At the Forefront of a Trillion-Yuan Opportunity: The Dynamic Convergence of China's Biopharma Industry and Shenzhen’s Nanshan Innovation Hub

As a sunrise industry that never fades, the “fire” of biomedicine has never been extinguished since it first ignited. The enthusiasm of the capital market best captures the palpable heat of development in this field.

According to statistics from the VBInsight database,In 2020, a total of 274 investment and financing transactions occurred in China’s biopharmaceutical sector, with total funding reaching RMB 79.7 billion. This amount ranked first among all healthcare subsectors, doubling the figure for the second-ranked sector, medical devices and consumables.

As of 2021, such "favoritism" continues. According to the latest released data,In the first half of 2021, a total of 228 investment and financing transactions occurred in China’s biopharmaceutical sector, with total funding reaching RMB 47.1 billion, a year-on-year increase of 91%.

Capitalizing on this momentum, we see the potential for integrating the biopharmaceutical sector with regional industries.In recent years, with the continuous increase in policy and financial support, China's biomedical industry has further demonstrated a trend toward clustered development. From the national level to local governments, active efforts are being made to strategically position and support the growth of the biomedical sector.

This is inevitably a sector brimming with imagination and infinite challenges, especially as urban development deepens into industrial construction. Whoever can first find a breakthrough in the “hot cake” that is biomedicine will be able to seize the commanding heights of future development.

Long before this trend took off, Nanshan District in Shenzhen, a pioneer of China’s reform and opening-up, had been making preparations for quite some time.

A Series of Incentive Policies Rolled Out to Build a High Ground for Innovation in the Biopharmaceutical Industry

As a pioneer of China’s reform and opening-up, Shenzhen has been continuously strengthening its industrial development.

In recent years, Shenzhen has entered a golden period of development driven by the “Dual Zones” — the Guangdong-Hong Kong-Macao Greater Bay Area and the Shenzhen Pilot Demonstration Zone — benefited from the overlapping advantages of the Shenzhen Special Economic Zone and the Shenzhen Pilot Demonstration Zone, and served as a model for the “Dual Reforms,” namely the Shenzhen Comprehensive Reform Pilot and the comprehensive deepening of reform and opening-up in the Qianhai Cooperation Zone.

In 2020, to enhance the independent innovation capacity of Shenzhen’s biopharmaceutical industry, foster and strengthen local new business formats and models, optimize spatial layout, drive the industry toward the mid-to-high end, and establish the biopharmaceutical sector as a new growth pole for the economy, Shenzhen actively responded to the spirit of central government documents, including the Outline of the “Healthy China 2030” Plan, the Opinions of the Central Committee of the Communist Party of China and the State Council on Supporting Shenzhen in Building a Pilot Demonstration Area of Socialism with Chinese Characteristics, and the Guiding Opinions of the General Office of the State Council on Promoting the Healthy Development of the Pharmaceutical Industry. By focusing efforts and addressing weaknesses, Shenzhen issued the “1+3” series of supporting documents, including the Guiding Opinions of Shenzhen Municipality on Promoting the Clustered Development of the Biopharmaceutical Industry.

Guided by a series of policies in Shenzhen, Nanshan District, the city’s innovation hub, has responded swiftly by focusing on a full-process innovation ecosystem encompassing “basic research, technological breakthroughs, commercialization of achievements, sci-tech finance, and talent support,” striving to become a driving force for innovation-led development in the Guangdong-Hong Kong-Macao Greater Bay Area. This trend is evident from the promulgation of multiple policies.

June 2021,"Implementation Plan for Promoting the Leading Development of the Biomedical Industry in Nanshan District (2021-2025)"(hereinafter referred to as the “Implementation Plan”) and“Several Measures of Nanshan District to Promote the Leading Development of the Biopharmaceutical Industry”(hereinafter referred to as the “Several Measures”), two key policies have been successively introduced, indicating that NanshanTheFurther Promote the Development of the Biopharmaceutical Industry,Strive to build a leading domestic and world-class innovation hub for the biopharmaceutical industry.

In the "Implementation Plan," Nanshan proposed to adhere toFocus on Key Areas, Improve Shared Services, Uphold Independent Innovation, and Highlight Intensive DevelopmentFour Major Principles: Guiding the Aggregation of Core Elements Such as Capital, Technology, Projects, and Talent to Build a Full-Chain Ecosystem for the Biopharmaceutical Industry.

Among the specific support measures, Nanshan District has focused intensively onEstablish a shared platform for scientific and technological innovation, build a service system for scientific and technological innovation, tackle key technologies in core areas, develop intensive and efficient industrial parks, and strengthen safeguard measureskey dimensions, thereby laying a solid foundation for the effective implementation of biomedical industry development in Nanshan. The "Several Measures" comprise 16 key provisions, including support for the construction of major innovation platforms, development of innovation carriers, enhancement of new drug innovation capabilities, R&D support for medical devices, cultivation of high-growth enterprises, attraction of high-quality enterprises, support for high-level talent in innovation and entrepreneurship, sci-tech financial services, development of specialized industrial spaces, subsidies for pollution discharge treatment fees, and support for particularly significant projects. These measures aim to create a "hotbed" for the growth of the biomedical industry, further driving the regional industry toward higher quality, greater sophistication, and advanced standards.

In terms of sub-sectors,First, in terms of funding,Nanshan will allocate no less than RMB 100 million in fiscal funds annually to prioritize the development of innovative drug research and development, high-end medical device manufacturing, and precision medicine.Secondly, inSpaceCarrierAspectIn Nanshan District, plans are underway to prepare and develop approximately 1 million square meters of specialized biopharmaceutical industrial space in key areas such as Zhiyuan, Zhicheng, the Central High-Tech Zone, the Northern High-Tech Zone, and Honghualing, fully meeting enterprises’ needs for office, R&D, and production facilities. Eligible companies will also receive multiple “housing benefits,” including rental subsidies of up to 70% for industrial premises.Finally, in terms of the platformNanshan District will vigorously develop a suite of public service platforms for the biopharmaceutical industry to address gaps in the industrial chain and provide high-level, one-stop services for corporate R&D. It is reported that the upcoming Safety Assessment Center, set to commence operations soon, will be the largest biopharmaceutical safety evaluation laboratory in the Guangdong-Hong Kong-Macao Greater Bay Area. It will be capable of conducting pharmacodynamic trials and preclinical safety evaluations for 15 innovative drugs simultaneously, while providing technical support and shared platform services for biopharmaceutical R&D and translational medicine research. Furthermore, the Medical Device Review and Certification Department of the Shenzhen Municipal Administration for Market Regulation’s Licensing Review Center has been established in Nanshan. Entrusted with the review of Class II medical device registration applications within Shenzhen, it helps save valuable time for product registration. This initiative complements the Greater Bay Area Branches of the National Medical Products Administration’s Center for Drug Evaluation and Inspection and the Center for Medical Device Technical Evaluation and Inspection, jointly fostering the innovative development of local pharmaceuticals and medical devices.

For the cell and gene therapy industry, Nanshan can also benefit from unique policy advantages:On August 26, 2020, the Regulations of the Shenzhen Special Economic Zone on the Qianhai Shekou Free Trade Pilot Area were adopted at the 44th Meeting of the Standing Committee of the Sixth Shenzhen Municipal People’s Congress. The Regulations stipulate that drugs and medical devices urgently needed for clinical use by medical institutions within the Free Trade Pilot Area, which have been approved for marketing in Hong Kong and Macao but have not yet obtained domestic registration approval, may be used in designated medical institutions within the Free Trade Pilot Area. Medical institutions and scientific research institutions within the Free Trade Pilot Area may carry out research, translation, and application of new technologies, including stem cell therapy, immune cell therapy, gene therapy, monoclonal antibody drugs, and tissue engineering, in accordance with relevant provisions and based on their technical capabilities. These Regulations came into effect on October 1, 2020.

Tapping into a Trillion-Yuan Industry: What Gives Nanshan Its Confidence?

The biopharmaceutical industry is undoubtedly a blue ocean. According to data from the National Bureau of Statistics, the market size of China's biopharmaceutical industry reached a staggering RMB 3.57 trillion by 2020. However, establishing a firm foothold in this vast blue ocean is no easy feat.

On one hand, there is the inherent “high-specification nature” of the biopharmaceutical sector.As an important component of the healthcare ecosystem, the biopharmaceutical industry possessesHigh technical complexity, long development cycles, and substantial resource investmentsuch distinctive characteristics, thus imposing high requirements on market entrants.

On the other hand, there is the fiercely competitive industry environment.Currently, many cities in China are beginning to strategically plan for the development of the biopharmaceutical industry and incorporate it into their future regional development plans. It is reported that these cities are mainly concentrated inThe Bohai Rim, the Yangtze River Delta, and the Guangdong-Hong Kong-Macao Greater Bay AreaThe three major economically developed regions have made substantial investments and have already begun to achieve scale, which has, to some extent, further fueled the rapid growth of the biopharmaceutical industry.

As a pioneer in the biopharmaceutical industry of the Guangdong-Hong Kong-Macao Greater Bay Area, how has Nanshan strategically positioned itself in this sector? What inherent developmental genes does the region possess?

Further exploration reveals that Nanshan itself is a fertile ground with immense potential for the development of the biopharmaceutical industry, possessing numerous core elements that drive industrial advancement.

First,Distinct locational advantages facilitate industrial development by enhancing transportation connectivity.Nanshan District, situated on the east bank of the Pearl River Estuary in the central-western part of Shenzhen, boasts a superior geographic location nestled between mountains and the sea. Its favorable conditions for development granted Nanshan the opportunity to serve as a pilot zone for prioritized industrial growth during the early years of the People’s Republic of China, allowing it to accumulate greater industrial resources than most other cities. It was here that China’s first industrial zone opened to foreign investment—the Shekou Industrial Zone—as well as the nation’s first joint-stock commercial bank, China Merchants Bank, and its first joint-stock insurance company, Ping An Insurance, were incubated and established.

Second, the industrial foundation is robust, with a significant aggregation of leading enterprises. As of now, Nanshan District has cultivatedMindray Medical, Joincare, Chipscreen Biosciences, LifeTech Scientificand other industry-leading enterprises, forming a development pattern characterized by the agglomeration of leading and innovative companies, which has injected strong vitality into the advancement of the regional biomedical industry.

Third, strong innovation capabilities drive the rapid translation and implementation of scientific research achievements.As Shenzhen’s “Leading Zone for Biopharmaceutical Industry Innovation,” Nanshan District boasts robust innovative vitality and is home to three national-level strategic science and technology platforms: Peng Cheng Laboratory, Xili Lake International Science and Education City, and Shenzhen High-Tech Industrial Park. It is building itself into a globally influential source of knowledge creation and a hub for radiating technological innovation.

Data can reflect innovation vitality. Currently, Nanshan District is home to over 4,100 National High-Tech Enterprises, 1,400 innovation carriers, 2,641 “Pilot Talents,” and 37 full-time academicians. Moreover, Nanshan District concentrates 80% of the city’s higher education institutions and R&D organizations specializing in biomedicine. Research institutes such as the Shenzhen Institute of Advanced Technology, Chinese Academy of Sciences; Shenzhen University; Southern University of Science and Technology; Harbin Institute of Technology, Shenzhen; and graduate schools of top-tier universities including Tsinghua University and Peking University have all established their presence in Nanshan. The district hosts nine Nobel Prize laureate laboratories, including the Edvard Moser Laboratory for Neural Plasticity, and gathers approximately 167 innovation carriers in the biomedical field, such as key laboratories, engineering centers, and public technical service platforms, among which 11 are national-level innovation carriers.

Fourth, the business environment is world-class, providing substantial support for corporate development.After years of development and construction, Nanshan District has established a favorable business environment. According to disclosed financial data, Nanshan’s total GDP reached RMB 650.2 billion in 2020, with an average annual growth rate of 7.3% over the preceding five years, demonstrating substantial economic strength. In terms of industry, as of now, Nanshan is home to two Fortune Global 500 companies, nine China Top 500 enterprises, and as many as 187 listed companies, making it the district with the highest concentration of listed companies in China. Entrepreneurs have become a well-known “specialty” of Nanshan.

Nanshan’s impressive achievements are attributable to its dedicated efforts in cultivating a robust revenue-generating business environment. First, Nanshan is home to China’s first legal ascertainment platform, which provides resident enterprises with corresponding legal assistance. Second, it hosts China’s first trade secret protection base jointly established at the provincial, municipal, and district levels, helping to accelerate the commercialization of Nanshan’s biopharmaceutical industry. In terms of transforming scientific and technological achievements, Nanshan has established a rigorous intellectual property (IP) protection system to ensure a favorable innovation ecosystem. As a pilot zone for China’s national IP credit system, Nanshan offers multiple preferential policies. Regarding government services, Nanshan has leveraged its pioneering spirit of “bold exploration” and “innovation” by addressing practical pain points, launching China’s first multi-channel, integrated mobile government service system known as “Suishenxing” (On-the-Go). This initiative enables services to be handled through “a single number, a single window, a single online platform, a single visit, and transparent procedures,” thereby establishing a “15-minute public service circle.”

Overall, NanshanA favorable policy environment, unique locational advantages, a robust industrial foundation, strong innovation capabilities, an excellent business climate, and highly “compelling” industry support policiesTogether, they have cultivated fertile ground for the development of the biopharmaceutical industry, empowering Nanshan with greater confidence as it advances into this sector and unlocking even more possibilities.

Looking to the Future: How Much Room for Imagination Does Nanshan Still Have in the Biopharmaceutical Industry?

Since the introduction of the development plan for the biopharmaceutical industry during the “12th Five-Year Plan” period, China’s biopharmaceutical sector has achieved a compound annual growth rate exceeding 15%, marking extremely rapid expansion.In 2020, the scale of the biopharmaceutical industry exceeded RMB 10 trillion for the first time, with its value added accounting for more than 4% of GDP, making it a leading sector of the national economy.

Standing at this new starting point, Nanshan has already taken action and is focusing on key developments across multiple critical dimensions to create a “new calling card” for its biopharmaceutical industry.

For Nanshan, as the pioneering highland of reform and opening-up, it has always maintained an open and inclusive posture, continuing to carry forward“Respecting Business, Valuing Commerce, and Benefiting Enterprises”uphold the fine tradition, consistently regard optimizing the business environment as the “lifeline” of high-quality development, sincerely treat enterprises as “family members,” make every effort to deliver tangible benefits in the form of “real money and silver” to enterprises, and provide resident enterprises with a strong sense of belonging and sustained momentum for development.

On October 14, 2021, the “2021 Future Medical Technology Trends (Xili Lake) Forum,” hosted by the Nanshan District People’s Government, supported by the Shenzhen Talent Work Bureau and the Shenzhen Science and Technology Innovation Commission, organized by the Nanshan District Science and Technology Innovation Bureau, and co-organized by VCBeat, successfully concluded in Nanshan.

This conference, themed “Deepening Synergy,” centers on “AI-Driven Drug Discovery and Cell & Gene Therapy"Two major tracks focus on the application of cutting-edge technological innovations, anchor the construction of the biopharmaceutical industry ecosystem, and gather core resources from academicians, experts, industry leaders, top investors, and the medical technology innovation ecosystem. The aim is to create a global platform for sharing frontier technologies in the future healthcare industry, linking industrial resources, facilitating industry exchange and cooperation, and releasing trends in future healthcare. This initiative seeks to build an innovative ecosystem characterized by 'service leadership, innovation-driven development, enterprise-centricity, and high-end agglomeration,' thereby propelling Nanshan District’s biopharmaceutical industry to lead in development."

The Wind Has Just Risen; The Future Holds Great Promise.