(Yicai) Oct. 13 -- Shanghai is building a leading innovation ecosystem to foster a biomedicine industrial cluster and become a global highland for the sector, which it counts among its three leading industries, expecting its size to exceed CNY1 trillion (USD140.3 billion) this year.

Shanghai's biomedical industry topped almost CNY500.6 billion (USD70.2 billion) in the first half of this year, having a compound annual growth rate of 8.9 percent in recent years, according to the latest data by the local government.

In addition, Biopharmaceutical companies in Shanghai lead China by out-licensing agreements, completing 38 such deals worth USD30.7 billion so far this year, accounting for almost one-third of the total nationwide.

"Shanghai will fully promote the development of the entire supply chain from basic research to production and application and speed up the building of a world-class biomedicine innovation highland and industrial cluster," said Cao Hongming, director of the Biopharmaceuticals Division of the Science and Technology Commission of Shanghai Municipality.

Transforming the clinical research achievements of medical institutions into practical applications is Shanghai's latest initiative, with the city's Academy for Clinical Innovation and Translation, set up in September last year, attempting to accelerate the industrialization of local hospitals' clinical research results via a business operating model.

The key part of the model is that hospitals authorize the ACIT with the patent rights of clinical achievements, with the academy responsible for their industrialization, Wang Liyan, vice president of the ACIT, told Yicai. This ensures income from such achievements, accelerates their transformation process, and improves the management efficiency of hospitals' technical assets, Wang added.

Shanghai's biggest advantage lies in its international ecosystem and institutional environment, including its superior business environment, an insider from local innovative drug developer Henlius Biotech said to Yicai.

Shanghai gathers potential partners from all aspects related to the pharmaceutical sector and attracts various top talent, the insider noted, adding that the city has a complete financial and information service system, providing a unique foundation for the global development of biopharma companies.

Shanghai Is Hub for Foreign Pharma Firms

Nineteen of the top 20 global pharma companies and 19 of the top 20 global medical device makers have set up headquarters or research and development centers in Shanghai, with many high-level projects launching in the city in recent years. In addition, the number of innovation tie-ups between multinational and Chinese pharma companies has increased with the rise of pharmaceutical innovation in China.

Insilico Medicine, which has had its drug R&D center in the "pharmaceutical valley" in Zhangjiang in Shanghai's Pudong New Area since 2019, chose to settle there due to the city's complete biopharma supply chain and leading R&D infrastructure and industrial support, as well as because it gathers top talent and an open and inclusive innovation environment that provides support for companies from startups to big firms, Ren Feng, co-chief executive and chief scientific officer of the Massachusetts-based company, told Yicai.

Shanghai is no less impressive than major international centers focusing on biomedicine, including Boston in the United States and Basel in Switzerland, Ren noted, adding that it has even surpassed these overseas pharma centers in terms of scale and industrial cluster.

Patient Capital

"Shanghai established a CNY22.5 billion (USD3.2 billion) mother fund for its biomedicine industry last year, selecting 13 sub-funds so far and raising its capital 5.6 times," Cao said. "The city also set up a CNY10 billion merger and acquisition fund."

The biomedicine sector in Shanghai raised nearly CNY238.4 billion from 2021 to last year via 1,494 financing rounds, ranking among the top in the country, Cao noted. Some 64 new and superior drugs and 132 medical devices were included in the directories of municipal hospitals, promoting the application of innovative products, Cao pointed out.

Diversified capital sources, via professional and market-oriented operation mechanisms, play the roles of incubators, accelerators, and stabilizers in the investment and financing activities of Shanghai's biomedicine industry, Chen Xiaojie, deputy general manager of Shanghai State-Owned Capital Investment's fund management department, told Yicai.

The number of biopharma firms above the designated size in Shanghai from the manufacturing, services, and wholesale areas reached 2,183 by the end of last year, with 46 such companies going public from 2021 to last year and another four following suit in the first nine months of this year. In addition, many more are in the initial public offering process.

Editors: Tang Shihua, Martin Kadiev