Medical investment declining in U.S., rising in China

Print 23 January 2015
Cornelia Zou / BioWorld

HONG KONG – With the global center of gravity shifting eastward and the world's most populous region increasingly wealthy, it should come as no surprise that Asia is gaining momentum in medical research. This advancement is taking place while the leadership role of the U.S. transforms into an important player in a multipolar research world.

The annual growth of U.S. medical research spending dropped from 6 percent between 1994 and 2004 to only 0.8 percent between 2004 and 2012. America's share of total global investment declined by approximately 13 percent from 2004 to 2012, while Asia's share increased by 7 percent, according to the latest issue of the Journal of the American Medical Association (JAMA).

The decline of medical research activity in the U.S. is also reflected in patent output – its global share of research patents designated as most valuable declined from 73 percent in 1981 to 59 percent in 2011.

"The differences in medical research investment between the East and West can be found in three factors: the current economic environment, political factors and the perception of science generally and biomedicine specifically," Hamilton Moses III, chairman of Alerion Advisors LLC, who also compiled the JAMA issue, toldBioWorld Today.

"In both the U.S. and Europe the great expansion of the countries' investments in science has occurred historically when they were prosperous, incomes rising, and when long-term investments were viewed as desirable," said Moses.

In the West, the boom period for medical research investment took place from the 1950s through the mid-1970s and was interrupted by the oil crisis, after which it was followed by another boom from the mid-1980s through the 1990s.

"Those eras of expansion of medical research coincided with prosperity following the Second World War, and again after the fall of the Berlin Wall," Moses said. "Investment requires a degree of economic and financial self-confidence, by both governments and companies alike."

Political environment is also an important factor affecting scientific investment in the U.S.

Since 2001, the U.S. has been preoccupied by terrorism, perceived external threats and the social consequences of a stagnating economy now recovering from the last financial crisis.

"Therefore, it is not so much that science has receded as a priority, only that it has been overtaken by world events," Moses said. "Opinion polls here reflect this."

Between 1900 and 2000, life expectancy in the developed countries of the West grew by 30 years, primarily due to the fruits of medical research being applied to individuals at the bedside and to large populations via broad public health programs.

That lesson is well understood in the developing countries in Asia, particularly by China and India.

Japan and South Korea also learned that lesson during comparable periods of their development. "Asia understands that scientific research, and especially that in medicine, leads to economic prosperity and enhanced national stature," Moses said.

From a purely commercial perspective, Asia believes that biomedical research leads directly to new products, which are sources of exports and, in turn, lead to further economic development, he added.

"This, thus, becomes a self-reinforcing cycle, much as it did in the West in earlier decades," he said.

"China represents a quite important natural experiment in productivity," said Moses. "Although China's investment in medical research is beginning from a very low base amount, that sector employs a very large number of people as a percentage of the work force."

According to Chinese biopharma information provider BioInsight, nearly 100 cities in China have biopharma bases. There are also more than 300 bioparks in the country. Most of the bioparks in China are located in the larger cities along the coast.

The newest biopark project in China is the Laishui Biopharmaceutical Industrial Park located in the city of Baoding in Hebei Province, only 90 kilometers from the capital. Beijing Youcare Pharmaceutical Group Co. Ltd. plans to invest ¥5 billion (US$800 million) to build a new hub for biopharmaceuticals, medical devices and drug distribution services.

The direction of medical research investment also varies from the East to the West. China is placing more emphasis on people, while the U.S. and Europe pay more attention to technologies.

"China seems to be preferentially investing in education and training for a new cadre of researchers," Moses said. "In contrast, the U.S. and Europe have chosen to invest preferentially in technology, such as sequencing the genome a decade ago, or the current brain mapping project, which are both capital intensive."

"It will be exceedingly interesting to see how the two approaches progress over the next decade or so, since many observers here believe that the right mix of people and machines has not yet been found," he added.

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