China is emerging as a ‘global innovation powerhouse’, according to clinical research organisation ICON. 

ICON’s global biotech sector survey, capturing insights from more than 260 biotech professionals and venture capital executives, found that China is cementing its dominance in the sector and Western biotechs must adapt to maintain competitiveness. 

According to the survey, funding remains a key challenge, with 41% of organisations actively seeking additional R&D funding, a 27% increase since 2023, highlighting ongoing financial pressures across the industry. Globally, the top three sources of funding are unchanged: large pharma partnerships, venture capital (VC), and government grants.  

The survey also shows how VC funds have expanded their focus, with APAC biotechs stating VC funding was 60% of their current funding source versus 32% for US and 30% for Europe. This is leading some biotechs to explore innovative funding sources and ICON highlights the emerging models being increasingly adopted, including royalty financing, carve-outs, and crowdfunding. 

“Biotech is entering a transformative era. Our survey shows China emerging as a global innovation powerhouse, driving collaboration and accelerating R&D,” said Deepali Suri, President of ICON Biotech. 

“Despite funding pressures and geopolitical uncertainty, confidence remains strong with 92% of leaders expecting to hit their next investment milestone. Three out of four biotechs plan to increase R&D spend in the next two years, signalling resilience and a commitment to innovation even in the face of drug development complexity and change.” 

China faces similar challenges to global counterparts

Since the last survey, access to talent is becoming more of a concern. This was more pronounced in APAC where respondents were almost three times as likely to list talent shortages as having operational impact as their global counterparts (47% vs 18% in the US and 17% in Europe). 

Elsewhere, cell therapy has overtaken small molecules and is now most prominent, making up 40% of organisations’ pipelines. Antibody drug conjugates (ADCs) and microbiome therapies are not far behind at 31%. Therapeutic focus areas have also evolved since the last survey findings, with neurology (44%), cardiovascular (39%), and immune disorders (32%) now outpacing a previous dominance in oncology. 

Despite the multiple macro challenges they face, the biggest risk to biotechs’ operations is the complexity of drug development. Almost three quarters of respondents (73%) ranked this among their top five micro factors posing the greatest risk to their organisation’s operations. 

The survey also highlights how biotech companies are increasingly embracing digital technologies to improve operations, with 76% of respondents anticipating AI and other technologies will significantly accelerate R&D processes within the next two years. When asked which factors have the most potential to accelerate drug development, 41% of respondents selected AI-enabled asset selection in drug discovery, an increase from 26% in 2023. 

ICON also launched a separate survey on China-based biotechs, based on 100 respondents. The findings underline the challenges China-based biotechs face align with their global counterparts, including funding and the complexity of drug development and regulations.  

Cardiovascular and oncology remain the top therapeutic focus areas in China, in contrast to the global shift toward neurology. However, cell therapy, microbiome therapies, and ADCs dominate pipelines across all regions. Respondents in China also report less concern about geopolitical developments and greater confidence in investment and product success. 

 

Bruno Quinney, Content Team, DDW