For the biomedicine industry, Shanghai has the conditions and enterprises are determined - 2022-07-22
Shanghai HeartCare Medical Technology Co., Ltd. (hereinafter referred to as "HeartCare Medical") has a sweet trouble.
From time to time, non-local governments come to visit and invite HeartCare Medical to move there, with favorable conditions: "free of rent", "tax reduction", "purchase of land use rights for development at a low price"...
These policies given by non-local investment promotion departments are both attractive and targeted. It goes without saying that free of rent and tax reduction are real benefits. The purchase of land use rights for development alone has attracted many enterprises in Shanghai. After all, the land area in Shanghai is relatively small, while its land prices are relatively high.
However, every time facing these enthusiastic visitors, Wang Guohui, chairman of HeartCare Medical, smiled and rejected, "We will stay in Shanghai."
In the biopharmaceutical manufacturing field, there are many enterprises like Shanghai HeartCare Medical Technology Co., Ltd. They have taken root, developed and expanded in Shanghai all the way, and are not attracted by the favorable investment promotion policies from non-local governments. Behind their seemingly incomprehensible choices are the objective laws of the development of their own industries.
"It doesn't make much difference to purchase so many land use rights for development."
When people walk on the streets in Shanghai, it is difficult to associate this modern city with biopharmaceutical manufacturing. Even people who have lived here for a long time may not know that it is an important city for biopharmaceutical manufacturing. Statistics show that, in 2021, the scale of the biomedicine industry in Shanghai reached RMB761.714 billion, accounting for more than one-sixth of Shanghai's total GDP that year. The output value of the manufacturing part in the biomedicine industry reached RMB171.2 billion, with a year-on-year increase of 12%, exceeding the overall growth rate of the industry.
How do these biopharmaceutical manufacturing enterprises "invisibly" exist in Shanghai? Part of the answer lies in the fact that they are no longer pharmaceutical factories flowing waste water and emitting exhaust gas in the traditional concept. Just like the HeartCare Medical's factory in Shanghai Lingang Land of Wonder Park, it is more like a laboratory than a factory. In the workshop on the third floor of the factory building, workers in white gowns are scattered in front of the operating table. Some people are weaving guide wires through microscopes, while some are using steel rulers to measure catheters.
They produce medical devices for intracranial mechanical thrombectomy in stroke patients. Such medical devices are extremely delicate and require the utmost concentration and meticulous handling by workers. In HeartCare Medical's factory, there is no accumulation of production raw materials, and no roar of large machinery. The factory is quiet and clean just like a university laboratory.
Wang Guohui said: "Compared with traditional industries, precision manufacturing enterprises like us have less requirements for sites, maybe dozens of acres of land and one building are barely enough. For us, it doesn't make much difference to purchase so many land use rights for development."
In the past two days, another enterprise in the Land of Wonder Park— Allogene Overland Biopharm (Shanghai) Limited (hereinafter referred to as "Allogene Overland"), is busy building a factory of about 6,000 square meters, which can accommodate 4 production lines after completion.
Allogene Overland researches and develops drugs of cell therapy for tumor immunotherapy, which can accurately, quickly and efficiently identify and remove cancer cells. Yao Shuyuan, CEO of Allogene Overland, said: "Unlike traditional chemical drugs, drugs of cell therapy are produced in small batches. Their production method and product form determine that we do not need to occupy large-scale land."
Land is an essential productive factor for manufacturing. Although Shanghai does not have an advantage in land resources compared with other regions, it can still satisfy the land demand for advanced manufacturing. Tang Yunyi, researcher of the Shanghai Academy of Social Sciences, said: "biopharmaceutical manufacturing in Shanghai has gradually phased out the production of low-end active pharmaceutical ingredients (APIs) with high energy consumption, high pollution and low added value, while the proportion of research and development and production of high-end medical devices and innovative drugs has continuously increased. Shanghai shall retain high value-added products and key production links."
At a time when the current global industrial chain is being impacted, the trend of localized production is becoming more and more obvious. The Report on International Competitiveness of the Biopharmaceutical Manufacturing Industry in Shanghai (2020-2021) pointed out that developed countries are making active efforts to build regional pharmaceutical industry chains, control core links, and shorten industry chains through vertical integration.
Engineers and workers are working together.
The innovative biomedicine industry chooses to manufacture in Shanghai especially due to its inherent demands in research and development, production and application.
Chen Jianxin, CEO of Shanghai ZhenGe Biotech Co., Ltd. (hereinafter referred to as "ZhenGe Biotech"), remembers an incident that happened on National Day last year. On that day, the factory in Shanghai Pudong Lingang Industrial Area reported that an abnormal condition suddenly occurred in the production process, and the pH value of the samples in the pilot test (a small-scale test of the product before mass production) was slightly higher, and engineers and workers in the factory did not know how to deal with it. In biomedical research and development and production, such emergency is not unusual, because the pilot test itself has an experimental nature.
Less than half an hour after the factory report, ZhenGe Biotech's management, technicians from Pudong Zhoupu, and the head of the factory in Lingang Industrial Area were already sitting in the same conference room, discussing the cause and solution of the abnormal process. Chen Jianxin said that in an innovative enterprise like ZhenGe Biotech, research and development and manufacturing are integrated, because problems arising in manufacturing require the research and development personnel to solve.
After analyzing the history of the rise and fall of American manufacturing, two professors from Harvard University pointed out that although manufacturing and research and development look like two independent ends of the smile curve in the value chain, they often complement each other in the innovation chain. In some industries, they are even more inseparable. Manufacturing itself is an integral part of the innovation process. The lack of manufacturing capabilities often causes faults in the industry and makes innovation like water without a source.
As far as the development process of biological drugs is concerned, there is another special factor that determines that research and development and production are geographically inseparable. Yao Shuyuan said: "There is a certain continuity in the development of biological drugs. For example, the cell lines established in the research and development process are required to be transferred to the production process, and it is more in line with the law to put research and development and production in one place."
This property is different from traditional chemical drugs. The chemical structure of chemical drugs determines the function of the drugs. As long as the structure is determined, there is no difference where it is produced. Therefore, some chemical pharmaceutical enterprises keep research and development in first-tier cities while they move production to lower-cost areas. However, biological drugs are not suitable for this.
In addition, the demand for iterative upgrades of products also determines that research and development and production are inseparable. Wang Guohui told the reporter with a catheter product developed by HeartCare Medical that although it looks ordinary, there are 10 to 15 sections of changes. The tail end of the catheter is the doctor's operating end, with tough texture, while its head is very soft because it is required to touch the cerebral blood vessels. After the catheter is put on the market, many doctors will put forward suggestions for improvement of changes in softness and hardness of each part based on clinical application. Once in a while, HeartCare Medical will integrate the feedback from doctors and upgrade its products. Iterative upgrades require the cooperation between the research and development team and the production team. Wang Guohui said: "Our engineers and workers are working together, and sometimes engineers even need to teach the workers hand by hand." In fact, the management, research and development, and production of HeartCare Medical all lie in the same building in the Land of Wonder Park.
The Comparative Advantages of Shanghai
When asked why they keep the whole process of research and development, clinical trial and production in Shanghai, the interviewed enterprises all mentioned the comparative advantages of Shanghai, which is the fundamental reason why enterprises are rooted here.
Firstly, Shanghai is home to talents. Wang Gang, founder of Kactus Biosystems (Shanghai) Co., Ltd., said: "A large number of biomedical talents have gathered in Zhangjiang. In addition, a number of clients and partners have also gathered here, which are incomparable advantages for start-ups compared with other regions."
Secondly, Shanghai is rich in public resources, with large number and high level of hospitals and universities related to the biomedicine industry, which has incomparable advantages across the country.
In addition, the policy advantages in Shanghai are also valued by pharmaceutical enterprises. Shanghai has rich experience and high efficiency in the field of import and export. In August last year, Shanghai piloted the import whitelist system for biomedical research and development products, which improved the degree of import facilitation and helped enterprises to speed up the process of new drug research and development. At the beginning of this year, Shanghai Customs took the lead in launching the pilot reform in entry supervision and quarantine of special biomedical products across the country.
Tang Yunyi believes that Shanghai shall make full use of its comparative advantages in talents, research and development, and public medical care, and shall further extend its advantages to manufacturing. She said: "At present, the manufacturing industry in Shanghai shall focus on the value chain, collect key areas and key links in the industry chain, pay more attention to building the core competitiveness of the manufacturing industry centered on 'smallness, sophistication, and cutting-edge technology', and increase the competitiveness of Shanghai's key enterprises in key technologies, core links and basic fields in the global value chain."
Those in the biomedicine industry in Shanghai also pointed out that most of the innovations in this field still come from abroad, and especially several multinational pharmaceutical giants have led the innovation and trend. In the supply chain of the biopharmaceutical industry, domestic enterprises also rely heavily on overseas enterprises. Yao Shuyuan said: "At present, most of the raw materials and equipment used in our production are imported from abroad. As far as the cell therapy industry we are engaged in, the domestic industrial environment still needs to be improved, including the upstream industry chain, the downstream industry chain, channels, payment mechanisms, etc. The industry needs to be rotated to form a closed loop."
These dilemmas are precisely what the government seeks to make breakthroughs. The Shanghai Biomedical Industry Development Leading Group Conference requested: Focusing on the whole life cycle of "research and development + clinical trial + production + application" and the upstream and downstream industry chain, Shanghai shall create an industrial ecology with agglomeration effect and build a world-class industrial cluster. The "14th Five-Year" Plan for the Development of Shanghai Biomedicine Industry proposed that, by 2025, the development level of Shanghai biomedicine industry will be significantly improved, and its leading role in the coordinated development of the biomedicine industry in the Yangtze River Delta will be more prominent, with continuous increase in its international influence of the source of industrial technology innovation, and initial completion of a core carrier of world-class biomedicine industry clusters.
Chen Jianxin said: "As an enterprise, we are willing to work with the government to build an environment for innovation. Shanghai has the conditions to conduct biomedical innovation, which is also the mission given to Shanghai by history."
From time to time, non-local governments come to visit and invite HeartCare Medical to move there, with favorable conditions: "free of rent", "tax reduction", "purchase of land use rights for development at a low price"...
These policies given by non-local investment promotion departments are both attractive and targeted. It goes without saying that free of rent and tax reduction are real benefits. The purchase of land use rights for development alone has attracted many enterprises in Shanghai. After all, the land area in Shanghai is relatively small, while its land prices are relatively high.
However, every time facing these enthusiastic visitors, Wang Guohui, chairman of HeartCare Medical, smiled and rejected, "We will stay in Shanghai."
In the biopharmaceutical manufacturing field, there are many enterprises like Shanghai HeartCare Medical Technology Co., Ltd. They have taken root, developed and expanded in Shanghai all the way, and are not attracted by the favorable investment promotion policies from non-local governments. Behind their seemingly incomprehensible choices are the objective laws of the development of their own industries.
"It doesn't make much difference to purchase so many land use rights for development."
When people walk on the streets in Shanghai, it is difficult to associate this modern city with biopharmaceutical manufacturing. Even people who have lived here for a long time may not know that it is an important city for biopharmaceutical manufacturing. Statistics show that, in 2021, the scale of the biomedicine industry in Shanghai reached RMB761.714 billion, accounting for more than one-sixth of Shanghai's total GDP that year. The output value of the manufacturing part in the biomedicine industry reached RMB171.2 billion, with a year-on-year increase of 12%, exceeding the overall growth rate of the industry.
How do these biopharmaceutical manufacturing enterprises "invisibly" exist in Shanghai? Part of the answer lies in the fact that they are no longer pharmaceutical factories flowing waste water and emitting exhaust gas in the traditional concept. Just like the HeartCare Medical's factory in Shanghai Lingang Land of Wonder Park, it is more like a laboratory than a factory. In the workshop on the third floor of the factory building, workers in white gowns are scattered in front of the operating table. Some people are weaving guide wires through microscopes, while some are using steel rulers to measure catheters.
They produce medical devices for intracranial mechanical thrombectomy in stroke patients. Such medical devices are extremely delicate and require the utmost concentration and meticulous handling by workers. In HeartCare Medical's factory, there is no accumulation of production raw materials, and no roar of large machinery. The factory is quiet and clean just like a university laboratory.
Wang Guohui said: "Compared with traditional industries, precision manufacturing enterprises like us have less requirements for sites, maybe dozens of acres of land and one building are barely enough. For us, it doesn't make much difference to purchase so many land use rights for development."
In the past two days, another enterprise in the Land of Wonder Park— Allogene Overland Biopharm (Shanghai) Limited (hereinafter referred to as "Allogene Overland"), is busy building a factory of about 6,000 square meters, which can accommodate 4 production lines after completion.
Allogene Overland researches and develops drugs of cell therapy for tumor immunotherapy, which can accurately, quickly and efficiently identify and remove cancer cells. Yao Shuyuan, CEO of Allogene Overland, said: "Unlike traditional chemical drugs, drugs of cell therapy are produced in small batches. Their production method and product form determine that we do not need to occupy large-scale land."
Land is an essential productive factor for manufacturing. Although Shanghai does not have an advantage in land resources compared with other regions, it can still satisfy the land demand for advanced manufacturing. Tang Yunyi, researcher of the Shanghai Academy of Social Sciences, said: "biopharmaceutical manufacturing in Shanghai has gradually phased out the production of low-end active pharmaceutical ingredients (APIs) with high energy consumption, high pollution and low added value, while the proportion of research and development and production of high-end medical devices and innovative drugs has continuously increased. Shanghai shall retain high value-added products and key production links."
At a time when the current global industrial chain is being impacted, the trend of localized production is becoming more and more obvious. The Report on International Competitiveness of the Biopharmaceutical Manufacturing Industry in Shanghai (2020-2021) pointed out that developed countries are making active efforts to build regional pharmaceutical industry chains, control core links, and shorten industry chains through vertical integration.
Engineers and workers are working together.
The innovative biomedicine industry chooses to manufacture in Shanghai especially due to its inherent demands in research and development, production and application.
Chen Jianxin, CEO of Shanghai ZhenGe Biotech Co., Ltd. (hereinafter referred to as "ZhenGe Biotech"), remembers an incident that happened on National Day last year. On that day, the factory in Shanghai Pudong Lingang Industrial Area reported that an abnormal condition suddenly occurred in the production process, and the pH value of the samples in the pilot test (a small-scale test of the product before mass production) was slightly higher, and engineers and workers in the factory did not know how to deal with it. In biomedical research and development and production, such emergency is not unusual, because the pilot test itself has an experimental nature.
Less than half an hour after the factory report, ZhenGe Biotech's management, technicians from Pudong Zhoupu, and the head of the factory in Lingang Industrial Area were already sitting in the same conference room, discussing the cause and solution of the abnormal process. Chen Jianxin said that in an innovative enterprise like ZhenGe Biotech, research and development and manufacturing are integrated, because problems arising in manufacturing require the research and development personnel to solve.
After analyzing the history of the rise and fall of American manufacturing, two professors from Harvard University pointed out that although manufacturing and research and development look like two independent ends of the smile curve in the value chain, they often complement each other in the innovation chain. In some industries, they are even more inseparable. Manufacturing itself is an integral part of the innovation process. The lack of manufacturing capabilities often causes faults in the industry and makes innovation like water without a source.
As far as the development process of biological drugs is concerned, there is another special factor that determines that research and development and production are geographically inseparable. Yao Shuyuan said: "There is a certain continuity in the development of biological drugs. For example, the cell lines established in the research and development process are required to be transferred to the production process, and it is more in line with the law to put research and development and production in one place."
This property is different from traditional chemical drugs. The chemical structure of chemical drugs determines the function of the drugs. As long as the structure is determined, there is no difference where it is produced. Therefore, some chemical pharmaceutical enterprises keep research and development in first-tier cities while they move production to lower-cost areas. However, biological drugs are not suitable for this.
In addition, the demand for iterative upgrades of products also determines that research and development and production are inseparable. Wang Guohui told the reporter with a catheter product developed by HeartCare Medical that although it looks ordinary, there are 10 to 15 sections of changes. The tail end of the catheter is the doctor's operating end, with tough texture, while its head is very soft because it is required to touch the cerebral blood vessels. After the catheter is put on the market, many doctors will put forward suggestions for improvement of changes in softness and hardness of each part based on clinical application. Once in a while, HeartCare Medical will integrate the feedback from doctors and upgrade its products. Iterative upgrades require the cooperation between the research and development team and the production team. Wang Guohui said: "Our engineers and workers are working together, and sometimes engineers even need to teach the workers hand by hand." In fact, the management, research and development, and production of HeartCare Medical all lie in the same building in the Land of Wonder Park.
The Comparative Advantages of Shanghai
When asked why they keep the whole process of research and development, clinical trial and production in Shanghai, the interviewed enterprises all mentioned the comparative advantages of Shanghai, which is the fundamental reason why enterprises are rooted here.
Firstly, Shanghai is home to talents. Wang Gang, founder of Kactus Biosystems (Shanghai) Co., Ltd., said: "A large number of biomedical talents have gathered in Zhangjiang. In addition, a number of clients and partners have also gathered here, which are incomparable advantages for start-ups compared with other regions."
Secondly, Shanghai is rich in public resources, with large number and high level of hospitals and universities related to the biomedicine industry, which has incomparable advantages across the country.
In addition, the policy advantages in Shanghai are also valued by pharmaceutical enterprises. Shanghai has rich experience and high efficiency in the field of import and export. In August last year, Shanghai piloted the import whitelist system for biomedical research and development products, which improved the degree of import facilitation and helped enterprises to speed up the process of new drug research and development. At the beginning of this year, Shanghai Customs took the lead in launching the pilot reform in entry supervision and quarantine of special biomedical products across the country.
Tang Yunyi believes that Shanghai shall make full use of its comparative advantages in talents, research and development, and public medical care, and shall further extend its advantages to manufacturing. She said: "At present, the manufacturing industry in Shanghai shall focus on the value chain, collect key areas and key links in the industry chain, pay more attention to building the core competitiveness of the manufacturing industry centered on 'smallness, sophistication, and cutting-edge technology', and increase the competitiveness of Shanghai's key enterprises in key technologies, core links and basic fields in the global value chain."
Those in the biomedicine industry in Shanghai also pointed out that most of the innovations in this field still come from abroad, and especially several multinational pharmaceutical giants have led the innovation and trend. In the supply chain of the biopharmaceutical industry, domestic enterprises also rely heavily on overseas enterprises. Yao Shuyuan said: "At present, most of the raw materials and equipment used in our production are imported from abroad. As far as the cell therapy industry we are engaged in, the domestic industrial environment still needs to be improved, including the upstream industry chain, the downstream industry chain, channels, payment mechanisms, etc. The industry needs to be rotated to form a closed loop."
These dilemmas are precisely what the government seeks to make breakthroughs. The Shanghai Biomedical Industry Development Leading Group Conference requested: Focusing on the whole life cycle of "research and development + clinical trial + production + application" and the upstream and downstream industry chain, Shanghai shall create an industrial ecology with agglomeration effect and build a world-class industrial cluster. The "14th Five-Year" Plan for the Development of Shanghai Biomedicine Industry proposed that, by 2025, the development level of Shanghai biomedicine industry will be significantly improved, and its leading role in the coordinated development of the biomedicine industry in the Yangtze River Delta will be more prominent, with continuous increase in its international influence of the source of industrial technology innovation, and initial completion of a core carrier of world-class biomedicine industry clusters.
Chen Jianxin said: "As an enterprise, we are willing to work with the government to build an environment for innovation. Shanghai has the conditions to conduct biomedical innovation, which is also the mission given to Shanghai by history."
Source: Jiefang Daily
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