China Leads in Patent Filings but Lags in Commercialization: How Far Is 'Chinese-Style Innovation' from the U.S. Model?

Data always tells the truth.

According to data released by the World Intellectual Property Organization (WIPO), since 2019,China has ranked first globally in the number of patents for three consecutive years,and the gap with the second-place United States continues to widen. Focusing specifically on universities, by the end of 2019, China’s “Double First-Class” universities held more than250,000 units, with their number far exceeding that of the United States.

However, in terms of innovation, the number of patents is only one metric.The most critical factor remains the conversion rate.According to the data,By the early 1990s, the conversion rate of scientific and technological achievements in the United States had already climbed to 80%.Even now, the United States continues to maintain a research-to-application conversion rate of over 50% in high-tech fields.

However, China currently finds itself in a rather “awkward” position regarding this metric, despite the considerable efforts and attempts made in recent years to enhance translational outcomes.However, the actual conversion rate remains below 10%., there remains a significant gap compared to the United States. When focusing specifically on the healthcare sector, this disparity becomes even more pronounced in terms of conversion rates.

So, where exactly does China still lag behind the United States in medical innovation? In this regard,VBInsight Orange BureauConducted in-depth analysis.

Before addressing any issue, the foremost step is to resolve matters of awareness.

In the United States, medical centers and enterprises, as the primary drivers of healthcare innovation, share a “consensus” on innovation: they fully recognize its importance and prioritize it as a core component of their operations.

Let’s start with the medical center.The vast majority of medical institutions in the United States have established dedicated research departments or research centers, where physicians devote 90% of their efforts to their own research and are minimally involved in clinical practice. Taking the Mayo Clinic as an example, it currently has a total of57 research centers and over 3,800 professional researchers,Annual investment in medical innovation research reaches hundreds of millions of U.S. dollars.

In China, however, the situation is reversed: most physicians are primarily focused on clinical practice, with only a small minority genuinely willing to engage in laboratory research. This phenomenon is mainly attributed to three factors. First, domestic performance evaluation metrics are predominantly clinically oriented. Second, physicians are heavily burdened by long-term clinical commitments, making it difficult for them to allocate time to scientific research. Third, many physicians lack sufficient research capabilities, resulting in an extremely low rate of producing frontier innovative achievements with originality.

Having discussed medical centers, let us now turn to enterprises.In fact, compared with medical centers, the vast majority of domestic healthcare enterprises in China have shown significant improvements in recent years, both in terms of innovation awareness and concrete investment; however, the gap with the United States remains substantial.

First, in terms of the number of innovative R&D companies. According to statistical data, in 2019,The number of pharmaceutical R&D companies in the United States accounts for approximately 50% of the global total.However, China’s figure stands at only 4%, a gap of 46 percentage points.

Secondly, in terms of corporate R&D investment. According to the latest annual report data statistics,The R&D investment ratio of U.S. healthcare companies is generally above 15%.Among them, leading enterprises, such asJohnson & Johnson, Pfizer, AstraZenecaIn 2021, R&D expenditures all exceeded USD 10 billion. Turning our focus to China, the scale of R&D investment by leading domestic enterprises lags far behind that of their U.S. counterparts.Hengrui MedicineR&D investment in the first half of 2021 amounted to RMB 2.581 billion;BeiGeneR&D investment in the first half of 2021 amounted to US$677 million (approximately RMB 4.3 billion).

Finally, in terms of innovative drug output. According to statistical data,In 2015, the number of investigational new drugs under development in the United States accounted for approximately 48.7% of the global total,Meanwhile, China accounts for only 4.1% of new drugs under development worldwide, a gap of 44.6 percentage points.

With awareness established, the next consideration is whether the soil for innovation is sufficiently fertile.

According to publicly available statistical data, prior to 1978, the commercialization rate of biotechnology achievements in the United States was only 5%, lagging significantly behind innovative powerhouses in the biotechnology sector such as the United Kingdom and Japan. However, by the early 1990s,The conversion rate of scientific research achievements in the United States rapidly climbed to 80%,Achieved the leap from “novice” to “elite” in just ten years.

This is inseparable from"Bayh-Dole Act"The efforts made, it is referred to as“The most inspiring legislation enacted in the United States over the past half-century”. In fact,"The Bayh-Dole Act"Only four issues were addressed: first, the rights to results generated from government-funded research are by default retained by universities; second, universities enjoy exclusive patent licensing, and proceeds from technology transfer should be reinvested in teaching and research; third, inventors have the right to share in patent licensing revenue; and fourth, the government retains “march-in rights,” allowing the federal government to take action regarding the invention under special circumstances.

Statistics show that since the passage of the Bayh-Dole Act, it has driven U.S. economic outputIncreased by $1.7 trillion, supporting 5.9 million jobs,and assistgiving rise to more than 14,000Healthcare-related startups.

Let us now turn our attention to China. Since 1985, when national-level legislation and tax policies were introduced to support the commercialization of scientific and technological achievements, relevant Chinese authorities have been making various attempts to better promote innovation. According to statistics from VCBeat’s Orange Fruit Bureau, ChinaOver the past 37 years, a total of 435 policies directly related to the translation of scientific and technological achievements have been issued.

Especially in the past year or two, as the pace of innovation has gradually accelerated, a large number of relevant policies have been on the verge of introduction. According to statistics, in 2021, China issued a total of49 Policies, with its core content primarily focusing on“Intellectual Property, Talent Development, and Research Incentives”Three Key Focus Areas.

However, the actual benefits have been less than satisfactory, primarily due to two reasons:First, "insufficiently precise management", some functional agencies, due to a lack of precise understanding of the industry, can only participate in the formulation of industry policies at a narrow level and fail to address its real pain points.

Taking the Division of Intellectual Property Rights as an Example, in some existing scientific research projects, both universities and hospitals hold certain proportions of intellectual property rights. Therefore, during the commercialization process, approvals must pass through two distinct evaluation systems from these departments, making the procedure quite complex. Even within a single hospital or university system, disagreements may arise due to differences among affiliated departments or institutions. However, there is currently a policy gap in China regarding how to precisely delineate such ownership.

Second, “excessive regulation”, medical innovation and translation are, in fact, a relatively flexible and diverse process that, to some extent, requires innovators to independently explore, experiment, and learn from failures in the competitive market, thereby uncovering market potential and achieving market development. However, from the current policy perspective, the original “driving force” has instead become an “obstacle” to scientists’ progress.

Taking state-owned shares as an example, since current scientific and technological achievements mainly originate from research institutes and universities, they mostly belong toState-owned Asset Management Model,Therefore, every action requires going through formal procedures; however, due to the excessively lengthy approval process, research achievements often miss the optimal window for market entry.

With awareness and a fertile ground for innovation, the next challenge lies in the human factor—and by “human,” we do not mean scientists, but rather"Technology Manager"。

Currently, driven by policy incentives and market guidance, an increasing number of scientists are stepping out of their laboratories and into the marketplace. However, this transition is far from easy. For the vast majority of scientists, engaging effectively with the market and successfully commercializing their research achievements present concrete and thorny challenges that often exceed their current capabilities.

This calls for research institutions to step forward, and behind them are actually “technology managers.” However, the reality is thatCompared with top-tier scientific research talents, professional technology managers are in extremely short supply in China.This is reflected not only in the absolute number but also in the quality of talent, specifically the professional competence of technology transfer professionals, where a significant gap remains compared to the United States.

This is certainly for a reason, mainly includingVague user profiling, an underdeveloped training system, and insufficient government support.

However, looking at the United States, their talent pipeline development for technology transfer professionals is already highly robust. It is reported thatIn the United States, there are four technology transfer professionals for every 100 researchers.In addition to their numerical advantage, U.S. technology managers possess strong professional capabilities, demonstrating significant expertise in both project evaluation and the linkage of market resources.

This is, of course, also for a reason.First, the United States initiated policy-driven measures to rapidly establish industry planning and define talent profiles.According to statistics, between 1980 and 2011, the United States enacted and promulgated 16 laws and regulations related to technology transfer, with the aim of precisely defining the professional profile of technology managers.

Secondly, encourage universities to take the initiative in participation, thereby maximizing market vitality.Modeled after Stanford University’s Office of Technology Licensing, established in 1970, U.S. universities began to extensively build technology transfer offices. In 1989, the Association of University Technology Managers (AUTM) was founded, cultivating a large workforce of university-based technology transfer professionals.

Then, prioritize performance evaluation and assessment to “select the best of the best” from the talent pool.To identify industry elites, many U.S. universities have established rigorous evaluation systems for technology managers, typically conducted by the universities or industry associations. These assessments primarily focus on metrics such as the volume and rate of invention disclosures and patent grants, as well as the number and monetary value of patent licenses and assignments, with subsequent internal adjustments made based on the evaluation results.

Finally, safeguard the rights and interests of technology transfer professionals and accord them due respect.To enable technology managers to fully demonstrate their professional expertise during the commercialization process, the United States has established a comprehensive technology transfer framework, within which the work-related rights and interests of technology managers are legally protected.

In addition to technology managers, another category of talent is also crucial, namelyProfessional Manager. In the United States, the medical field generally adopts“Dual-Leadership System”entrepreneurial partnership, in which an experienced professional manager collaborates with a scientist possessing cutting-edge technology, with the scientist responsible for technical research and the professional manager overseeing corporate operations.

In China,“Scientists + Professional Managers”Although this entrepreneurial model is becoming a trend in the healthcare sector, several thorny issues remain at present: first, channel matching, i.e., how to effectively pair scientists with professional managers; and second, integration, i.e., how both parties can identify their respective focal points to maximize their complementary strengths.

Scientific research can focus solely on the technology itself, but translation must engage in “close contact” with the market.

And how to engage with the market mainly includes two core elements:First, market-based benchmarks are used to accurately evaluate scientific research outcomes; second, project needs serve as the basis for precisely connecting with appropriate market resources.

Let's start with the assessment.In fact, evaluation is crucial throughout the entire translation process and, to a certain extent, determines the “life or death” of scientific research achievements. However, in this regard, scientists themselves, research institutions, and even investors all have certain limitations.

Take scientists and research institutions as examples,They have long been confined to a closed environment dominated by the scientific research system, making it difficult for them to access market resources and, consequently, to accurately evaluate their own research projects from a market perspective.# Speaking of Investors, unlike mid- to late-stage investments, which target relatively mature projects that have been validated by the market, early-stage medical projects exhibit a high degree of uncertainty. Consequently, the evaluation criteria are more numerous and complex, requiring investors to possess more diversified capabilities in project screening and due diligence.

In this regard, the United States has taken the lead, with both its research institutions and related incubators, a comprehensive “evaluation mechanism” has been established internally,Capable of evaluating scientific research projects from multiple core dimensions and providing appropriate commercialization pathways based on the evaluation results.

Following the assessment, the incubation phase begins, which involves linking market resources.This issue should be examined from two perspectives: first, whether research institutions and universities have established their own “resource pools”; and second, whether they can accurately match resources suitable for the development of their scientific achievements amidst a market rife with mixed-quality offerings. Clearly, domestic research institutions and universities are still in the early stages in both respects.

However, the United States holds certain advantages in this regard. Taking funding as an example, in the U.S., whether it is research institutions or incubators, they all have their own"Angel Fund Pool", their fundraising methods are generally divided into two types: one is self-led, such as holding funds managed by research institutions and alumni funds established by alumni; the other is market-oriented, where research institutions select a number of high-quality investment firms to make targeted investments in innovative projects.

In such a relatively closed and fast-paced investment environment, its advantages in early-stage project incubation are fully demonstrated. First, it provides scientists with more investment options, reducing the cost of blindly seeking investment institutions; second, it achieves "precise investment," meaning that these investment institutions can provide startups with market-oriented resources that synergize with their own businesses.

Finally, it effectively “protects” scientists. Due to their unique characteristics, startup projects are not well-suited for excessive public exposure in the early stages. Therefore, within this relatively closed investment environment, scientists can quickly build trust with investors while also safeguarding the “privacy” of their startups.

Innovation translation in the medical field may seem like a solitary endeavor, but it actually places great emphasis on teamwork; it is not a battle fought alone, but rather requiresGovernment, Research Institutions and Universities, Investment Firms, Enterpriseswith the joint participation of innovative entities.

However, within China, these innovation entities are not well connected and largely operate in silos.Let's start with the government side,It has not been deeply involved in the entire innovation translation process, resulting in a slight “disconnect” from actual needs in terms of policy formulation and resource linkage.

Regarding research institutions and universities, their linkage with market resources such as investment firms and enterprises remains insufficient, leading to bottlenecks during the commercialization process. Finally, as market entities, enterprises and investment firms find it difficult to access the relatively closed ecosystem of research institutions and universities at this stage, thus remaining in a long-term “wait-and-see” posture.

However, in this regard, the United States holds considerable “influence.” With what Americans take pride in“The Boston Model”as an example, this is a comprehensive and mature innovation ecosystem for life and health. In fact, the “Boston Model” fully integratesGovernment, universities, venture capital, large enterprises, and innovative companiesFive Major Innovation Entities: Building an Innovation Ecosystem Network Linked by Interest Mechanisms, Thereby Forming a Collaborative and Symbiotic Industrial Innovation Ecosystem.

Specifically, throughout the entire process, the government, universities, venture capital firms, large enterprises, and innovative startups are all performing their respective functions.First, the government, primarily by issuing various policies to foster a favorable environment for innovation and entrepreneurship and to aggregate the key elements of innovation and entrepreneurship;Next is the university,Its primary focus is on incubating innovative outcomes and cultivating a talent pipeline for the translation of scientific research.

Then comes venture capital, primarily to provide financial support for innovative projects;Next are large enterprises, its role is also to provide an incubation platform for innovative projects;Finally, innovative enterprises, playing a vital role in guiding the direction of industrial development and facilitating the translation of research outcomes into practical applications.

It is undeniable that there is a significant gap between China and the United States in medical innovation and translation. However, this is a normal phenomenon, as the United States began building its medical innovation system nearly half a century earlier than China.

Therefore, recognizing the gaps, acknowledging the immediate challenges, and initiating efforts to address them are our top priorities in translating medical innovations into practice. This process will inevitably take time; after all, as the global leader in biotech innovation, the United States also progressed from 0 to 1, then gradually from 1 to 10, before finally reaching 100.