Driving force from authorities: the evolution of innovation system for biomedical industry in China

Impact of government subsidies on innovation of Chinese biopharmaceutical firms: Based on kink threshold model

Do government subsidies achieve the goals of stimulating firm innovation and macro-regulation? Existing studies have not reached a consistent conclusion. We will study the incentive effect of government subsidies on innovation of biopharmaceutical firms, analyze the optimal interval of government subsidies, and improve the efficiency of government subsidies. Thus, based on kink threshold model using data from Chinese biopharmaceutical listed companies from 2013-2019, this study analyzes the impact of government subsidies on innovation inputs and outputs. Government subsidies can stimulate innovation inputs and outputs of biopharmaceutical firms. Meanwhile, such subsidies have a significant threshold effect on innovation inputs and outputs, and there is an optimal interval effect. Additionally, concerning enterprise ownership, government subsidies have a more significant role in promoting innovation of non-state biopharmaceutical firms. Regarding regional differences, such subsidies have a more significant role in promoting innovation of firms in the less economically developed central and western regions. This study reveals the influence pattern of government subsidies, and provides insights and suggestions to formulate subsidy policies and enhance innovation.

Recent developments in China’s biopharmaceutical industry (2012-2017)

Purpose

The paper aims to take stock of China’s recent biopharmaceutical industry development by analyzing product innovation and changes in the firms’ product portfolios during the five-year period between 2012 and 2017.

Design/methodology/approach

The paper introduces a classification of biopharmaceutical products. By applying the classification to the product data of China’s drug regulator, the CFDA, it becomes possible to trace the developments within the sector by looking at changes in the number of firms within each subgroup and changes in the number of subgroups in which each firm is involved. The classification allows an evaluation of the latest product innovation achievements.

Findings

The paper demonstrates a mild shakeout of firms in the relatively long-existing domestic market segments, a trend toward more specialized product portfolios and an enduring prevalence of innovation strategies aimed at exploiting relatively unpopulated domestic market niches instead of pioneering entirely new products. Especially the capability of upgrading to second-generation protein therapeutics has become a key criterion for separating the wheat and the chaff in China’s domestic sector. The paper moreover points out the relevance of acquisitions as a corporate growth strategy.

Research limitations/implications

The research does not consider complementary indicators, product pipelines in particular. Future research should compare patterns across emerging economies.

Originality/value

The paper is unique in using the CFDA database for systematic academic research on (bio)pharmaceutical innovation and in introducing a biopharmaceutical product classification to trace innovative activities and changes in corporate product portfolios over time.

Seizing Opportunities for Markets of Discovery: The Reconfigurations of Value Chains in Pharmaceutical Industry in the Global South

This article investigates whether Asian countries are becoming more active at the discovery stage, a higher stage of the drug development value chain. We conduct the first quantitative study to investigate these countries positioning in drug discovery activities. For this purpose, we draw on a database containing historical information on more than 61,000 drugs, for the period 1994–2015, and extract and analyse data on the drug discovery events in which a selected group of Asian countries were involved.

The results show that these countries are increasingly involved in activities of discovery and that, in some of them, these activities are predominantly conducted on drugs owned by local organisations. Along with this process, markets for discovery are being created, both through sub-contracting and through partnerships among local organisations (for their own drugs) and between local and non-local ones. Second, drawing on the strategies and organisational set-ups adopted in each country, we distinguish a number of profiles regarding the ways competences for markets for discovery are being built. Third, we identify the existence of a strong regional centre of competences, acting as a local–global articulation locus for markets of discovery.

These results provide new insights into the ways Asian countries are moving up the drug development value chain and contribute to our understanding of the learning processes underway in different contexts and the variety of configurations resulting from these processes, supporting a discussion on the potential role of policies to further expand markets for discovery.