Business Of Biotech

The Implications Of China's Growing Biotech Industry With Allan Shaw

• Ben Comer • Episode 250

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Business of Biotech MVP Allan Shaw is back to talk about the rise of China's biotech sector, and its evolution from fast follower to global innovation powerhouse. Increased deal activity with Chinese biopharmaceutical companies is injecting new risk into traditional development models in the West, despite an uncertain policy environment in the U.S. vis-à-vis China. Will faster trial starts, cheaper asset upfronts, and a growing talent base slingshot Shanghai's biotech hub into an innovation destination on par with Boston and San Francisco? 

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Ben Comer:

Welcome back to the Business of Biotech. I'm your host, Ben Comer, Chief Editor at Life Science Leader, and today I'm grateful to have a Business of Biotech MVP on the show, Allan Shaw. Allan has been a five-time public company COO, he's served on a number of board of directors and I'm happy to have him here to talk about a very timely subject Chinese biotech, which has become something of a go-to source of innovation for global big pharma and biotech alike. Deal activity has been robust in recent months. To use just one example, Merck has, since last November, announced three multi-billion dollar out licensing deals with Chinese biotech companies. And Merck is certainly not the only company doing deals in China and eyeing new opportunities. Lilly and Novo Nordisk are two other recent examples of companies doing big deals in China. But fortunately we have Allan on as our guest to explain what's behind China's growing biopharmaceutical industry and why Western companies have become so keen on Chinese biotech and what it all means. Thanks for being here, Allan.

Allan Shaw:

Thanks a lot, Ben. Always glad to be here and quite excited to do an episode with you now, but I'm really looking forward to chatting about China with you and the episodes that go forward from here.

Ben Comer:

Likewise, Allan, thank you. I really appreciate your willingness to move on from Matt and be on an episode with me More to come. Absolutely, absolutely. Anticipation, I think, of China's growing middle class expanded health care benefits with the idea of commercializing more products for the Chinese market. But that's not really what we're talking about today. Of course, that's still happening, but what we're talking about is the dramatic growth of China's own biotech industry over the last decade. Allan, what is driving that surge and how did we get here?

Allan Shaw:

Yeah, it's an interesting evolution that we've been witnessing and you know I would say that China's rise in biotech is the result of a deliberate and well-executed strategy that combines policy, talent and capital investment. But there's several factors that I think specifically have really been drivers behind this. You know, we've done a really good job of training a lot of Chinese top scientists here in the United States and we've done such a good job that they've been able to bring back this world-class expertise and repopulate that very effectively over in China and have developed very strong networks. The Chinese government have also prioritized biotech as a strategic industry and they've been providing a lot of funding and incentives to help drive innovation and really really grow that.

Allan Shaw:

You know, when I was over in Suzhou ... you know it was like walking in in Cambridge really, you know, and that's part of the greater Shanghai hub that we'll be hearing more and more about in the future. You know they they have really a low, much lower the future. You know they have really a much lower cost workforce. You know their PhDs are literally a dime a dozen over there and that really enables much more cost-effective ways of doing things compared to other parts of the world and their regulatory environment is also, perhaps some people would argue, a little loose, but it does enable faster pathways, making it an interesting place for development, but certainly been a very fertile area for R&D right now, and so all of these factors have really created a dynamic biotech ecosystem that is really starting to really step onto the global stage, and you know I look forward to talking about you know the implications.

Ben Comer:

Yeah, yeah, that's, that's absolutely right. I mean I mentioned in the intro Western pharma companies have been increasingly striking deals with with Chinese biotech firms. I gave a couple of examples in Merck and Lilly and Novo, which were just the couple that occurred to me. Can you quantify how significant that shift has become?

Allan Shaw:

Yes, it's there. It's growing like a weed. You only have to go back five years ago and approximately, if you look at $50 million as your threshold cut off, that represented about 5% of the global deals were originated out of China. You fast forward to this past year originated out of China. You fast forward to this past year, according to data out there, and there's now that represents almost 30% of the deals that are licensed are originating out of China. That's really a significantly exponential growth and it involves, like besides Merck, az, gsk and, as you touched on you know, there was a recent Merck LP little a deal and we'll be hearing a lot about LP(a) as a clinical standard of care in cardiology. But you know, there's opportunities, to say the least, and not only are the strategics going over there, but there's a lot of investors also going over there and taking advantage of the opportunity to really harvest the crops and the availability of assets over there.

Allan Shaw:

Bain, RTW are pouring hundreds of million dollars into Chinese biotechs and the rationale for this is a confluence of factors. You know the Chinese companies are producing high quality drugs, often biosimilars or bio, not bio betters, actually, not biosimilars that enhance existing therapies at a fraction of western development courses I referenced. Their inputs are just so much less. And also, what's contributed to this is their capital market system has really blown up over there. So, you know, you've got a lot, of, a lot of needy companies, you know, I guess they're even needier than ours, even needier than ours.

Allan Shaw:

And so right now, you know, because so many of them are also clustering around similar targets, it's really, you know, giving a whole new meaning to Chinese menus and they're really, you know, so it's really a buyer's market in China right now. And what makes and what I think underscores some of that and this is according to a recent white paper that Locust Walk put out that the upfront payments are significantly lower than those in the that paid from the United States, almost like two times lower. You know, like you're paying almost 5%, I think. If you used US metrics, the upfront used to represent about 10% of the total deal value. Now if you go into China, you're paying about 5%. So that's a big difference and it makes it a lot smaller upfront.

Allan Shaw:

Yeah, and the shift really underscores the growing role of Chinese biotech and global innovation landscape and highlights the increasing appetite of companies for accessing these low, low, low cost effective assets. You know it all. It also implies that there is money that's leaving the, the traditional ecosystem as well.

Ben Comer:

Yeah, yeah, absolutely. And you know you mentioned the government heavily subsidizing the biotech industry in China, and you know we've seen this in other sectors as well, in electric cars. Everybody heard about DeepSeek and AI and it seems like what? And just thinking about those two industries, what they have in common, seemingly, is that they're creating a technology you know, similar or better to what exists in other global markets, and yet significantly cheaper, you know, aside from it. How are they able to do that? I guess, aside from is it all government subsidies that allows, you know, the Chinese market to develop drugs, to build electric cars, to create AI algorithms and apps more cheaply?

Allan Shaw:

You know it's. You know it's really a great question and I think you know you can go a lot of different places with it. But you know you can also look at how we do things and I think there's a lot of legacy practices in the way we develop drugs. You know we spend a lot of time on animal models yeah, yet how many times, you know. And then we often say these animal models don't translate, you know.

Allan Shaw:

So you know you're putting a lot of layers in your process there. You know we can talk about the clinical drug process too. That's got a lot of layers of yesterday built into that and there are probably more effective, more cost-effective ways, particularly when you start looking at developing the drugs for chronic diseases where you need multiple phase twos. You need the power of these studies and you know what you're doing is you're selling a suit off the rack and we know that. You know people aren't off the rack. So you, you know there's a lot of disconnects from you know what we're doing in the studies. So you know when you, when you superimpose that back to china, you know they're they're not necessarily doing that. You know they they're cutting out a lot of the upfront uh, animal work, you know, and they go right into humans, and I often quipped that human models translate so much better.

Ben Comer:

Yeah, yeah, right Now, that's a really interesting point. They may not have the same kinds of, you know, incremental base costs. You know that that farm, that big pharma has developed over years, some of which you know is probably wasteful or needs to be redesigned to be more efficient. They may not have the same base costs in China.

Allan Shaw:

Absolutely. And now, if you're going to be, you know, scouting and trying to bring in assets, you know, are you going to be better with a molecule or an antibody that's been in man, or are you going to be happier with a molecule that's been in a mouse or a rat, or a monkey for that matter?

Ben Comer:

I know what I'd be happier with.

Allan Shaw:

So you know there's, and so you can really de-risk things and run the so-called killer experiment a lot sooner and get better results. That translate, and because costs are cheaper over there, you have cost advantages besides speed and efficiency and the science has become very, very, very, very good over there. You know they're certainly. You know they've come up with the new PD-L1/ VEGF that you know Akeso is developing with Summit, but you know there's a lot of other great, great things that they're doing over there. And then, as you touched on, you know, depending on your partnerships, you know you could potentially open up access to, you know, a population of billions.

Ben Comer:

Yeah, yeah Right. I saw a Simon Kucher report recently that had that showed in 2023, which was the most recent data in the report, 39 percent of all clinical trials, phase one through four, were happening in China in 2023, which was, you know, a dramatic increase, just in you know the five years prior to 2023, which I think reflects that you know continuing interest in commercializing drugs in China. But it also reflects you know what you're talking about the growing amount of Chinese initiated clinical research and the real strength in R&D that they've developed.

Allan Shaw:

Now, indeed, and I think you need to also distinguish between the studies that are being run for commercialization purposes in China versus those that are being run straight efficacy as well, because at least some of the noise that I've been hearing from folks when I talk about, you know, this new trend or phenomena, or you know it's hard to call it a phenomena it's real, but it is the fact that I think people find that it's a great place to get early stage stuff. You know I don't think people are really relying on, for a lot of reasons, great place to get early stage stuff. You know I don't think people are really relying on, for a lot of reasons, on the stuff that's being developed, yeah, in the, in the clinic, from the baseline drug development, and the perception is that they have not, they haven't, I guess they have not imported enough chops in order to do actually do the clinical development in a way that people would feel comfortable with.

Ben Comer:

Yeah, I think the FDA is more or less kind of express that view, not to mention the fact that, uh, I think there's some pretty strict Chinese laws about transferring health data from Chinese nationals outside of the exchange or back and forth in clinical development programs. Obviously, in most countries, you have to conduct clinical trials In the country where you want to commercialize a drug not always the case. It sort of depends on some circumstances. But I've had some people more than one person mentioned that to me as something that I think there are workarounds that have been established but nevertheless it's not as easy as conducting a phase two trial in China or a phase three trial in China and, you know, submitting that to the FDA. You know, to get a drug approved in the US, as Lilly found out, you know, with their PD-1 back in 2022 found out, you know, with their PD-1 back in 2022.

Allan Shaw:

No, exactly, you know, I think the playbook is to get the asset early and then develop it yourself before it can be screwed up, or and do it with your goalposts, your measurements and answer the questions under your control and with assurance that the underlying data is reflective of the experiments.

Ben Comer:

Yeah, so strong preclinical assets not at a premium, at a lower cost for acquisition. Is that what's primarily driving Western big pharma and investors to seek out Chinese biotech partnerships and deals?

Allan Shaw:

Yeah, and I think they're looking at later stage programs too, depending, you know, depending on the expertise.

Allan Shaw:

But yeah, I think you've nailed that and you know it really, you know, gives them the opportunity to, you know, backfill their pipeline, because you know it does beg a question of what they're going to do with their own internal R&D resources, because they've really, I think they can probably put those functions on a diet in some regards I don't see the productivity of the yield coming from those areas.

Allan Shaw:

But, yeah, I think that's going to be part of the playbook. I think, you know, ultimately, Shanghai, the Shanghai hub, will be at it in the same breath as San Diego, San Francisco and Boston. You know, like I said earlier, when I was in Suzhou, it had the same kind of feel and energy as walking around Cambridge. You know you couldn't step anywhere without crushing a molecule. So I do think it offers, you know, I think what you're going to get to is, you know, historically the Chinese companies have been more of a fast follower, I think, and I think people have been feeling very comfortable with them in that role. But I think it's still ultimately causing a problem as far as supply and demand is concerned.

Ben Comer:

Yeah, yeah, well, and I'm glad you mentioned the patent cliff, because I think that has to be at least part of the reason why some of these deals are getting done right. We have a kind of not since what 2007 or 2010, you know a pretty substantial patent cliff for a lot of big pharma companies coming in the next couple of years.

Allan Shaw:

right, oh, no, indeed, and that's been the speculation that these guys have a pile of cash and they'll be doing deals, and it hasn't necessarily played out that way right now, and people are scratching their heads and that's probably for a separate discussion. But the IPO market isn't working. The M&A market isn't working, you know, know, it's causing a little bit of consternation in the marketplace and I think this, this dynamic too, it allows companies, rather than buying companies, right, rather than buying a cow, you can go buy, you can go go to china and buy the steak. So, yeah, it does give, it does give people options. But you, you have to ask yourself is this kind of potentially? Not only is it redirecting resources out of the United States, but are we potentially also cannibalizing a little bit of the M&A dynamic? That's kind of been an important pillar in how the capital markets for biopharmaceuticals have worked?

Ben Comer:

Yeah Well, Allan, I'm going to have you back on and we'll dig into this issue of the broken IPO market and what companies can do. We'll save that for a future episode. Going back to China, are there specific drug types or therapeutic areas that companies are really looking to China for? And you know we've already alluded to or discussed, you know, the PD-1s and how effective Chinese biotech has gotten at developing those. But what you know, what, what else, what other drug types are, and maybe it's not a specific one or two, maybe it's, it's all across the map, I'm not sure.

Allan Shaw:

No, it's, it's. It's interesting to see how, where they're really carving out their differentiation and being competitive, being competitive, and you know, I think people ask are they really being bio-betters or are they innovating? And I think the general perspective has been that they've been kind of me-tos or me-betters is what I've heard a lot of people talk about but they've been doing that so well and so prolifically. Now that you know you're seeing competition coming out of the woodwork and people are being blindsided, competitive landscape and having conviction that you've got your arms around it, because there is so much of that going on over there. But I do think the innovation is bubbling under the surface.

Allan Shaw:

I recently was advised that, based on the number of patents that have been issued or filed, China is actually kicking our butts Really. Yeah, so the innovation is bubbling under the surface. So while today they're known as innovators and I think we've still got an innovative heads up on them they are catching up very wise, very quickly. And to your question, you know they've they've proven themselves to be very, very good at making antibodies. Um, they've been being able to make the ADCs, which have been very uh, that that have been selling like hotcakes yeah, not an easy product to make either no, so they've, they've really been able to uh do a good job on those.

Allan Shaw:

Uh, there, I understand, you know they're doing a good job on by specific. So they've got the antibodies down and uh, and I think they've gotten and they've gotten everybody's attention on that. But they're also, you know, the chemists are very good too. So you know they got. They can certainly go toe to toe with anybody on small molecules and I think that's really where the general focus is.

Allan Shaw:

They haven't been as prolific in the cell that I've seen in the cell or gene therapy space and I think that's also very costly modality in the cell or gene therapy space and I think that's also a very costly modality and that's not the way their medical system operates. But I think it's those two particular modalities that they've done really well and typically what they do is they tweak the chemistry, they enhance efficacy a little bit, improve safety profiles, rather than doing traditionally, doing the innovative first move of drugs. But as I said, you know they are moving forward and I think we got to take them seriously. Yeah, because I think they can create, and they are creating, dislocation in the system that that we've previously understood.

Ben Comer:

Right, and you know we we've been talking about this question of innovation, which you're saying is bubbling up, versus kind of the refining of existing drugs, incrementally improving existing drugs. Do you anticipate the emergence of a Chinese big pharma that is doing more global trials, bringing more products into the US that were originated in China and maybe initially studied with a phase three, or maybe two and three, conducted as part of a global trial system in the US and then approved in the US? I mean, are we still a ways away from that or is that on the near horizon?

Allan Shaw:

And I think the US represents a a big market. So I think naturally it would, it would make sense for companies to do that certainly some have yeah yeah, I think it has. It has been done, and I think there are smaller companies that are that are migrating over one of the more successful ipos this year uh, a percentage is basically a company that's come from over there and they're executing very well.

Allan Shaw:

So I think, you're going to see that. There's no question about it, particularly, and I think part of what will influence that too is how their capital market system works. You know, there was a period of time where, if you had a choice I was involved with one of those companies you could go. I remember when I got involved I said are we looking east or are we looking west? Right now, I think you can only look west, but the western model is like, we've said, has its own issues, but it's still looking like, we've said, has its own issues, but it's still looking better than the others.

Allan Shaw:

And I think the one thing that we have here in the United States and this is one we have to be careful about is we have the ecosystem. We've created a really, really robust ecosystem and it's the envy of the world. You know, that's why you got a lot of European companies, a lot of companies out of Israel. You have companies from Asia who coming over here, not only for our capital markets, but it's for our infrastructure. And china is certainly, you know, may, you know, may ultimately come to a point where people find that to be a fertile place to go to, and I think it has its purpose.

Allan Shaw:

But right now the capital markets, it doesn't have the complete ecosystem. So I still think we have a leg up, but I think we also a high risk of that. I mean, you know, I think what's going on today, you know, unlike when the Russians put rockets in space and that kind of, was a wake-up call to the US to kind of harness our technology and we had the so-called space race that JFK initiated, At this point in time, when we're basically getting a shot across our bow that China is a real emerging biotech competitor for leadership, our response is to blow up the NIH. Right, it's a bit ironic and you know we and you know I think there's an opportunity for course correction, but you know we shouldn't just take it for granted.

Ben Comer:

Yeah, that's a. That's a great point. And I did want to ask you you know how you think some of those US policies NIH funding, cuts, tariffs, you know alter the competitive landscape. I was speaking to a gentleman who has a really interesting book coming out in late April called so Small it's about. It's a history of germ theory, and he is the head of science writing at MIT. He's a professor there but also an author, and what he was telling me is that when you stop funding something like the NIH, freeze research grants, even for six months, much less like a four-year period, potentially, you don't just pick up where you left off. You actually really lose some.

Ben Comer:

You know not just people and programs, but also just knowledge. You know he referenced. You know in the lab that you know the single guy who knows to knock twice on the side of the, you know the machine to make it work right, who, once he's gone. You know no one knows how to do that and you just the knowledge is lost and he was quite concerned about that. But anyway, Allan, you know what do you think some of these US policies might do to? You know, affect the competitive landscape, affect the competitive landscape.

Allan Shaw:

Yeah, you know, I think long-term. You know you can't measure the near-term implications of doing something at the NIH because you know the lead time of development and their impact is usually felt.

Ben Comer:

You know a generation later, A year later yeah.

Allan Shaw:

So you know it's one of those things that you can do for short term gratification. You know, I, you know, and I think as a general premise, you know, all this funding has kind of become like an entitlement and people have viewed these things as entitlements and that's not a good thing either, right. So you know, I think you know, doing something that's a little bit more freestanding and challenging the status quo of how we allocate resources I think makes infinite sense if it's done in rational, thoughtful manner. You know, I mean I kind of hate to think how much money the government has spent on supporting the amyloid plaque hypothesis. I mean, I'm sure there's a small fortune, was there. So you know, we got to be thoughtful about how we do things. But I think those are longer term implications.

Allan Shaw:

You know, I think stuff that can have bigger implications are things that kind of view, things that put barriers around global medicine. You know it's global medicine. You know this is about humanity and you know trying to kind of artificially tether that to geographical boundaries seems a bit unnatural in the spirit of helping mankind. So you know, to me the BioSecure Act didn't make a lot of sense. It seemed to be highly disruptive. It's adding costs and delays, arguably to bring in drugs to market as opposed to helping people do that. You know, if there's disrespect on respecting IP, you know that's a different issue and you need to address it differently.

Allan Shaw:

But so from my perspective, I think a lot of these policies are not particularly helpful. But I guess it's through the eyes of the beholder and what you're trying to solve, for you know you're trying. If this is all about patience and I've always thought that, you know, at the end of the day, while a lot of people make money on this and it is a profitable way of doing so, I thought this was still all about patience and about you know, if you do the right thing for patients, everything else takes care of itself and somehow we're getting that. That's getting lost in translation. When it comes down to that, I think as an industry we can do a much better job in terms of resource allocation. I mean, you know, how do you get 100 CAR-T CD19 companies? You know, look at what's going on in obesity right now. It's actually somewhat obese.

Allan Shaw:

Yeah, obese pipelines, yeah, yeah, so it's you know we have to be smarter about how we allocate. It's such a lemming approach. You know why do we need so many checkpoint pdl ones? Uh, out there, you know we just all we're doing is actually commoditizing good science, and so you know we are. We sow the seeds to a lot of these problems, and you know, and, and it's you you have to ask yourself who wrote the check for that hundredth CD 19 company? Who thought that was a good idea?

Ben Comer:

Yeah, yeah, Right. Well, tariffs, Peter Navarro, saber, rattling aside what. What are the potential downsides if there are any, of China's growing role in biotech, particularly for US and European companies?

Allan Shaw:

You know, the biggest concern is China's ability to produce high quality drugs at lower costs, which can really disrupt the financing models here in the US and Europe, as we've touched on. You know, their ability to do that kind of as we touched on, I think can really put the M&A market at risk. And you know it's going to put more pressure on companies to actually launch their own products, commercialize their own products. And you know, I think it does challenge one of the underpinnings of how the capital markets currently work. You know M&A has been a big driver of returns and I've actually written an article in the past saying that at times when the market's been hot it's almost akin to a casino mentality as far as who people think is going to be the next takeout I mean. So you know people have companies circled up. So if there are things that are playing out as a consequence of China's emergence, that's kind of giving people an alternative to that channel.

Allan Shaw:

That's going to have its implications at the end of the day yeah, I don't see any getting around that and it's also going to hit the valuations of companies and their cost of capital. Because if they're basically resetting the prices, not only for drug prices that are commercial, but what are the trade values of a phase one asset or a phase two asset, your valuations are going to be impacted too. So you know there's a ripple effect. You know I wouldn't call them the drunks that came to the party, but it has that kind of potential implication on the way the model has traditionally worked. Model has traditionally worked. You know, certainly I think the Me Too's is going to kind of make things branded products become almost generic before their time. You know, I think it'll give a new meaning to branded generic in certain respects.

Allan Shaw:

In certain respects and from a national security perspective, you know concerns persist around the IP protection and over-reliance on Chinese supply lines. So you know, going back to what I said, you know I don't want to poo-poo them, but I think in the context of what you're trying to solve for or address, it's a little bit of the tail wagging the dog and I would suggest that there's different ways to try to mitigate those risks. But you know the whole thing. So many people work with WuXi and you know WuXi may have, you know, be having data that may be ultimately very competitive somewhere down the road, and you know I guess that's a business decision and you know, I think you can make a decision on that. But I think there's other Chinese suppliers. You don't have to work with WuXi as well. So you know, if these trends continue, they could certainly they are reshaping the competitive landscape and do pose long-term challenges.

Allan Shaw:

I don't think people really want to think about it, but it's here, it's now and it's not going away and, as I understand it, the US government's actually going to be putting out a paper in the first week in April that's going to be talking a little bit more about this. So it'll be interesting. Guys, when I was at the Cowen Conference not that long ago, they had a couple of representatives and there was actually a subcommittee appointed by the Senate looking at biotech innovation Senate looking at biotech innovation. So they were trying to tie this in. But it seems to me the bigger issue is that they're working on executive order, expansion of powers and overspending, and I think that this is where this is all going to kind of rubber hits the road.

Ben Comer:

Well, okay, so you talked about additional risk associated with Chinese biotech based on, you know, some of the existing making with their PDL PD1 back in 2022 that was ultimately declined by the FDA was that it would be. You know, they'd offer it at something like a 40% discount to the other immune cancer immunotherapies that were on the market at the time. And I remember Richard Pazdur saying well, you know, FDA doesn't consider cost. But I think people heard that and thought, well, you know, if we can get this, you know bio better essentially, or you know some sort of equal cancer product at a much lower cost, wouldn't that be good for patients? What do you think about that cost? Wouldn't that be good for patients? What do you think about that? Do you think Chinese biotech's presence and the growth of Chinese biotech is ultimately good or ultimately bad for patients?

Allan Shaw:

You know, I think in the short term, China's growing biotech presence, I think, is great for patients. You know, I think it'll bring down costs and make drugs much cheaper and lead to better access over in the short term. However, the long term picture is a lot more complex. If traditional biotech funding models break down, incentives for high-risk, high-reward innovation can diminish. This may result in fewer first-in-class breakthroughs and more incremental improvements, potentially slowing the pace of medical advancement. You know, I think our risk-reward model works pretty well and I think it's become the envy of the world and China's doing a really good job emulating it. You know, are there things that we can do better and more efficiently? Absolutely, but you know, I think you got to be careful what you wish for. You know, if you start, if you start, it's like the sweater, the loose thread on a sweater. Once you start pulling on that, you know who knows where that thing is going to go. So you know we do need to think about how we squeeze, do things more efficiently. You know, and I think you know, I think clinical development is a ripe area to take a fresh look at. You know, and I think you know, I think clinical development is a ripe area to take a fresh look at. You know we should also look at, you know, questioning. You know our preclinical work and you know whether or not there's opportunities to squeeze time out of that. You know they can really get drugs to market in half the time.

Allan Shaw:

We do, you know, and there's tradeoffs. Obviously there's risks, we do, you know, and there's trade-offs. Obviously there's risks, and you know, as a fundamental view is, you know, are you trying to identify things that are just safe and then you can try to figure out things whether they work later on? So there's different, there's still different fundamental approaches. But I think, at the end of the day, this is a real opportunity for us to kind of look at ourselves, take stock and understand what we're doing good and what we're not doing good, and even on a bigger picture, while everybody's quite anxious over the new head of HSS and what might actually happen and for good reason but I would also say that when you spend $4 trillion a year on healthcare and you have the highest cost per capita in the free world, yet you have the lowest life expectancy in the free world that we're in fact paying more for less, there's probably opportunities in a lot of areas for us to be more efficient on how we do things.

Ben Comer:

Yeah, something's amiss, right Exactly.

Allan Shaw:

Yeah, yeah.

Ben Comer:

So do you? Do you think that you know we talked about a shot across the bow and we're kind of retrenching here at the moment? Do you think that we'll see a shift in global biotech leadership away from the US, given China's rise? Are we getting to that point or not yet?

Allan Shaw:

You know, I've thought about that a lot and I think at this point, I think it's pretty safe to say that we're still there. You know, I think we're still innovating, I think that breakthroughs and what we're seeing, you know, speak for themselves. But I don't think you know you got to also look at what happened to the dinosaur. At the end of the day, and you can't rest on your laurels the fact that they're out patenting us right now. You know it could be a bunch of crap that they're throwing over the wall.

Allan Shaw:

I have no idea what they're filing, but the fact that they're close on an absolute number basis, or beating us on an absolute number basis, does suggest that that should serve as a wake-up call if we want to continue to maintain our leadership. You know, it's like the hare and the mouse, whatever it was. The tortoise, yeah, If we take too many naps along the way, those guys will get to us. So no, I think this should be. This should serve as a wake up call, and that's why I think it's so ironic that you know, really right now, the actions that we've taken has been anything but the has been the antithesis of a wake up call, which I think is frustrating and scaring a lot of folks.

Ben Comer:

So, Allan, where do we go from here? You know, what should we be thinking about in, I guess, the short to midterm? What should we, you know, cross our fingers about? What should we keep an eye out for? You know where are we headed. Does the industry have the collective will to make the adjustments and see this as an opportunity to compete? You know, to up our game.

Allan Shaw:

You know, policymakers, investors and biopharmaceutical leaders must take proactive steps at this time to ensure innovation remains incentivized, while strategically leveraging China's efficiencies. China's biotech emergence isn't a future trend, it's here. Whether it's an opportunity or a challenge depends on how the industry, people adapt. The race for innovation is on and the next decade will determine who leads the next wave of medical breakthroughs. So you know, I would say right now it's a coin toss, but I think there's still great opportunity for us to grab the bull by the horns. And I think, if you look at America, every time it is confronted with a challenge, you know we, we we know how to innovate, we know how to pivot and we know how to pivot and we know how to rationalize things.

Allan Shaw:

And you know, certainly, I think, the current leadership is not accepting status quo. So, on one hand, you know, if you're looking at efficiencies that may be gained from the clinical side, fda, this might represent a unique opportunity to take a freestanding approach to see if some of those practices can be shed and be more efficient. On the other hand, you know similar people are making decisions to blow up NIH, which I think may get you a tax cut this year, but I'm not sure what it'll do, you know, 10 years from now. So you know again. I think you got to be careful what you wish for.

Ben Comer:

Yeah, all right. Well, I think that is a nice, positive and yet nuanced note for us to end on, Allan. We've been speaking with Allan Shaw, a biotech soothsayer and longtime friend of this podcast. I'm Ben Comer and you've just listened to the Business of Biotech. Find us and subscribe anywhere you listen to podcasts, and be sure to check out new weekly videocasts of these conversations every Monday under the Business of Biotech tab at Life Science Leader. We'll see you next week and thanks for listening.

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