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1st PART-Current Situation & Advantages of Biotech & Pharm Industry in Shanghai

In order to tackle the global financial crisis, promote the development of strategic emerging industries in Shanghai, and substantially improve the science and technology level of biotech & pharmaceutical industry in Shanghai, Government of Shanghai Municipality made and launched “Action Plan on Biotechnology & Pharmaceutical Industry Development in Shanghai (Y2009-Y2012)”. Through the implementation of this action plan, the industrial scale raised steadily, along with more rational industrial structure, fast-growing leading and backbone enterprises, significant improved innovative capability, and progressively optimized policy environment. Compared with other areas of China, Shanghai possesses stronger R&D and talent advantage, as well as strengths in market, clinical application, industrial foundation and other related aspects.

1.Steadily raised industrial scale, and progressively optimized industrial structure

During the four years from 2009-2012, even impacted by the financial crisis and other many adverse macroeconomic factors, the biotech & pharmaceutical industry in Shanghai carried smooth growth on the whole, with more than 15% of the total economy growth in the consecutive 3 years. Compared with that of 2008, the total economy aggregate of Shanghai biotech & pharmaceutical industry achieved double amount with RMB 208.48 billion. This number included: RMB 81.66 billion of manufacture industry with growth rate of 86.7%, RMB 111.75 billion of commerce with growth rate of 120%, and RMB 15.07 billion of CRO service with growth rate of 200%. The medicine commerce and CRO aspects of Shanghai is already in the leading position in China. The manufacture industry is in the transition from traditional, low-end chemical medicines to high-level and high-efficiency biopharmaceuticals, and medium- high level medical devices. Therefore, these three aspects develop simultaneously and coordinately in Shanghai.

2. More rational industrial structure, with the effects of industrial agglomeration

Considering the industrial bedrock and development space in districts and counties in Shanghai, through the linkage mechanism, we emphasized and promoted the construction of 6 main biotech & pharmaceutical parks---Zhangjiang–Zhoukang of Pudong, Minghang, Xuhui, Fengxian, Jinshan and Qingpu. Pharmaceutical enterprises and kinds of innovative factors have been gathered to these 6 parks. The concentration effects of the biotech & pharmaceutical industry improves significantly. In 2012, the total manufacture industry output in these 6 parks exceed RMB 60 billion, with more than 80% of that in the whole city. During the four years, these 6 parks saw more than 80% of the new investment projects in biotech & pharmaceutical field implemented. These 6 parks possess different advantages and features with dislocation plan and we regard them as the main carrier of the development of biotech & pharmaceutical industry.

3. Fast-growing key enterprise with established influence

Through the supportive policies and investment promotion, the key enterprises in Shanghai developed rapidly. There are 116 key companies with output beyond RMB 200million. Foreign invested, Chinese private and state-owned companies are the three main parts in this field and develop together. Foreign invested companies are important and contributed 58% of the total output in Shanghai. Currently, among the 22 biotech & pharmaceutical companies of the top 500, there are 10 companies already established their region headquarters, R&D centers or manufacturing bases in Shanghai. The companies, for example, Roche, Bristol-Myers-Squibb, Boehringer Ingelheim, GE, Siemens and Covidien, increased their investment and speed up the research of new products. Chinese companies, for example, Shanghai Pharm Group and Fosun Pharm Group, are in the top 10 list in the whole country. Some other Chinese private and technology-oriented companies, for example, Desano, Microport and Kaibao, are regarded as the leading ones in their respective niche market. ?

4. New products constantly appeared, and improved innovation ability

? ?Shanghai is very proud of its strong innovation ability in biotech & pharmaceutical industry. There are more than 10 universities and 30 professional research institutes, such as, Fudan University, the 2nd Military Medical University, Shanghai Institute of Biochemistry and Cell Biology of CAS, Shanghai Institute of Materia Medic of CAS, Institute of Plant Physiology and Ecology of CAS, Institut Pasteur of Shanghai of CAS, and etc. Additionally, we established kinds of public service platforms for the different sectors in new drug development process, such as, National New Drug Screening Center, National New Drug Safety Evaluation Center, and etc. Besides, there are 14 national key laboratories, 36 Shanghai key laboratories and 17 engineering technology research centers, with the research fields covering innovative drug, molecular biology, tissue engineering, immunology, antibody engineering, experimental animal models and etc. As to the aspect of talents, there are about 60 academicians in biotechnology and pharmaceuticals fields in Shanghai, as well as 134 newly-introduced talents by national and local 1000 Talent Plan. During the four years of 2009-2012, through the supports of policies and projects, in Shanghai, there are more than 100 products with over RMB 100 million sales amount, 4 innovative drugs approved for the State Category -1 certificate, and 27 innovative drugs approved for the clinical trials. ?

2nd PART -Future Target and Mission

1.Development train

In order to better grasp the new opportunities in biotech & pharmaceutical industry, and promote rapidly the scalization, agglomeration and internationalization of this industry, in 2013, local government made and launched the new action plan for the period of 2014-2017. Market-oriented mechanism of technology creation is emphasized particularly in this new action plan. We will more concern about the “3 focuses”

1.1 More focus on the improvement of industrial development quality

To speed up the transformation development and continuously improve the industrial capability and level, we vigorously develop the high-end product manufacture, represented by bio-pharmaceuticals and medical devices, and strengthen the manufacture industry. Also, we introduce leading domestic and overseas enterprises for the headquarters economy to improve the medicine commerce. Meanwhile, under the guidance of the industrial integration, we refine CRO field. New technology, new business pattern and new industry will gain vigorously development to drive the optimization of industrial structure and improvement of industrial scale. ?

1.2 ?More focus on cultivation of the role of enterprise

We guide kinds of factors to concentrate into innovative companies, for boosting the

collaborative innovation by the combination of enterprises, academics, research and clinics. The improvement of technology R&D ability and creative management ability in enterprises are specially supported. We encourage and support enterprises to carry out the global merger and acquisition, as well as the product globalization. Meanwhile, we cultivate some enterprise groups and leading companies in several niche markets. ? ?

1.3More focus on improving industrial innovation ability

Considering the requirements of innovative development, we thoroughly implement

technology creation specific projects, optimize the configuration of major projects, strengthen the establishment of creative platforms, speed up to breakthrough of kinds of common and key technologies, develop a number of innovative products, construct and improve the technology innovation system.

2.Development Target

? ?With the implementation of the new action plan, we keep on improve Shanghai to the manufacture center of high-end medicine products, commerce center and innovative R&D center in Asian-Pacific Region. We plan to achieve the target of total economy amount of RMB 350 billion, including RMB 150 billion of manufacture, RMB 170 billion of commerce, and RMB 30 billion of CRO service. There are still other concrete targets in the new action plan, including improving 50 big companies with annual output exceeding RMB 2billion, cultivating 50 main products with annual sales amount exceeding RMB 500million, launching to the market of 100 high-tech innovative products. The bio-tech & pharmaceutical industry in Shanghai is promising to achieve the leaping development soon.

3.Key tasks

3.1 Vigorously develop manufacturing industry.

We promote merger and acquisition between enterprises and give priority to the development

of bio-pharmaceuticals and high-end medical devices, improve the development of chemical medicines, carry forward the modern TCM, accelerate the industrial structure adjustment and globalization process.

3.2Actively improve the medicine commerce

We will drive the distribution enterprises to establish the large scale medicine distribution

system based on Yangtzi River Delta and sell to the whole country, to achieve large size, integration and globalization trade. Additionally, we develop large retail chain enterprises, accelerate the establishment of internet of things in medicine distribution field, boost the improvement of logistic distribution system and e-business, and build up the national center for medicine distribution.

3.3 Speed up the development of CRO service industry

All kinds of medicine research and service organizations are attracted and cultivated to

explore the first-trial policy for the contract manufacture of antibody medicine. CROs for the synthesis and screen of leading chemical compounds, clinical trials, safety evaluation and etc get priority development. We plan to make an international influent CRO center of Shanghai.

3.4 Focus on the development of enterprises

Big enterprises are the main part to be supported. By the integration of advantageous

resources, we focus on some leading biopharmaceutical companies to improve their resource concentration ability, market competition, and industry influence. Companies with different ownership are encouraged to develop in Shanghai. Meanwhile, we will speed up the reform of state-owned companies, support the technology medium-small companies. Taking the opportunity of authorization of new version of Good Manufacture Practice (GMP), we sustain the enterprises who meet the requirements to implement the global merger and acquisition, and to accelerate the international authorization of manufacture quality. ?

3.5 Cultivate large-scale products.

We carry out the strategies of cultivate main products and brand strategy, assist the

enterprises to re-develop the advantageous and main products. Based on the industrialization of technology achievements and consistency evaluation of generic medicines, we make great progress to the product quality and core competitiveness, and to explore the domestic and international market.

3.6 Continuously improve the creative ability

The innovative system will be further improved. A number of main innovative projects and

application demonstration projects will be carried out mainly by enterprises. The innovation of technology, product, brand, industrial organization and trade model will be specially accelerated in bio-pharmaceuticals and high-end medical device fields.

3rd PART - Policy and Environment

In 2009, to gear with the implementation of action plan, “Several Policies Concerning Promoting the Development of Biotech & Pharmaceutical Industry in Shanghai” was issued for the supports from government finance, tax, finance, public purchase, market access, price, industrial bases and other related aspects. It has active effects to optimize the development environment and smooth implementation of the action plan for the boosting of biotech & pharmaceutical industry.

To accelerate the latest industrial development, we will further improve and optimize the industrial development environment, bases on keeping implementation the existing regulations and policies. “Several Policies and Regulations to Further Accelerate Bio-technology & Pharmaceutical Industry in Shanghai” will be made and launched soon. It will focus on some bottleneck issues, for example, finance, land, project approval, market exploration, and etc.

1.Encourage the merger and acquisition, to cultivate the leading companies

We actively drive the leading companies of Shanghai to M &A the companies in upstream

and downstream of the industrial chain, through professional, market and global measurements, in order to integrate and cultivate the updated leading companies with global competition, advance technology and complete industrial chain. ?

2.Improve the construction land policy, to accelerate the industrialization process of the innovative products

We encourage the industrial bases to build accelerators and standard factory workshops, to improve the utilization rate of the land, and shorten the project operation period. We also encourage the rural area of Shanghai and industrial bases to strengthen the supports to the companies located in the accelerators and standard factories, to boost the development of innovative companies.

3.Improve the market policies for assisting innovation in companies, to drive on the demonstration application of innovative products

We encourage local companies to cooperate with clinical organizations to establish the

product application demonstrative bases, local imaging detection centers, and etc. We will improve the price management and medical insurance policies, speed up the marketing progress of innovative products, and boost the development of innovative products and major products.

4.Enforce the linkage and coordination mechanism between urban and rural areas of Shanghai, to jointly improve the industry development

? ?Considering the industrial bases and development targets, we planned some new industrial land plots with total area of more than 10 km2 in Shanghai. Besides the existing industrial parks of Pudong, Minghang, Fengxian, Jinshan and Qingpu, Jiading Park is appointed as the new one, specially for the development of medical devices. We will improve the industrial configuration with characteristics of complementary advantages, dislocation development and different targets.

Related district and county governments is making and implementing regional development plan, to strengthen the coordination and cooperation.