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5 years, 1 month ago

Will China become a world leader in health life sciences and usurp the US?

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Will China become a world leader in health life sciences and usurp the US?
 
After World War II, the US captured the global lead from Europe in life sciences thanks to the large American domestic market, its strong network of university research laboratories, competent regulation, effective pricing regimens and generous federal R&D funding.
 
America’s leadership in life sciences is slipping
 
Over the past two decades, as China has systematically upgraded its economy from low-grade to high-grade production, it has come to realize the significance of the health life sciences and Beijing has become determined to win a larger share of the industry’s activity. During this time America’s leadership position in the life sciences industry has slipped.
 
  • Will China usurp the US and become a world leader in health life sciences?
  • What could the erosion of the life sciences industry mean for the US economy?
  • What can American life sciences corporations do to reduce or slow their market slippage?
 
Health life sciences
 
Health life sciences refers to the application of biology and technology to improve healthcare. It includes biopharmaceuticals, medical technology, genomics, diagnostics and digital health and is one of the future growth industries positioned to radically change the delivery of healthcare, substantially reduce the morbidity and mortality of a range of chronic and incurable diseases and save healthcare systems billions. The life sciences industry plays a key role in supporting the economies of the US and China as well as other nations and helps them to compete internationally. The sector requires a complex ecosystem, which integrates high-tech research, large, long-term investments of capital in the face of significant technological, market and regulatory risks, skilled labour, specific manufacturing skills, intellectual property (IP) protection and policy support. According to a 2019 Deloitte’s report on health life sciences the global market size of the industry is projected to grow from US$7.7trn in 2017 to US$10trn by 2022.
 
Reason’s for America’s slippage
 
America’s slippage in its life sciences industry is due to:
  • Increased fair competition from a number of nations, including the UK, and increased unfair competition from China who aggressively steals US IP to piggyback on American life-sciences innovations in order to benefit from enhanced therapies without having to pay their fair share for the costly R&D. China then uses its government’s monopsony power as a purchaser of life sciences offerings to limit the prices of US and other international firms
  • Recent US Administrations’ lukewarm support for the industry. Federal biomedical research funding has been cut in real terms. Reimbursement policies are changing to a value-based approach and pricing policies have tightened. Such policies create uncertainty regarding the government’s willingness to pay for future treatments and the research necessary to discover and bring them to market. The US is also falling behind in providing innovative tax incentives for the industry
  • American life sciences corporations’ reluctance and inability to adapt their strategies and business models to changing international markets.
 
Permanent economic damage
 
The Chinese competitive threat is real and significant. It is important for the US to maintain a competitive life-sciences sector since it generates high-skilled, high-paying jobs and its product offerings are sold throughout the world and the industry is a key component of the US traded economy. A weaker American competitive position in the life sciences could mean a lower value for the dollar, a larger trade deficit, plant closures and job losses. China and other nations, which are gaining global market share at the expense of the US, could cause significant damage to the American life-sciences industry.
 
Creating a health life sciences industry is challenging enough, recreating one after it has lost significant market share is even more challenging, if not impossible. We suggest that to reduce to possibility of this happening US life sciences corporations might consider changing the mindsets of their leaders and demonstrate a greater willingness to learn from and engage with Chinese start-ups, especially those in adjacent industries with AI and machine learning capabilities and experience. The cost of doing this will be to give up some IP, which might be worth doing given the potential financial benefits from such a strategy.
 
A “bullish” American perspective
 
The generally accepted Western perspective is that the US excels at visionary research and moon-shot projects and will always be the incubator for big ideas. The reasons for this include: (i) American education is open, encourages individuality and rewards curiosity and its universities have consistently produced vast numbers of innovative discoveries in the life sciences, (ii) American scientists have been awarded the majority of Nobel prizes in physiology/medicine, physics and chemistry, and (iii)  America is the richest nation in the world. This suggests that there are no apparent reasons why the US should not continue as a world leader in health life sciences.

By contrast, China has stolen and copied America’s intellectual property (IP) for years and is a smaller economy fraught with politico-economic challenges. Although China’s economic growth has lifted hundreds of millions of people out of poverty, China remains a developing country with significant numbers of people still living below the nation’s official poverty level. Beijing has challenges balancing population growth with the country’s natural resources, growing income inequality and a substantial rise in pollution throughout the country. Further, China’s educational system is conformists and not geared to producing scientists known for making breakthrough discoveries. This is borne-out by the fact that China only has been awarded two Nobel prizes for the sciences: one for physiology and medicine in 2015 and another for physics in 2009.
 
Copiers rather than inventors
 
Over the past four decades Chinese scientists, with the tacit support of Beijing, have aggressively and unethically stolen Western technologies and scientific knowhow. According to findings of a 2017 research report from the US Intellectual Property (IP) Commission entitled The Theft of American Intellectual Property, the magnitude of "Chinese theft of American IP currently costs between US$225bn and US$600bn annually."

America’s response to China’s IP theft has been to adopt the moral high-ground, dismiss China as an unscrupulous nation not worthy of investment and focus on commercialising its discoveries with “single bullet” product offerings and marketing them in wealthy regions of the world, predominantly North America, Europe and Japan. Over the past decade, this strategy has been supported by a US Bull market in equities, which started in 2009, outpaced economic growth in most developed nations and led to a significant degree of satisfaction among C-suites and boards of directors of US life sciences corporations, which did not perceive any need to adjust their strategies and business models despite some market slippage and changing market conditions.
 
Confucian values support conformism rather than discovery
 
Although China has benefitted economically from the theft of American IP, the American view tends to be that China is unlikely to become a world leader in the life sciences because the nation has not produced a cadre of innovative scientists and its education system is unlikely to do so in the near to medium term. Chinese education encourages students to follow rather than to question. Indeed, Confucian values remain a significant influence on Chinese education and play an important role in forming the Chinese character, behaviour and way of living. Confucianism aims to create harmony through adherence to three core values: (i) filial piety and respect for your parents and elders, (ii)  humaneness, the care and concern for other human beings, and (iii) respect for ritual. According to Confucian principles, “a good scholar will make an official”. Thus, some of China’s best scientists leave their laboratories for administrative positions.
 
Further, Chinese universities tend to bind students to their professors who expect unquestioning loyalty. Scepticism towards generally accepted scientific theories is discouraged, especially when they are held by senior academics. Also, China unlike the US, does not tolerate “failure”, and this incentivises Chinese scientists to conduct “safe” research that yields quick and “achievable” outcomes. All these factors conspire to discourage high risk creative scientific activity and encourages safer, “copycat” research endeavours.
 
The strength of the US$ and the US economy
 
America’s global leadership in the life sciences is supported by the fact that the US is the world’s richest and most powerful nation. In nominal terms (i.e., without adjustment for local purchasing power) the US and China have GDPs of US$19trn and US$12trn respectively and  populations of 326m and 1.4bn. Further, the US has an “unrivalled” global trading position: the US dollar is the strongest currency in the world and dominates the overwhelming percentage of all international trade settlements: 70% of all world trade transactions are in US$, 20% in €’s and the rest in Asian currencies, particularly the Japanese ¥ and increasingly the Chinese ¥. Also, US dollar holdings make up the largest share of foreign exchange reserves and the effect of this is to maintain the high value of the US$ compared with other currencies and provide US corporations with significant profits, US citizens with cheap imports and the US government with the ability to refinance its debts at low interest rates.
 
An Asian context
 
We suggest that it is increasingly important for American health life science professionals to get a better understanding of China and Asia. The Asian perspective described here is drawn from three recent books: The New Silk Roads: The Present and Future of the World by Peter Frankopan, The Future is Asian by Parag Khanna and AI Super-Powers: China, Silicon Valley and the New World Order published in late 2018 by Kai-Fu Lee.  

Crudely put: the 19th century was British, the 20th century American and the 21st century is expected to be Asian. The era of breakthrough scientific discoveries and stealing American IP is over, and we have entered an “age of implementation”, which favours tenacious market driven Chinese firms. “Asians will determine their own future; and as they collectively assert their interests around the world, they will determine ours as well”, says Khanna. This is starkly different to American prognosticators who assume that the world will be made in the American image, sharing American values and economics.
Asian view of the US$

Some observers suggest that there are chips appearing in the giant US edifice of international trade described above. The current US Administration’s policies have triggered and intensified discussions in Europe and Asia about America’s dominant global economic position and suggest that the US$ might be starting to weaken against a basket of currencies as China, Russia, Iran, Turkey and other nations, choose to use local currencies for some international trade transactions, which they then convert into gold. Further, central banks are tightening their monetary policies and adjusting their bond purchasing strategies. A common US view is that such trading activities are so small relative to global US$ transactions they will neither weaken the US$ nor dent America’s pre-eminent global trading position.
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Can Western companies engage with and benefit from China?
Notwithstanding, replacing the US$ with the Chinese ¥ seems to be part of Beijing’s long-term strategy, as Beijing encourages its trading partners to accept the ¥ as payment for Chinese exports. China’s recent trading agreements with Canada and Qatar for instance have been based upon local currencies rather than the US$. China, which is the biggest importer of oil, is preparing to launch a crude oil futures contract denominated in Chinese ¥ and convertible into gold. European, Asian and Middle Eastern countries have embarked on domestic programs to exclude the US$ from international trade transactions. Also, oil exporting countries are increasingly able to choose which currencies they wish to trade in. At the same time, oil-producing countries no longer seem so interested in turning their revenues into “petrodollars. For the past decade, President Putin of Russia has been calling for the international community to re-evaluate the US$ as the international reserve currency. All this and more suggests that increasingly, emerging economies may transition from their undivided dependence on the US$ for international trade settlement to a multipolar monetary arrangement. Whilst small relative to the full extent of global trade, it is instructive to view these changes within a broader Asian context.
 
The US has had little exposure to China and Asia
 
One outcome of America’s pre-eminent global economic position and the financial success of American life sciences companies is that corporate leaders and health professionals tend to have little or no in-depth exposure to Chinese and Asian culture and markets. For example, few Fortune 500 senior executives have worked in China; few American life sciences corporations have sought in-depth briefings of Asian markets and few US students and scientists have studied or carried out research in China. Instead, American life science corporate leaders tend to be US-centric; they condemn China for its IP theft and recommend not to invest in China because a condition of doing so is that you are obliged to part with some of your IP.
 
Asia a potential economic powerhouse
 
This distancing has resulted in life science professionals “misdiagnosing” China in a number of ways, which we will discuss. One misdiagnosis is to conflate China with Asia. Asia is comprised of 48 countries. East Asia includes China, Japan and North and South Korea. South Asia includes India, Pakistan and Bangladesh. South East Asia includes Indonesia, Malaysia, Philippines, Singapore and Thailand. These three sub-regions link 5bn people through trade, finance, infrastructure and diplomatic networks, which together represent 40% of the world’s GDP. China has taken a lead in building new infrastructure across Asia - the new Silk Roads - but will not necessarily lead this vast region alone. Rather, as Khanna reminds us, “Asia is rapidly returning to the centuries-old patterns of commercial and cultural exchanges, which thrived long before European colonialism and American dominance”.
 
The difference between IP theft and imitating ‘what works’

Market driven Chinese start-ups, supported by the government, are expected to transform China into a world leader in health life sciences by 2030. The thing to understand about China is that it is not just a few start-ups that steal and copy American IP but thousands, which then aggressively compete. This entails cutting prices, improving and adapting their product offerings, developing leaner operations and aligning their strategies and business models to the demands of different markets. The vast scale of this activity has led to a unique cadre of über agile Chinese entrepreneurs, who imitate successful business models and then engage in value added culture-specific product development processes. This has led to Chinese companies becoming exemplary “market driven” implementors. By contrast American companies tend to be “mission driven” and operate a “single bullet” business model and are either slow or reluctant to adapt to the demands of different markets. This results in US discoveries being exploited in Asia by Chinese rather than American companies. We suggest that there are significant benefits to be derived from American life sciences companies developing joint ventures with market driven Chinese start-ups even if it means surrendering some IP.
 
As a postscript, it is worth pointing out that the first Chinese patent was only granted in 1985 and recently, after decades of widespread theft, IP protection in China has improved at lightning speed. As Chinese companies issue more patents, the keener they are to protect them. According to the World Intellectual Property Organization in 2017 China accounted for 44% of the world’s patent filings, twice as many as America.
 
US inventions exploited in Asia by Chinese start-ups
 
An illustration of a disruptive life science technology invented in the US but exploited faster and more extensively in China is CRISPR-Cas9 (an acronym for Clustered Regularly Interspaced Short Palindromic Repeats), which is generally considered to be the most important invention in the history of biology.  The initial discovery was made in 2012 by a collaboration between Jennifer Doudna, at the University of California, Berkeley, USA and French scientist Emmanuelle Charpentier. Applications of CRISPR technology are essentially as infinite as the forms of life itself. Since its discovery, modified versions of the technology by Chinese scientists have found a widespread use to engineer genomes and to activate or to repress the expression of genes and launch numerous clinical studies to test CRISPR-Cas9 in humans.
 
Virtuous circle
 
Notwithstanding, transforming CRISPR genomic editing technologies into medical therapies requires mountains of data and advanced AI capabilities. China has both. The more genomic data you have the more efficacious clinical outcomes are likely to be. The better your clinical outcomes the more data you can collect. The more data you collect the more talent you attract. The more talent you attract the better the clinical outcomes. China is better positioned than America to benefit from this virtuous circle. China’s less than stringent regulation with regards to privacy and storing personal data gives it a distinct competitive advantage over American and Western life sciences companies. China also has more efficient means than any Western nation for collecting and processing vast amounts of personal data.
 
Collecting personal data

Any casual visitor to China will tell you that one of the striking differences with Western nations is that the Chinese economy is cashless and card-less. Citizens pay for everything and indeed organise their entire lives with a mobile app called WeChat, a multi-purpose messaging, social media and mobile payment app developed by Tencent. WeChat was first released in 2011 and by 2018 it was one of the world's largest standalone mobile apps, with nearly 1bn daily users who every day send about 38bn messages. Not only is WeChat China's biggest social network it is also where people turn to book a taxi, hotel or a flight, order food, make a doctor’s appointment, file police reports, do their banking or find a date and has become an integral part of the daily life of every Chinese citizen. State-run media and government agencies also have official WeChat accounts, where they can directly communicate with users. Further, an initiative is underway to integrate WeChat with China’s electronic ID system. It may be hard for people outside of China to grasp just how influential WeChat has become. There is nothing in any other country that is comparable to WeChat, which captures an unprecedented amount of data on citizens that no other company elsewhere in the world can match. This represents a significant competitive advantage. Applying AI and machine learning technologies to such vast data sets provide better and deeper insights and patterns. These vast and escalating data sets, and advanced AI capabilities for manipulating  them, give China a significant competitive advantage in the high growth life sciences industry, which  increasingly has become digital.
 
 Processing personal data
 
AI is another example of  a technology invented in the West and implemented much faster in China. The “watershed” moment for China was in 2017, when AlphaGo became the first computer program to defeat a world champion at the ancient Chinese game of Go. Since then, China has been gripped by “AI fever”.

Until recently AI machines were not much better than trained professionals at spotting anomalies and mutations in assays and data. This changed in early-2,000 with the ubiquitous spread of mobile telephony and the confluence of vast data sets and the development of neural networks, which made the onerous task of “teaching” a computer rules redundant. Neural networks allow computers to approximate the activities of the human brain. So, instead of teaching a computer rules, you simply feed it with vast amounts of data and neural networking and deep learning technologies identify anomalies and mutations in seconds with exquisite accuracy.

The Beijing Genetics Institute

An illustration of the scale and seriousness of China’s intent to become a world-leader in life sciences and to eclipse similar initiatives by the US is the 2016 launch of a US$9bn-15-year national initiative to develop technologies for interpreting genomic and healthcare data. This national endeavour followed the launch in 1999 of the Beijing Genomics Institute (BGI), which today is a recognised global leader in next generation genetic sequencing. In 2010, BGI received US$1.5bn from the China Development Bank, recruited 4,000 scientists and established branches in the US and Europe. In 2016 BGI created the China National GeneBank (CNGB) on a 47,500sq.m site in Shenzhen, which benefits from BGI’s high-throughput sequencing and bio-informatics capacities. CNGB officially opened in July 2018 and is the largest gene bank of its kind in the world. Dozens of refrigerators can store samples at temperatures as low as minus 200 degrees Celsius, while researchers have access to 150 domestically developed desktop gene sequencing machines and a US$20m Revolocity machine, known as a “super­sequencer”. The Gene Bank enables the development of novel healthcare therapies that address large, fast growing and underserved global markets and to further our understanding of genomic mechanisms of life. Not only has CNGB amassed millions of bio-samples it has storage capacity for 20 petabytes (20m gigabytes) of data, which are expected to increase to 500 petabytes in the near future. The CNGB represents the new generation of a genetic resource repository, bioinformatics database, knowledge database and a tool library, “to systematically store, read, understand, write, and apply genetic data,” says Mei Yonghong, its Director.

US life sciences benefit by engaging with Chinese companies

Lee, in his book about AI, suggests that it is not so much Beijing’s policies that keep American firms out of the Chinese markets, but American corporate mindsets, which misdiagnose Chinese markets, do not adapt to local conditions and fail to understand the commercial potential of Chinese start-ups and consequently get squeezed out of the Chinese market.

This is what happened as Google failed to Baidu, Uber failed to DiDi, Twitter failed to Weibo, eBay failed to TaoBao, and Groupon failed to Meituan-Dianping. We briefly describe the demise of Groupon and point to lessons, which can be learned from it.
 
Lessons from Groupon’s failure in China

Groupon failed to adapt its core offering when group discounts in China faded in popularity and as a consequence it rapidly lost market share. Meituan, founded in 2010 as a Chinese copy of Groupon, quickly adapted to changing market conditions by extending its offerings to include cinema tickets, domestic tourism and more importantly, “online-to-offline” (O2O) services such as food and grocery delivery, which were growing rapidly.
 
In October 2015, Meituan merged with Dianping, another Chinese copy of Groupon, to become Meituan-Dianping the world's largest online and on-demand booking and delivery platform. The company has become what is known as a transactional super app, which amalgamates lifestyle services that connect hundreds of millions of customers to local businesses. It has over 180m monthly active users and 600m registered users and services up to 10m daily orders and deliveries. In the first half of 2018 Meituan-Dianping facilitated 27.7bn transactions (worth US$33.8bn) for more than 350m people in 2,800 cities. That is 1,783 enabled services every second of every day, with each customer using the company’s services an average of three times a week. Meituan-Dianping IPO’d in 2018 on the Hong Kong stock exchange and raised US$4.2bn with a market cap of US$43bn.
 
Efficiency also drives innovation. Meituan-Dianping’s Smart Dispatch System, introduced in 2015, schedules which of its 600,000 motorbike riders will deliver the millions of food orders it fulfils daily. It now calculates 2.9bn route plans every hour to optimize a rider’s ability to pick up and drop off up to 10 orders at once in the shortest time and distance. Since Smart Dispatch launched, it has reduced average delivery time by more than 30% and riders complete 30 orders a day, up from 20, increasing their income. In 2019, the American business magazine Fast Company ranked Meituan-Dianping as the most innovative company in the world.
 
Takeaways
 
Although Meituan-Dianping and other companies we mention may not be well known in the West and are not in the health life sciences industry, they are engaged in highly complex digital operations disguised as simple transactions, which enhance the real-world experiences of hundreds of millions of consumers and millions of merchants. To achieve this the companies have amassed vast amounts of data and have perfected AI and machine learning technologies, which make millions of exquisitely accurate  decisions every hour, 24-7, 365 days a year. Such AI competences are central to the advancement of health life sciences. American life science professionals might muse on the adage: “make your greatest enemy your best friend” and consider trading some of their IP to joint venture with fast growing agile Chinese data companies in a strategy to restore and enhance their market positions.
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6 years, 6 months ago

The global competition to translate genomic data into personal medical therapies - PART 2

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  • Many people still view China as a ‘copycat’ economy, but this is rapidly changing
  • China is:
    • Pursuing a multi-billion dollar-15 year strategy to become a world leader in genomic engineering and personalized medicine
    • Systematically upgrading and incentivizing its large and growing pool of scientists who are making important breakthroughs in the life sciences
    • Empowering and encouraging state owned and private life science companies to own and control the capacity to transform genomic, clinical and personal data into personalized medicines
  • The difference in national approaches to individualism and privacy confers an added competitive advantage to China and its life science ambitions
  • China’s approach to individualism and privacy issues could have implications for society


The global competition to translate genomic data into personal medical therapies

 

PART 2
 
China is no longer a low cost ‘copycat’ economy. Indeed, it has bold plans to become a preeminent global force in genomic engineering to prevent and manage devastating and costly diseases. Here we briefly describe aspects of China’s multibillion-dollar, government-backed initiative, to own and control significant capacity to transform genomic data into precision medicines. This is not only a ‘numbers’ game. China’s drive to achieve its life science ambitions is also advantaged by a different approach to ‘individualism’ and privacy compared to that of the US; and this could have far-reaching implications for future civilizations.

Uneven playing field
Genomic engineering and precision medicine have the potential to revolutionize how we prevent and treat intractable diseases. Who owns the intellectual property associated with genomic engineering, and who first exploits it, will reap significant commercial benefits in the future. However, genomic technologies are not like any other. This is because genetically modifying human genomes could trigger genetic changes across future generations. Misuse of such technologies therefore could result in serious harm for individuals and their families. On the other hand, over regulation of genomic engineering could slow or even derail the prevention and treatment of devastating and costly diseases. Establishing a balance, which supports measures to mitigate misuse of genomic technologies while allowing the advancement of precision medicine is critical. However, this has proven difficult to establish internationally.

Chinese scientists have crossed an ethical line
Chinese culture interprets individualism and privacy differently to American culture, and therefore China responds differently to certain ethical standards compared to the US and some other Western nations. Indeed, national differences were ignited in 2012 when Chinese researchers published their findings of the world’s first endeavors to modify the genomes of human embryos to confer genetic resistance to certain diseases. Because such modifications are heritable critics argued that the Chinese scientists crossed a significant ethical line, and this was the start of a “slippery slope”, which could eventually lead to the creation of a two-tiered society, with elite citizens genetically engineered to be smarter, healthier and to live longer, and an underclass of biologically run-of-the-mill human beings.

International code of conduct called for but not adhered to
2 prominent scientific journals, Nature and Science, rejected the Chinese research papers reporting world-first scientific breakthroughs on ethical grounds. Subsequently, Nature published a note calling for a global moratorium on the genetic modification of human embryos, suggesting that there are “grave concerns” about the ethics and safety of the technology. 40 countries have banned genetically modifying human embryos. In 2016, a report from the UK’s Nuffield Council on Bioethics stressed the importance of an internationally agreed ethical code of conduct before genomic engineering develops further.
 
In 2017 an influential US science advisory group formed by the National Academy of Sciences and the National Academy of Medicine gave ‘lukewarm’ support to the modification of human embryos to prevent, “serious diseases and disabilities” in cases only where there are no other “reasonable alternatives”. The French oppose genomic modification, the Dutch and the Swedes support it, and a recent Nature editorial suggested that the EU is, “habitually paralyzed whenever genetic modification is discussed”. In the meantime, clinical studies, which involve genomic engineering, are advancing at a pace in China.

With regard to genome testing, western human rights activists have warned that China is targeting vulnerable groups and minorities to help build vast genomic databases without appropriate protection for individuals. Those include migrant workers, political dissidents and ethnic or religious minorities such as the Muslim Uighurs in China's far western Xinjiang region. Xinjiang authorities are reported to have invested some US$10bn in advanced sequencing equipment to enhance the collection and indexing of these data.

Different national interpretations of ‘individualism’
‘Individualism’, which is at the core of ethical considerations of genomic engineering, is challenging to define because of its different cultural, political and social interpretations. For example, following the French Revolution, individualisme was used pejoratively in France to signify the sources of social dissolution and anarchy, and the elevation of individual interests above those of the collective. The contemporary Chinese interpretation of individualism is similar to the early 19th century French interpretation. It does not stress a person’s uniqueness and separation from the State, but emphasizes an individual’s social; contract and harmony with the State. By contrast, American individualism is perceived as an inalienable natural right of all citizens, and independent of the State.

Further, American individuals are actively encouraged to challenge and influence the government and its regulatory bodies, whereas in China citizens are expected to unquestionably support the State. China is a one party state, where individuals generally accept that their government and its leaders represent their higher interests, and most citizens therefore accept the fact that they are not expected to challenge and influence policies determined by the State and its leaders. This difference provides China with a significant competitive advantage in its endeavors to become a world leader in the life sciences,
 
Human capital

By 2025, some 2bn human genomes could be sequenced. This not only presents ethical challenges, but also significant human capital challenges. The development of personalized medicines is predicated upon the ability to aggregate and process vast amounts of individual genomic, physiological, health, environmental and lifestyle data. This requires next generation sequencing technologies, smart AI systems, and advanced data managers of which there is a global shortage. Thus, the cultivation and recruitment of appropriate human capital is central to competing within the rapidly evolving international genomic engineering marketplace. The fact that China has a more efficacious strategy to achieve this than the US and other Western democracies provides it with another significant competitive advantage.

STEM graduates
Since the turn of the century, China has been engaged in a silent revolution to substantially increase its pool of graduates in science, technology, engineering and mathematics (STEM), while the pool of such graduates in the US and other Western democracies has been shrinking. In 2016, China was building the equivalent of almost one university a week, which has resulted in a significant shift in the world's population of STEM graduates. According to the World Economic Forum, in 2016, the number of people graduating in China and India were respectively 4.7m and 2.6m, while in the US only 568,000 graduated. In 2013, 40% of all Chinese graduates finished a degree in STEM, over twice the share of that in US universities. In 2016, India had the most graduates of any country worldwide with 78m, China followed closely with 77.7m, and the US came third with 67m graduates.

University education thriving in China and struggling in the West
In addition to China being ahead of both the US and Europe in producing STEM graduates; the gap behind the top 2 countries and the US is widening. Projections suggest that by 2030 the number of 25 to 34-year-old graduates in China will increase by a further 300%, compared with an expected rise of around 30% in the US and Europe. In the US students have been struggling to afford university fees, and most European countries have put a brake on expanding their universities by either not making public investments or restricting universities to raise money themselves.
 
The increasing impact of Chinese life sciences
China's rapid expansion in STEM graduates suggests that the future might be different to the past. Today, China has more graduate researchers than any other country, and it is rapidly catching up with the US in the number of scientific papers published. The first published papers to describe genetic modifications of human embryos came from Chinese scientists. 

Further, according to the World Intellectual Property Organization, domestic patent applications inside China have soared from zero at the start of the 21st century to some 928,000 in 2014: 40% more than the US’s 579,000, and almost 3 times that of Japan’s 326,000.
 
China’s strategy to reverse the brain drain
Complementing China’s prioritization of domestic STEM education is its “Qianren Jihua” (Thousand Talents) strategy. This, established in the wake of the 2008 global financial crisis to reverse China’s brain drain, trawls the world to seek and attract highly skilled human capital to China by offering them incentives. Qianren Jihua’s objective is to encourage STEM qualified Chinese ex patriots to return to China, and encourage those who already reside in China to stay, and together help create an internationally competitive university sector by increasing the production of world-class research to support China’s plans to dominate precision medicine and life sciences.
 
Government commitment

In 2016, China announced plans for a multi-billion dollar project to enhance its competitiveness by becoming a global leader in molecular science and genomics. China is committed to supporting at least three principal institutions, including the Beijing Genomics Institute (BGI), to sequence the genomes of many millions.
 
In addition to investments at home, China also is investing in centers similar to that of BGI abroad. Over the past 2 years China has invested more than US$110bn on technology M&A deals, which it justifies by suggesting that emerging technologies are, “the main battlefields of the economy”. Early in 2017 BGI announced the launch of a US Innovation Center, co-located in Seattle and San Jose. The Seattle organization is focused on precision medicine and includes collaborations with the University of Washington, the Allen Institute for Brain Science, and the Bill and Melinda Gates Foundation. The San Jose facility, where BGI already has a laboratory employing over 100, supports its ambitions to develop next-generation sequencing technologies, which until now have been dominated by the US sequencing company Illumina.

Changing structure of China’s economy
Some suggest that China’s rise on the world life sciences stage will be short lived because the nation is in the midst of a challenging transition to a slower-growing, consumption-driven economy, and therefore will not be able to sustain such levels of investment; and this will dent its ambition to become a global player in genomic science. An alternative argument suggests slower growth forces China to act smarter, and this is what drives its precision medicine ambitions.

Between 1985 and 2015, China’s annual GDP rose, on average, by 9.4%. Fuelling this growth was a steady supply of workers entering the labour force and massive government led infrastructure investments. Now, because of China’s ageing population, its labour capacity has peaked and started to decline. Without labour force expansion, and investment constrained by debt, China is obliged to rely more heavily on innovation to improve its productivity. And this drives, rather than slows, China’s strategy to become a world leader in genomic technologies and personalized medicine.
 
China’s economic growth is slowing, but its production of scientific research is growing
Although China’s economy is slowing, it is still comparatively large. In 2000, China spent as much on R&D as France; now it invests more in genomics than the EU, when adjusted for the purchasing power of its currency. Today, China produces more research articles than any other nation, apart from the US, and its authors’ feature on around 20% of the world’s most-cited peer reviewed papers. Top Chinese scientific institutions are breaking into lists of the world’s best, and the nation has created some unparalleled research facilities. Even now, every 16 weeks China produces a Greece-size economy, and doubles the entire size of its economy every 7 years. Today, China has an economy similar in size to that of the US, and most projections suggest that, over the next 2 decades, China’s economy will dwarf that of the US.
 
Takeaways

China is cloning its successful strategy to own and control significant mineral and mining rights to the life sciences. Over the past 20 years China has actively pursued mining deals in different global geographies, and now controls significant mining rights and mineral assets in Africa and a few other countries. This allows China to affect the aggregate supply and world market prices of certain natural resources. Now, China is cloning this commercially successful strategy to the life sciences, and has empowered and encouraged a number of state owned and private companies to own and control genomic engineering and precision medicine. China’s single-minded determination to become a world leader in life sciences, and its interpretation of individualism and privacy issues could have far reaching implications for the future of humanity.
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6 years, 7 months ago

The global competition to translate genomic data into personal medical therapies - PART 1

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human genome project
large-scale data management
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  • In 2003 the US first discovered the genome and became the preeminent nation in genomics
  • This could change
  • World power and influence have moved East
  • China has invested heavily in genomic technologies and established itself as a significant competitive force in precision medicine
  • Ownership of intellectual property and knowhow is key to driving national wealth 
 

The global competition to translate genomic data into personal medical therapies

 

PART 1

Professor Dame Sally Davies, England’s Chief Medical Officer, is right. (Genomics) “has the potential to change medicine forever. . . . The age of precision medicine is now, and the NHS must act fast to keep its place at the forefront of global science.”
 
It is doubtful whether the UK will be able to maintain its place as a global frontrunner in genomics and personalized medicine. It is even doubtful whether the US, the first nation to discover the genome, and which became preeminent in genomic research, will be able to maintain its position. China, with its well-funded strategy to become the world’s leader in genomics and targeted therapies, is likely to usurp the UK and the US in the next decade.
 
This Commentary is in 2 parts. Part 1 provides a brief description of the global scientific competition between nation states to turn genomic data into medical benefits. China’s rise, which is described, could have significant implications for the future ownership of medical innovations, data protection, and bio-security. Part 2, which follows in 2 weeks, describes some of the ethical, privacy, human capital and economic challenges associated with transforming genomic data into effective personal therapies.
  
Turning genomic data into medical benefits
 
Turning genomic data into medical benefits is very demanding. It requires a committed government willing and able to spend billions, a deep understanding of the relationship between genes and physiological traits, next generation sequencing technologies, artificial intelligence (AI) systems to identify patterns in petabytes (1 petabyte is equivalent to 1m gigabytes) of complex data, world-class bio-informaticians, who are in short supply; comprehensive and sophisticated bio depositories, a living bio bank, a secure data center, digitization synthesis and editing platforms, and petabytes of both genomic, clinical, and personal data. Before describing how the UK, US and China are endeavoring to transform genomic data into personal medicine, let us refresh our understanding of genomics.
  
Genomics, the Human Genomic Project and epigenetics
 
It is widely understood that your genes are responsible for passing specific features or diseases from one generation to the next via DNA, and genetics is the study of the way this is done. However, it is less widely known that your genes are influenced by environmental and other factors. Scientists have demonstrated that inherited genes are not static, and lifestyles and environmental factors can precipitate a chemical reaction within your body that could permanently alter the way your genes react. This environmentally triggered gene expression, or epigenetic imprint, can be bad, such as a disease; or good, such as a tolerant predisposition. Epigenetics is still developing as an area of research, but it has demonstrated that preventing and managing disease is as much to do with lifestyles and the environment, as it is to do with inherited genes and drugs. If environmental exposure can trigger a chemical change in your genes that results in the onset of disease, then scientists might be able to pharmacologically manipulate the same mechanisms in order to reverse the disease.
 
DNA is constantly subject to mutations, which can lead to missing or malformed proteins, and that can lead to disease. You all start your lives with some mutations, which are inherited from your parents, and are called germ-line mutations. However, you can also acquire mutations during your lifetime. Some happen during cell division, when DNA gets duplicated, other mutations are caused when environmental factors including, UV radiation, chemicals, and viruses damage DNA.

You have a complete set of genes in almost every healthy cell in your body. One set of all these genes, (plus the DNA between them), is called a genome. The genome is the collection of 20,000 genes, including 3.2bn letters of DNA, which make up an individual. We all share about 99.8% of the genome. The secrets of your individuality, and also of the diseases you are prone to, lie in the other 0.2%, which is about 3 or 4m letters of DNA. The genome is known as ‘the blueprint’ of life’, and genomics is the study of the whole genome, and how it works. Whole genome sequencing (WGS) is the process of determining the complete DNA sequence of an organism's genome at a point in time.
 
‘The Human Genome Project’ officially began in 1990 as an international research effort to determine a complete and accurate sequence of the 3bn DNA base pairs, which make up the human genome, and to find all of the estimated 20 to 25,000 human genes. The project was completed in April 2003. This first sequencing of the human genome took 13 years and cost some US$3bn. Today, it takes a couple of days to sequence a genome, and costs range from US$260 for targeted sequencing to some US$4,000 for WGS. Despite the rapidly improving capacity to read, sequence and edit the information contained in the human genome, we still do not understand most of the genome’s functions and how they impact our physiology and health.
 
Roger Kornberg explains the importance of genomics
 
Roger Kornberg, Professor of Structural Biology at Stanford University, and 2006 Nobel Laureate for Chemistry, explains the significance of sequencing the human genome, “The determination of the human genome sequence and the associated activity called genomics; and the purposes for which they may be put for medical uses, takes several forms. The knowledge of the sequence enables us to identify every component of the body responsible for all of the processes of life. In particular, to identify any component that is either defective or whose activity we may adjust to address a problem or a condition. So the human genome sequence makes available to us the entire array of potential targets for drug development. . . . . The second way in which the sequence and the associated science of genomics play an important role is in regard to individual variations. Not every human genome sequence is the same. There is a wide variation, which in the first instance is manifest in our different appearances and capabilities. But it goes far deeper because it is also reflected in our different responses to invasion by microorganisms, to the development of cancer and to our susceptibility to disease in general. It will ultimately be possible, by analyzing individual genome sequences to construct a profile of such susceptibilities for every individual, a profile of the response to pharmaceuticals for every individual, and thus to tailor medicines to the needs of individuals.” See video below.
 
 
UK’s endeavors to transform genomic data into personal therapies

In 2013 the UK government set up Genomics England, a company charged with sequencing 100,000 whole genomes by 2017. In 2014, the government announced a £78m deal with Illumina, a US sequencing company, to provide Genomics England with next generation whole genome sequencing services. At the same time the Wellcome Trust invested £27m in a state-of-the-art sequencing hub to enable Genomics England to become part of the Wellcome Trust’s Genome Campus in Hinxton, near Cambridge, England. In 2015, the UK government pledged £215m to Genomics England.
 
DNA testing and cancer
“DNA sequencing is simply the process of reading the code that is in any organism . . . It’s essentially a technology that allows us to extract DNA from a cell, or many cells, pass it through a sophisticated machine and read out the sequence for that organism or individual,” says David Bowtell, Professor and Head of the Cancer Genomics and Genetics Program at the Peter MacCallum Cancer Centre, Melbourne, Australia; see video below. “DNA testing has becomeincreasingly widespread because advances in technology have made the opportunity to sequence the DNA of individuals affordable and rapid  . . . DNA testing in the context of cancer can be useful to identify a genetic risk of cancer, and to help clinicians make therapeutic decisions for someone who has cancer,” says Bowtell, see video below.
 

What is DNA sequencing?


What are the advanteges of a person having a DNA test?

Need for National Genome Board
Despite significant investments by the UK government, Professor Davies, England’s Chief Medical Officer, complained in her 2017 Annual Report that genomic testing in the UK is like a “cottage industry” and recommended setting up a new National Genome Board tasked with making whole genome sequencing (WGS) standard practice in the NHS across cancer care, as well as some other areas of medicine, within the next 5 years.
 
USA’s endeavors to transform genomic data into personal therapies

In early 2015 President Obama announced plans to launch a $215m public-private precision medicine initiative, which involved the health records and DNA of 1m people, to leverage advances in genomics with the intention of accelerating biomedical discoveries in the hope of yielding more personalized medical treatments for patients. A White House spokesperson described this as “a game changer that holds the potential to revolutionize how we approach health in the US and around the world.”
 
Data management challenges
The American plan did not seek to create a single bio-bank, but instead chose a distributive approach that combines data from over 200 large on-going health studies, which together involves some 2m people. The ability of computer systems or software to exchange and make use of information stored in such diverse medical records, and numerous gene databases presents a significant challenge for the US plan. According to Bowtell, “Data sharing is widespread in an ethically appropriate way between research institutions and clinical groups. The main obstacles to more effective sharing of information are the very substantial informatics challenges. Often health systems have their own particular ways of coding information, which are not cross compatible between different jurisdictions. Hospitals are limited in their ability to capture information because it takes time and effort. Often information that could be useful to researchers, and ultimately to patients, is lost, just because the data are not being systematically collected.” See video below.
 
 
 
China’s endeavors to transform genomic data into personal therapies

In 2016, the Chinese government launched a US$9bn-15-year endeavor aimed at turning China into a global scientific leader by harnessing computing and AI technologies for interpreting genomic and health data.  This positions China to eclipse similar UK and US initiatives.
 
Virtuous circle
Transforming genomic data to medical therapies is more than a numbers race. Chinese scientists are gaining access to ever growing amounts of human genomic data, and developing the machine-learning capabilities required to transform these data into sophisticated diagnostics and therapeutics, which are expected to drive the economy of the future.  The more genomic data a nation has the better its potential clinical outcomes. The better a nation’s clinical outcomes the more data a nation can collect. The more data a nation collects the more talent a nation attracts. The more talent a nation attracts the better its clinical outcomes.
 
The Beijing Genomics Institute
In 2010 China became the global leader in DNA sequencing because of one company: the Beijing Genomics Institute (BGI), which was created in 1999 as a non-governmental independent research institute, then affiliated to the Chinese Academy of Sciences, in order to participate in the Human Genome Project as China's representative. In 2010, BGI received US$1.5bn from the China Development Bank, and established branches in the US and Europe. In 2011 BGI employed 4,000 scientists and technicians. While BGI has had a chequered history, today it is one of the world’s most comprehensive and sophisticated bio depositories.

The China National GeneBank
In 2016 BGI-Shenzhen established the China National GeneBank (CNGB) on a 47,500sq.m site. This is the first national gene bank to integrate a large-scale bio-repository and a genomic database, with a goal of enabling breakthroughs in human health research. The gene-bank is supported by BGI’s high-throughput sequencing and bio-informatics capacity, and will not only provide a repository for biological collection, but more importantly, it is expected to develop a novel platform to further understand genomic mechanisms of life. During the first phase of its development the CNGB will have saved more than 10m bio-samples, and have storage capacity for 20 petabytes (20m gigabytes) of data, which are expected to increase to 500 petabytes in the second phase of its development. The CNGB represents the new generation of a genetic resource repository, bioinformatics database, knowledge database and a tool library, “to systematically store, read, understand, write, and apply genetic data,” says Mei Yonghong, its Director.

Whole-genome sequencing for $100
The CNGB could also help to bring down the cost of genomic sequencing. It is currently possible to sequence an individual's entire genome for under US$1,000, but the CNGB aims to reduce the price to US$152. Meanwhile, researchers at Complete Genomics, a US company acquired by BGI in 2013, which has developed and commercialized a DNA sequencing platform for human genome sequencing and analysis, are pushing the technology further to enable whole-genome sequencing for US$100 per sample. China's share of the world's sequencing-capacity is estimated to be between 20% and 30%, which is lower than when BGI was in its heyday, but expected to increase fast. “Sequencing capacity is rising rapidly everywhere, but it's rising more rapidly in China than anywhere else,” says Richard Daly, CEO, DNAnexus, a US company, which supplies cloud platforms for large-scale genomics data.

The intersection of genomics and AI
Making sense of 1m human genomes is a major challenge, says Professor Jian Wang, former BGI President and co-founder, who has started another company called iCarbonX. Also based in Shenzhen, the company is at the intersection of genomics and AI. iCarbonX has raised more than US$600m, and plans to collect genomic data from more than 1m people, and complement these data with other biological information including changes in levels of proteins and metabolites. This is expected to allow iCarbonX to develop a new digital ecosystem, comprised of billions of connections between huge amounts of individuals’ biological, medical, behavioural and psychological data in order to understand how their genes interact and mutate, how diseases and aging manifest themselves in cells over time, how everyday lifestyle choices affect morbidity, and how these personal susceptibilities play a role in a wide range of treatments.

iCarbonX is expected to gather data from brain imaging, biosensors, and smart toilets, which will allow real-time monitoring of urine and faeces. The Company’s goal is to be able to study the evolution of our genome as we age and design personalized health predictions such as susceptibilities to diseases and tailored treatment options. iCarbonX’s endeavours are expected to dwarf efforts by other US Internet giants at the intersection of genomics and AI.
 
Ethical challenges

China’s single-minded objective to turn its knowhow and experience of genome sequencing into personal targeted medical therapies has made it a significant global competitive force in life sciences. However, precision medicine’s potential to revolutionize advances in how we treat diseases confers on it moral and ethical obligations. For personal therapies to be effective, it is important that genomic data are complemented with clinical and other personal data. This combination of data is as personal as personal information gets. There could be potential harm to the tested individual and family if genomic information from testing is misused. Reconciling therapy and privacy is important, because privacy issues concerning patients' genomic data can slow or derail the progression of novel personal therapies to prevent and manage intractable diseases. The stakes are high in terms of biosecurity, as genomic research is both therapeutic and a strategic element of national security. While it is crucial to leverage genomic data for future health, economic and biodefense capital, these data will also have to be appropriately managed and protected. Part 2 of this Commentary dives into these challenges a little deeper, and describes some of China’s competitive advantages in the race to become the world’s preeminent nation in genomics and precision medicine. 
 
Takeaways

Despite the endeavours of the UK and US to remain at the forefront of the international competition to transform genomic data into personalized medical therapies for some of the worlds most common and intractable diseases, it seems reasonable to assume that China is on the cusp of becoming the most dominant nation in novel personalized treatments. Notwithstanding, China’s determination to assume the global frontrunner position in genomic science might have blunted its concerns for some of the ethical issues, which surround the life sciences. To the extent that this might be the case the future of humanity might well differ significantly from the generally accepted western vision. 
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