Shanghai and Boston: Twin Hubs of Innovative Drug Development

Original Title: Shanghai and Boston, Two Cities of Innovative Medicine

On Route 93 in Boston, neon lights flash the logos of Novartis, Vertex, and Thermo Fisher; this road is the world's most densely concentrated biopharmaceutical corridor.

And at the other end of the earth, Shanghai has the same scenery.

Boston, the world's biotechnology industry hub, has developed over nearly 30 years, while China’s biopharmaceutical industry truly took off starting from the regulatory reform in 2015, with only a decade of growth.

Over the past decade, Shanghai has become an important representative city of China's biopharmaceutical industry. The route from Shanghai to Boston has become one of the most frequently traveled business routes for professionals from multinational corporations and biotech companies between China and the United States. During those dozen hours at 30,000 feet in the air, their laptop screens flicker with PPT presentations covering everything from BD (business development, licensing), CROs (contract research organizations), clinical trials, and R&D outsourcing, to records of founders establishing workstations in both cities, encompassing every aspect of the biopharmaceutical industry chain.

The similarity between the two cities is no coincidence: behind the thriving biopharmaceutical industry lies the gradual establishment of major pharmaceutical companies, increasing capital inflows, and abundant research and clinical resources.

But there are also key differences. An American investor mentioned: "The ecosystem in Boston was not deliberately created; it formed naturally. First, there were universities like MIT and Harvard that were closely linked with hospitals, and then pharma companies gradually came in. Although the Boston government offered tax incentives to attract large pharmaceutical companies, government leadership was not a critical factor."

Shanghai, on the other hand, adopts a model of "strong government + vibrant market." As a person working in a relevant department mentioned: The rapid development of Shanghai's biopharmaceutical industry mainly relies on natural factors combined with the power of policy reform.

This has enabled Shanghai to grow from a city of generic drugs to a hub of innovative medicines in just a decade. In 2024, the scale of Shanghai's biopharmaceuticals industry is close to one trillion RMB, with manufacturing surpassing 200 billion, services at approximately 140 billion, and the remainder in the commercial wholesale sector.

Having lived in Boston for nearly three decades, with experience in multinational pharmaceutical companies and a leading CROWuXi AppTec"Shanghai's development of a large number of biopharmaceutical enterprises benefits from mature industrial concepts, workflows, and even enterprise management. Numerous industrial factors have made this city the *preferred choice for biopharmaceutical companies to establish themselves," said Li Jing, founder and CEO of Orange Sails Pharmaceuticals.

Over the past decade, Shanghai Zhangjiang, Caohejing andWaigaoqiaoGlobal giants such as AstraZeneca, Roche, Sanofi, Eli Lilly, Pfizer, and Novartis have established R&D centers or innovation bases in Shanghai, driving the simultaneous growth of local CROs, CDMOs, and medical device companies.

And China's local pharmaceutical companies are also part of the landscape: Shanghai is not only home toJunshi BiosciencesZai Lab, Hutchmed, I-Mab, and other leading Chinese pharmaceutical companies headquartered along the Huangpu River; companies like Qilu Pharmaceutical, Chia Tai Tianqing, and Hengrui are also gradually relocating their R&D resources to Shanghai.

-01-

The Entry of Large Enterprises: Energizing Research, Talent, and Capital

Thirty years ago, Boston was still a quiet college town. Although MIT and Harvard were leaders in scientific research, the pace of new drugs moving from the laboratory to the market was slow. At that time, only a few adventurous small pharmaceutical companies in Cambridge — Biogen, Genzyme — were quietly attempting innovation.

The focus of biotechnology in the United States lies in San Francisco, while large pharmaceutical companies are rooted in New Jersey. However, frequent changes in tax policies and political shifts in New Jersey have caused many large companies to relocate. Entering the 2000s, Boston's fortunes began to turn: In 2002, Novartis established its R&D hub in Cambridge, Boston, marking a landmark event; in 2008, Governor Deval Patrick introduced the Life Sciences Act, pledging $1 billion to develop the local biotechnology industry, with government support becoming a key driving force.

Subsequently, major companies such as Pfizer, Merck, Roche, Johnson & Johnson, and Novo Nordisk successively established a presence in Boston, setting up research and development centers and integrated experimental bases. Small entrepreneurial teams of professors and researchers were also able to integrate into this tide. An investor recalled: "The arrival of multinational corporations set the talent for research and development and entrepreneurship in motion, instantly energizing the city’s biopharmaceutical ecosystem." The once obscure Cambridge area quickly became the global center for biopharmaceutical innovation.

When industry talent moves in, the innovativeness of the university system is immediately amplified.

Harvard has a history of more than 300 years, and MIT has a history of more than 150 years. The accumulation of the two universities in scientific research, engineering, and medicine has provided continuous innovation power to the entire region.

"Why do VCs also tend to invest in projects in Boston? It's because universities can generate a lot of early-stage projects for investors to choose from. Rather than saying they are investing in technology, it’s more accurate to say they are investing in talent: even if a particular technology fails, these talents can still create new things," the aforementioned American investor said.

As early-stage companies grow, researchers and entrepreneurial teams drive the demand for laboratory space, specialized services, industrial chain support, and talent. Kendall Square in Cambridge has gradually evolved from a former derelict warehouse district into a high-density biotech hub.

Capital and resources are gradually becoming more fluid. Some large pharmaceutical companies have also recognized the opportunities embedded in scientific research.

Nowadays, it is not uncommon for professors from several universities in Boston to start their own businesses. Through interactions with capital and pharmaceutical companies, professors have gained a deep understanding of regulations, CMC, and industrialization, leading to extremely high efficiency in transitioning from the laboratory to startups.

As for Shanghai, the cause and effect of the story are somewhat similar.

Shanghai has undergone the same process, starting with university resources and research structures, followed by the entry of large pharmaceutical companies driving the development of the industrial chain.

Zhu Rong, Deputy Director of the Biomedicine Department of the Shanghai Science and Technology Commission, mentioned: "Shanghai itself is an international metropolis. Since its opening as a commercial port, it has maintained an outward-looking Hai Pai culture, which has attracted many multinational corporate headquarters to establish themselves in Shanghai. For pharmaceutical companies, there are two particularly attractive factors: First, the market. The East China region is very important for the domestic market in China. Shanghai not only has a local population of 30 million but also covers the medical-seeking populations in the surrounding Yangtze River Delta area, especially with a concentration of markets for difficult and complicated diseases and new drugs in Shanghai. Second, innovation capability. In addition to the concentration of universities and research institutes, another key factor is that Shanghai has a relatively high level of clinical trial expertise, including multi-regional clinical trials (MRCT), along with the aggregation of various talents. Therefore, they are willing to establish their presence in Shanghai."

Li Jing similarly believes that Boston and Shanghai share many similar traits. Boston's innovation ecosystem was not deliberately created but gradually formed through the natural interaction of universities, hospitals, and industries. Meanwhile, Shanghai is also experiencing a similar agglomeration effect — excellent talents are continuously flowing in, and the connection between scientific research and industry is becoming increasingly close.

"Boston's advantage lies in its talent density, and Shanghai has been rapidly approaching this state in recent years," said Li Jing. Whether it’s research institutions, startup teams, or multinational pharmaceutical companies, everyone is collaborating in an open environment, eager to continuously introduce new ideas, processes, and management experiences into industrial practice.

He particularly mentioned that an increasing number of returned overseas scientists are choosing to settle and start businesses in Shanghai, indicating that the city’s inclusiveness, living convenience, and industrial environment are creating a positive cycle.

-02-

Clinical Efficiency, Transformation Acceleration

Boston and Shanghai are both widely recognized as the most innovation-friendly cities for pharmaceuticals.

Among all the links in the innovation ecosystem, smooth cooperation with research institutions and hospitals is probably the most crucial one.

Boston's biopharmaceutical ecosystem was not artificially planned but rather a naturally formed innovative system.

More importantly, there is close cooperation between universities and hospitals in Boston. Many renowned hospitals, such as Massachusetts General Hospital (Mass General Hospital) and Brigham and Women’s Hospital, are institutions co-founded or deeply collaborated on by Harvard and MIT. It can be said that a complete innovation chain naturally forms here among research, clinical practice, and industry.

In the United States, the ecosystem of the pharmaceuticals industry dictates that clinical professors in academic hospitals hold significant sway over clinical guidelines, departmental protocols, and prescription habits. Principal investigators can directly influence the application and sales of drugs, with a fully open pathway from laboratory to market.

At the same time, there is another "matchmaker" between Boston's innovative pharmaceutical companies and hospitals—capital. Many academic medical systems have their own venture capital or private equity departments, which directly invest in early-stage enterprises or push hospital scientific inventions to the market through incubation. By forming a closed loop of "hospital investment-clinical validation-prescription use," Boston effectively lowers the market entry barriers for new drugs in the early stages of commercialization.

And in Shanghai, policy-driven efforts have provided further assistance.

Ren Dong Medicine CEO Jin Ge's company focuses on medical devices and test reagent products in the fields of urological tumors and precision diagnostics. Unlike innovative drugs, which often require years of research and development, the transformation chain for medical devices is shorter. Since its establishment in 2015, Ren Dong has collaborated with the Chinese Academy of Sciences Health Institute to build an expert academician workstation and jointly developed a Class III diagnostic kit with Renji Hospital of Shanghai Jiaotong University, completing the entire process from scientific research to product implementation.

In Jin Ge's view, scientific researchers in Shanghai generally possess "science and engineering thinking" and "engineer culture," making it easier for their research achievements to extend into technological applications and product development. "For example, the hospitals affiliated with Jiaotong University naturally have the logic of combining medicine and engineering; the process from laboratory to clinical transformation is relatively smooth," she said.

Of course, even with abundant academic resources, how to establish a clearer interest mechanism to enable research institutes, clinical doctors, and enterprises to form a truly synergistic closed loop remains a challenge faced by all regions.

At the mechanism level, Shanghai's clinical transformation system is systematic: the Shenkang system promotes the integration of clinical resources, universities and colleges jointly build research platforms, and enterprises accelerate the industrialization of achievements by purchasing university patents — "Rendong has bought several patents from Jiaotong Medical College," Jin Ge mentioned. "From the drafting of patents, basic scientists, clinical experts, and the enterprise application end have repeatedly communicated until the product is finalized."

Besides policy, both Boston and Shanghai have clinical resources that are the envy of the world.

Most universities in Boston have affiliated hospitals: Mass General, Brigham and Women’s, Dana-Farber, Boston Children’s, etc., which have large patient populations and professional research teams. Pharmaceutical companies only need to sign cooperation agreements to efficiently complete clinical enrollment and obtain high-quality data.

In Shanghai, the advantages lie in systematic approaches and international alignment. "In terms of multi-center clinical trials and the level of leading principal investigators (PIs), Shanghai is second to none in China," said Zhu Rong. "Therefore, many foreign pharmaceutical companies are willing to establish themselves in Shanghai."

Currently, the project management standards of clinical institutions in Shanghai have been aligned with ICH. This means that multinational pharmaceutical companies can directly incorporate Shanghai centers into their Global Study Network when conducting global multicenter trials, without the need for additional training or system revisions, significantly saving time and costs. From 2021 to August 2025, Shanghai hospitals led or participated in 1,688 international multicenter clinical trial projects.

Li Jing, who chose to return to China to start a business, *has always been in Shanghai, even though the hardware costs in Shanghai are not the *. What he cares about is "invisible competitiveness." He believes that there are significant differences in the commercial atmosphere across different regions of China, andThe Yangtze River Delta region — especially Shanghai — has formed a relatively mature and internationalized innovation environment."The business environment is open, the professional atmosphere is strong, the alignment with international rules is high, and the systems for industrial collaboration and capital support are more complete."

He mentioned that he has interacted with a large number of investors, many of whom have been established in Shanghai for over two decades. The city hosts a vast number of biopharmaceutical investment firms, ranging from venture capital (VC), industry funds to insurance-backed capital, all participating in the innovative drug sector. Similarly, in Boston, the situation is no different, attracting investors from across the U.S. and even globally. Even though many fund headquarters are in California or Chicago, their key focus projects are often located in Boston.

"Capital follows the industry, and the industry follows capital," said Li Jing. "This is especially evident in Shanghai. The high level of capital activity also accelerates the growth of the entire industry."

He pointed out that although Shanghai is not as densely populated with research institutions as Boston,Stronger industrialization capabilities and investment support. Here, there is not only a stable entrepreneurial environment but also a sufficient number of professional teams and resource platforms, making it easier for scientific research results to move towards commercialization.

"Shanghai's advantage lies in a mature business environment system and a rapidly responsive capital system. The combination of these two makes it the city in China closest to the international innovation ecosystem," Li Jing concluded.

-03-

Shanghai VS Boston: Gaps and Advantages

Boston and Shanghai, although sharing commonalities in the development of the biopharmaceutical industry—high talent density and sufficient market openness—differ in that the former mainly relies on natural accumulation, while the latter is primarily driven by systematic promotion.

Two paths, each with its own advantages and disadvantages: The Boston model represents stability and originality, but the high cost, high threshold, and low efficiency of clinical trials have become its challenges; The Shanghai model has brought explosive growth and extremely high clinical efficiency, but its original innovation capabilities and the transformation efficiency of local universities still need time to be tested.

Moreover, there is an even more crucial aspect: In the high-risk, heavily invested field of innovative drug development, the role of capital is extremely important. Especially in the past two years, China's biopharmaceutical industry has experienced a downturn and a harsh winter during its rapid development.

In the United States, the capital market is more mature,Allowing FailureA fund typically invests in more than a dozen projects, and it's impossible for all of them to succeed. Investors know that some projects will fail, but as long as a few succeed, or even one experiences explosive growth, it is enough to cover the losses and bring substantial returns.

This mechanism also makes the U.S. investment environment more tolerant and more willing to let innovation happen naturally.

"It doesn't matter if a project fails, as long as the talent is excellent, they will still receive investment next time, because these people can often create new projects," the aforementioned American investor said.

This investment trend has been reinforced in the city of Boston: due to the unique nature of the biopharmaceutical industry, investors in this city tend to be more patient compared to their counterparts in Silicon Valley. Many local companies have received support from "opportunity funds," a supplementary investment model that ensures some startups continue to receive follow-on investments during their early growth stages. Even when the environment is unfavorable or project timelines exceed expectations, this continued support can ensure that promising companies do not fail as a result. In contrast, in China's innovative drug investment sector, state-owned capital has once been criticized by enterprises for being overly "risk-averse." Zhu Tongyu, Vice Dean of Shanghai Medical College at Fudan University, mentioned in an interview that national mega-funds have not played a sufficient role in incubating innovative drugs, and the assessment mechanism for government funds is an important reason. "The evaluation system places excessive emphasis on short-term financial returns, which makes fund managers overly cautious in their investments, reluctant to commit to high-risk innovative drug projects."

At the same time, compared with Boston's rich investment models, the financing methods of Shanghai's innovative drug companies are relatively单一. A group of companies that have not yet made a profit continue to line up for IPOs on the Hong Kong stock market: once going public becomes the *goal, companies tend to pursue short-term visible results during the R&D phase in order to meet valuation or financial report requirements.

In order to survive, quite a number of companies choose to make deals at an early stage where the drug value leverage is relatively small, missing out on future opportunities that could significantly increase the company's value and turn it into a biopharma giant; domestic investors and founders signWagering Agreement, Repurchase ClauseAllowing entrepreneurs to bear extremely high pressure, and once the cycle is unfavorable, project failure may lead to困境.

All of the above have contributed to the gap between Shanghai and Boston in the biopharmaceuticals industry: the growth ceiling of companies is sometimes restricted, innovation tends to cater to capital, resulting in a lag in originality and cutting-edge advancements.

Shanghai, reflecting on the characteristics of the innovative drug industry in terms of investment, has recently introduced a series of initiatives. Starting from 2024, a leading biopharmaceutical industry fund with a total investment of 22.5 billion yuan has been established. This fund serves two purposes: one is to make direct investments, and the other is to act as an LP to leverage social capital. From last year to this year, it has already mobilized 13 sub-funds, with a scale more than five times that of the original fund.

After leveraging state-owned funds to mobilize diverse capital, Shanghai hopes to address the shortcomings in the early biotech market. "The participation of state-owned funds spans the entire chain, including early VC, PE, late-stage industrial mergers and acquisitions, and S funds. Future industrial funds will focus on early frontier projects, while leading industrial funds aim to build a full life cycle fund matrix for the biopharmaceuticals industry," said Zhu Rong.

At the same time, we must recognize that Shanghai's strengths lie in efficiency and cost, which are key to attracting international investment and maximizing the outbound movement of domestic industrial chains.Zhangjiang Hi-TechThe city has attracted many global pharmaceutical companies as well as a large number of local enterprises, forming an agglomeration effect across the entire chain of "clinical-manufacturing-data-capital," enabling companies to comprehensively layout the entire process from candidate molecules to market promotion. Additionally, during the clinical and approval stages, policy incentives and talent concentration have expedited the response speed of each link, making the city a fertile ground for achieving results at the fastest pace.

China’s clinical efficiency has become an open secret in the international biopharmaceutical industry.

An American rare disease company found during the clinical trial phase that "in China, a single department or doctor may have 3,000 patients. This level of concentration makes clinical enrollment much more efficient. In contrast, an American doctor typically has only a dozen patients, with ten companies competing for them." The number of patients in China is astonishingly high and highly concentrated in a few large children's hospitals—such as Fudan Children’s Hospital, Tongji Hospital, and Zhongshan Hospital, all located in Shanghai.

A drug can shorten the global R&D timeline by nearly a year using a Chinese platform. Zhu Rong mentioned that industry practitioners had compared the clinical efficiency of two cities: "For a preclinical CRO order, it would take a week to get a response in Boston, but in Shanghai, results can be obtained immediately." She explained: This is mainly because any collaboration in Boston requires market intervention and regulation, whereas in Shanghai, the government can allocate the most suitable resources.

At the policy level,Shanghai places great emphasis on the layout of clinical resources, continuously investing in the construction of research-oriented hospitals and research beds, along with supporting hardware, software, and a professional title evaluation system specifically designed to provide professional title assessment and training for clinical staff. At the same time, efforts are being made to build cohorts, establish biobanks, and set up data centers.

Overall, the gap between Shanghai and Boston lies in the intensity of market-driven capital support, while the advantage is in the efficiency of clinical work. However, as integration and alignment deepen, the two models are gradually converging from Boston to Shanghai.

One relies on the accumulation of time to create a stable ecosystem, while the other relies on systems and speed to foster a new pattern.

When capital, policy, and scientific research form a virtuous cycle in Shanghai, and when innovators are allowed to accumulate experience through failure, perhaps the story of the next thirty years will begin right here.