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AstraZeneca has pledged $1bn to a healthcare fund to support local innovation in China, joining big pharma peers J&J and Merck KGaA in fresh moves to embrace this market, where a new wave of digital technology transformation and fast-shifting trends now favor novel new therapies and the rise of local health start-ups.

 

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ASTRAZENECA TO SET UP GLOBAL R&D AND AI CENTER IN SHANGHAI Source: Shutterstock

 

The rise of local innovation, artificial intelligence (AI) and mobile technology are fast changing the health industry in China, compelling large pharma multinationals to jump on board with these trends.

The latest company to do so, AstraZeneca PLC, has just announced several initiatives in a new show of commitment to China. They include a Healthcare Industrial Fund with a target size of $1bn to support local innovation, a global R&D Center and an AI Innovation Center, both in Shanghai.

Announced during the second China International Import Expo (CIIE), AstraZeneca said the global R&D center with a headcount of roughly 1,000 will be focused on locally prevalent conditions such as cancer, respiratory and other chronic diseases and has a goal to forest closer partnerships with local companies.

The investment fund, set up jointly with China International Capital Corp (CICC), one of China’s leading investment banks and majority-owned by state-owned Central Huijin Investment Co., aims to tap into CICC’s investment and capital management capabilities and use AstraZeneca’s healthcare expertise to support both local and international health startup companies, said Leon Wang, the UK firm's head of International.

“The new fund will inject vitality into small and medium-sized healthcare innovation enterprises with promising development prospects, so that they can achieve substantial growth in China,” he said.

Separately, the UK drug maker has also licensed India company Sun Pharmaceutical Industries Ltd.‘s novel oncology drugs to commercialize in China.

Merck: Greater Bay Area Calling
Meanwhile, Merck KGaA has committed CNY100m ($143,000) in seed funding for start-ups in China, the German company said on 18 October. It has also opened an Innovation Hub in Shanghai and will soon inaugurate another in Guangzhou in November.

The seed fund is aimed at nurturing local innovative ventures across three Merck business areas - healthcare, life science and performance materials - as well as new businesses such as AI-based healthcare solutions.

The new Guangzhou center will tap into the potential of the emerging "Greater Bay Area” which includes Guangzhou, Zhuhai, Hong Kong and Macau.  (Also see "China 'Bay Area' Calling: Merck KgAA Chooses Guangzhou For New Innovation Center" - Scrip, 15 Nov, 2018.)

The fund and innovation hubs will allow the German firm to work closely with local partners to accelerate innovation in China and beyond, commented CEO Stefan Oschmann.

The seed fund, along with Merck’s existing M Ventures capital fund, intends to invest in Chinese seed-stage companies with individual investments of between €500,000 to €1m ($552,000-1.1m) to help them to reach the next stage of development within 18-24 months.

Like others including Johnson & Johnson, Merck is looking to work closely with local start-ups in China and so far six ventures from China and other Asian countries have taken part in the first phase of the Merck Accelerator program in China.

J&J: AI, Robotics Push
Embracing for a digital health future in China, J&J itself in late October announced the setup of its J&J China Data Empowerment Center.

As China continues to shift wholesale to digital technology, the healthcare sector's digital transformation is being driven by social e-commerce, big data and "internet-plus" initiatives. J&J needs to embrace the trend to build data-driven precision medicine and open-innovation platforms, noted the company, which was among the few foreign firms to embrace China’s Open and Reform policy started in 1978 by setting up a joint venture in Xi’an, Shaaxin Province.

The new Data Empowerment Center will be tasked to analyze data to gain insights on consumer needs and market demand, and build digital detailing and data-driven branding efforts.

As part of this strategy, J&J Medical China has signed a joint marketing, distribution and R&D agreement with Beijing Tianzhihang (Tinavi) Medical Technology Co., Ltd., a Chinese orthopedic robotics marker. The partnership will focus on spinal and trauma surgery and is intended to improve patient care through digital solutions, supporting local orthopedic surgeons to become more efficient and precise.

The US drug and medical device conglomerate reported double-digit growth for its pharma, devices and consumer health business in China in 2018.

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