (~$15 billion) was earmarked for this project, which will contain all aspects of product development, from R&D to manufacturing to marketing and distribution, both domestically and abroad. It is 85 sq km, with its own municipal government, police and a provincial office for the SFDA to facilitate regulatory filings. I first visited China Medical City (CMC) in May 2010, where we discussed some of the business terms as well as site selection to determine if this was an appropriate environment to set up a CMO. Not only did it appear that it would work, but there was a terrific amount of enthusiasm on the part of the CMC leadership, since it fit into the overall strategic vision for what China Medical City was to become.

In June a contract was signed to establish a cooperative joint venture with the local government and commit sufficient funding to build and staff a 20,000 sq. meter cGMP manufacturing facility. We would provide the Western management team with the required experience, and the Chinese government would provide the funding and infrastructure support to get the company up and running. I moved to China in August 2010, and since then have been working with design firms to engineer the facility, and I’ve been pounding the pavement to find potential customers and strategic partners to participate in and ensure our success. By the way, I did not speak Chinese before moving, but am slowly learning the language as best as my aging brain will allow.

In subsequent posts I will be happy to answer any questions to elaborate on my personal and business experiences in China.

David Wilson

nature.com blogs

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