When Samantha Du returned to her native China in 2001 with a mission to build a pharmaceuticals company, the move seemed like a terrible mistake.
She had left behind a comfortable life in the US where she spent the previous 12 years, first as an academic scientist and later in roles of rising seniority at Pfizer. Back in China, she felt like an alien in her own country as she tried to start her venture.
Several times she came close to quitting but was dissuaded by business partners. Fifteen years later, her persistence appears to be working. As, first, chief scientific officer of Hutchison China MediTech and now chief executive of Zai Lab, she is prominent among a wave of biotech entrepreneurs aiming to modernise China’s pharma industry and make the country a force in drug development.The nadir came during a business meeting in which the refreshments came in the form of hard liquor. She recalls: “Everyone drank until they fell asleep. Then they woke up and signed the contract. While they were sleeping I left the room and cried. I had left a great career and a big house in rural Connecticut. Now here I was negotiating with drunk people.”
Most of them are “sea turtles” — the name given to Chinese professionals trained in the west who have returned home armed with qualifications and experience. All nine of Zai Lab’s top management studied at US universities. They have been drawn home by rapidly improving opportunities in China’s life science sector as Beijing pumps resources into its quest for a more innovative, high-value economy.
After a PhD in biochemistry at the University of Cincinnati, Ms Du joined Pfizer as a research scientist and ended up in charge of licensing some of the US group’s drugs around the world. She had not thought about leaving until a call came from Hutchison Whampoa, the holding company of Hong Kong tycoon Li Ka-shing, inviting her to head a new pharma enterprise. “They said, ‘You have already achieved so much in the US. Why not come back and do something for China?’”
With the resources of one of Asia’s richest men behind her, she criss-crossed China looking for assets to build a company around. It did not prove an easy task. Instead of hidden scientific gems, Ms Du found a domestic industry more interested in eking out margins from cheap generic drugs than investing in research and development. “The mindset was all about trading rather than innovation,” she recalls.
Gradually, however, China MediTech, or Chi-Med, began building its own R&D capabilities in partnership with western drugmakers including Eli Lilly and AstraZeneca. The company floated on London’s Aim stock market in 2006 and is planning a dual listing on Nasdaq this month as it pushes two cancer drugs through late-stage trials, with five other products in earlier studies.
Ms Du left Chi-Med in 2011 to take charge of Chinese healthcare investments for Sequoia Capital, the Silicon Valley venture capital firm, before founding Zai Lab in 2013. The company has licensed experimental treatments from big pharma partners including Sanofi and Bristol-Myers Squibb, but Ms Du’s long-term focus is on developing homegrown drugs. Zai in January raised $100m in private finance from Sequoia and other big international investors and recently opened an R&D base in Shanghai. “We want to be the first Chinese biotech company with global standing,” says Ms Du.
She is hardly alone in that ambition. BeiGene, a company founded by Xiaodong Wang, former professor of biomedical science at the University of Texas, last month raised $158m on Nasdaq to accelerate development of four promising cancer drugs.
Perhaps the most successful “sea turtle” in China’s life science sector is Ge Li, who earned his doctorate at Columbia University and became a biotech entrepreneur in the US before returning home to found WuXi AppTec 15 years ago. The company has since become the biggest Chinese contract research organisation, performing R&D and manufacturing for many of the world’s biggest pharma groups.
About 5 per cent of WuXi AppTec’s 10,000-strong workforce was trained overseas.
Among them is Hongye Sun, who studied at Harvard and spent a decade with a Californian biotech company before being lured back to run WuXi’s genomic sequencing business. Mr Sun says the biggest difference with the US is the speed of decision making.
“In America it felt like I needed 60 meetings to get something done, whereas here I need four.”
WuXi AppTec has tried to harness the vigour of Chinese business culture while importing the quality standards learnt by its top scientists in the west. “We have 15 minutes of compliance training every morning,” says Mr Sun. “We tell our people, ‘We cannot afford a single mistake because if something goes wrong it could ruin the company in a day’”.
While returnees are leading the development of China’s biotech sector, they are increasingly drawing from an expanding local talent pool to build their businesses. China overtook the US in 2008 as the world’s biggest producer of PhDs, and the number has continued to grow rapidly.
Critics question whether the increasing volume is matched by quality. Mr Sun says standards at the top Chinese universities are high, with fierce competition for entry. But he concedes that locally trained scientists can be too deferential.
“I tell employees to argue with me and call me by my name, not my title. I tell them, ‘If you use my title, you are less likely to tell me the truth’.”
With soaring numbers of scientists, rising investment in R&D and growing demand for medicines from an ageing population, China has all the ingredients for growth in its biotech sector. Ms Du and others like her are aiming to replicate the success of US companies such as Genentech andAmgen, which suddenly appeared in the 1980s to become forces in global pharma.
As a service provider to local and foreign companies alike, WuXi AppTec is well placed to assess progress. Steve Yang, the company’s chief operating officer and a veteran of AstraZeneca, Pfizer and the University of California, urges caution.
“There is a group of Chinese companies that are well positioned, but how many years did it take for the world to appreciate Genentech? It took decades. The race is on, but it’s still very early.”