(Yicai) Dec. 22 -- Shanghai’s fast-growing biomedical sector, built on the city’s research and development strengths, is expanding into the Yangtze River Delta region as companies draw on neighboring cities for cheaper labor and other resources.

Shanghai remains the cradle of China’s biomedical industry, but enterprises often need to move pilot testing, manufacturing, and technology transfers to nearby cities to take advantage of lower labor costs and and more available space, Liu Yun, founding partner and chairman of Huayi Capital, told Yicai.

The Yangtze River Delta region, which encompasses Shanghai and the provinces of Anhui, Jiangsu, and Zhejiang, is one of China’s key manufacturing hubs and most economically innovative regions. Its biomedical industry accounts for 40 percent of the country’s total.

When companies become leaders in their respective fields, they often go back to Shanghai to set up R&D or global centers there, forming a “return path,” Liu noted. “Both Shanghai and the surrounding areas in the Yangtze River Delta area benefit, allowing them to share the incremental dividends brought by the growth of these companies.”

For example, Shanghai-based Yijian Health recently launched an in vitro diagnostic test production line in Jiaxing in Zhejiang, and Beijing Origingene-Tech Biotechnology, which bases its R&D in Shanghai, built a plant in the same city for pet diagnostic testing equipment, Liu said. Both companies are backed by Huayi Capital.

“Such cases are very common in the Yangtze River Delta region, forming a standard path for the collaborative development of biomedical scientific innovation,” according to Liu.

Financial support is key to this expansion strategy. Liu noted that the biomedical fund established last year by the Yangtze River Delta G60 Science and Technology Innovation Corridor exemplifies this approach, integrating resources from Shanghai and neighboring cities in accordance with the industry trend.

The corridor comprises nine cities along the G60 expressway and other major transport links in the Yangtze River Delta region. These include Hangzhou, Huzhou, Jiaxing, and Jinhua in Zhejiang province, Hefei, Wuhu, and Xuancheng in Anhui province, Songjiang district in Shanghai, and Suzhou in Jiangsu province. Between them, they are home to 9,813 biomedical firms, or nearly 15 percent of China’s total.

Cooperation between Shanghai and the rest of the region in the biopharmaceutical field should prioritize the allocation and smooth flow of technical resources, making a comprehensive assessment system for scientific and technological achievements indispensable, according to Yan Mingfeng, president of the Shanghai Technology Exchange.

Yan pointed out that this system needs to address questions such as whose achievement it is, what kind of achievement it is, and how to realize better value in the application process. The STEX set up a special biomedical board precisely to solve these problems, he added.

The board has processed 1,835 projects, encompassing 4,649 technological services, with a total transaction value of over CNY38 billion (USD5.2 billion).

Building on Shanghai’s strengths in science, innovation, and finance, mechanisms such as biomedical technology asset valuation standards and pipeline pledges have already been implemented, Yan said.

“Coupled with ongoing exploration of models such as intellectual property securitization and investment-loan linkage mechanisms, these experiences will be replicated from Shanghai to the Yangtze River Delta region, promoting integrated sci-tech and industrial innovation across the entire region,” he noted.

Songjiang is the bridge connecting Shanghai to surrounding cities in the Yangtze River Delta region, Song Suwei, head of the Sci-Tech Innovation Group of the Joint Conference Office of the G60 Science and Innovation Corridor, told Yicai.

Biotech firms often set up R&D bases in Songjiang and complete manufacturing in the other eight cities in the corridor, which is an effective model for the layout of the biomedical industry, Song noted.

Editors: Tang Shihua, Futura Costaglione