Whenever I visit China, I am reminded of my first trip here, more than 30 years ago. At that time, I was asked to represent Pfizer at one of the first trade conventions ever opened to foreign investors. China was, to us, new and different and yet, even then, we could sense its potential.

But who could have envisioned that China would move so far and so fast?

Today, China continues to climb the value chain in manufacturing, moving from "supplier" to a more fully integrated force in global manufacturing.

While China's fast growth in manufacturing is welcome news, China's leadership is already looking to the next step, understanding that manufacturing alone cannot sustain the level of economic growth China needs.

President Hu Jintao set the tone for China's future in the world's "brainpower industries" with his call last January for China to speed up its transition to an innovation-based economy.

In addition, innovation was the theme of the recently concluded National People's Congress. The 11th Five-Year Plan (2006-10) calls for significant increases in spending aimed at greater innovation. These and other high-profile calls from leaders reflect longer-term efforts to capitalize on China's growing brainpower.

All of the trends that exist in China today the call for brainpower industries, significant increases in technical investment, and history's largest pool of scientific talentis a heady mix in my business. Add in other dynamic factors that exist in China, including a population of 1.3 billion people, a roughly 10 per cent annual gross domestic product (GDP) growth rate, 6,000 Chinese companies already engaged in pharmaceuticals, growing demand for better healthcare, and you have a prescription for explosive growth in the life sciences.

I believe that China can reach for global greatness in the life sciences sooner rather than later. The largest beneficiaries of this greatness will be the people of China, and the patients of the world.

IPR and innovation

I want to first stress that China has made significant inroads in strengthening its protection of patents and intellectual property rights (IPR), and I applaud the efforts China has made to date.

I believe increasingly enhanced IPR protection will greatly expedite the growth of research-based pharmaceuticals in and biotech industries in China, and it is critical that China continues down the path of strengthening protection for intellectual property rights.

In fact, I believe the most important step in moving towards a world-class life science industry is to ensure confidence in the protection of intellectual property rights.

Given the 10-to-15 years it takes to develop and register a new medicine, you can understand why weak IPR protection could have an enormous chilling effect on innovation.

Confidence that innovation will be recognized and protected leads to an explosion of innovation. And, in the research-based pharmaceutical industry in particular, success in innovation has a real "multiplier effect" on the surrounding economy.

We are finally moving into the long awaited, "golden age of medicine."

After a relative lull in pharmaceutical breakthroughs, the laboratories of the research-based pharmaceutical industry are brimming with breakthroughs. Our industry will certainly make more progress in controlling disease over the next two decades than we made over the previous two millennia.

And while a range of groups, from universities to corporations, do biomedical research, it is private companies, like Pfizer, that account for 95 per cent of all new medicines.

First and foremost, the government's focus on strengthening intellectual property rights is the right direction for China.

In addition to strengthened IPR protection, China's pharmaceutical industry would also benefit from a rethinking of the balance between risk and rewards, innovation and pricing.

Some believe that stronger patent protection and significant premiums for innovative products would put medicines out of reach of the hundreds of millions of China's citizens who need more access today.

Again, and this is counter-intuitive, our experience shows the opposite to be more true.

A system balancing exclusivity with generic access and depending on the free market to establish pricing adds, over time, numerous new medicines to the public domain. Such a system also puts pressure on research-based pharmaceutical companies to innovate.

Now, let me talk about the long-term benefit in streamlining the regulatory process in China.

China has made great strides in defining a transparent and consistent regulatory process when it comes to the approval of new medicines.

I believe there is room for streamlining both the approval and registration process and, along with it, the process for reimbursement. With so many new medicines entering the market every year, authorities need to ensure that patients have access to the newest medicines possible.

Vast potential

I have tried to focus on how China can unleash the vast potential of its life-science skills. Ultimately, the path China will take in life sciences hinges on the vision the nation has for pharmaceutical and biotechnology research.

By 2010, China will be a top-five pharmaceutical market. By 2050, this nation is projected by some to be the world's largest market for pharmaceuticals. The question is: Can China become not just the world's largest consumer of medicines, but also, its pre-eminent power in medical innovation?

I believe it can, and to get there, China can begin, now, to unleash the full potential of its fragmented pharmaceutical and biotech sector. I believe that the small pharmaceutical and biotech companies that now pack into China's research parks don't want to stay small forever. They want to "grow up" and become major players in what is clearly an industry of the future.

For Pfizer, and for all innovative healthcare companies, an environment of strong competition and a level playing field for all competitors will be best for everyone starting with patients.

As China has shown the world so clearly, competition drives innovation and for patients awaiting new cures there can never be enough innovation.

It is in everyone's interest to see a vibrant research-based pharmaceutical industry take shape in China and to build this industry into one of the drivers of this nation's innovation society.

I look forward to the day when many new medicines will come stamped, "Discovered in China." That day will be a bright one both for China and for patients, everywhere.

The article is an excerpt from a speech delivered by Dr Hank A. McKinnell, Jr, Chairman and Chief Executive Officer, Pfizer Inc, during his visit to

Shanghai on July 21.

(China Daily 07/26/2006 page9)