China is boosting its healthcare spending and streamlining drug reviews, opening up vast opportunities for pharmaceutical companies. But as the world's second largest pharmaceutical market, when will it become stronger in drug research? The CEO of Merck, Stefan Oschmann, tells Global Business that co-innovation is the key.  

CHENG LEI BEIJING "The government is really accelerating investments in healthcare and also in promoting indigenous drug discovery and development. But some of the bottlenecks between lab and industry exist. There is sometimes a mindset which prefers publications over patents and there's also a shortage of leadership talent in pharmaceuticals. How is Merck contributing to China's innovation drive?"

STEFAN OSCHMANN, CEO MERCK GROUP "If you look at how much China is spending on healthcare, it's roughly six percent of GDP. For instance, India is spending as far as I know, less than two percent of GDP on healthcare. And we see a lot of growth when it comes to the position of Chinese companies in biopharma fences. There is no major Chinese company among the top 50 in the world. I think that's gonna change fast with our life science division. You're servicing Chinese companies by a similar genetics companies or innovative companies. And we think that they are impressive pipelines. China will make progress also because the government is putting so much more emphasis on intellectual property protection. China has become much more positive in that. And that respect I think that will enhance the competitiveness of Chinese companies of global scale."

CHENG LEI BEIJING "I'm glad you touched upon it, because China's newly passed foreign investment law tries to improve on those fronts, technology transfer and intellectual property rights protection, and on the whole, tries to promote more transparency and equality for foreign investors. What would you like to see in the details that would make international pharmaceutical company feel more comfortable investing more in China?"

STEFAN OSCHMANN, CEO MERCK GROUP "In the pharmaceutical field, we observed two factors. One is the regulatory framework and that's how drugs get approved in the country. And there the government has made a significant effort to upgrade this. I think they have basically tripled the number of reviewers and been seen much better time lines. The Chinese agency has also joined what it's called  'ICH'. That's the global body coordinating, regulatory, scientific standards. So that's very encouraging. And people would be very happy if China could further go along this path and accelerate the adoption of 'ICH' standards. You mentioned the intellectual property protection, China is not yet a paradise in that respect, I would say. But we see meaningful progress. We would like to encourage the government to carry on further that respect."

CHENG LEI BEIJING "What's being looks experience in China in technology transfer and IP?"

STEFAN OSCHMANN, CEO MERCK GROUP "Like any other foreign company, we started marketing our products that heavily into manufacturing. We built major facilities in Nantong, both for life science and for healthcare. We have a long tradition of manufacturing performance materials, products, mostly liquid crystal mixtures in China. The new trend now is co-innovation. This is becoming a highly digitized, highly innovative economy and society. And we want to participate in that. We want to work with Chinese academia, with startups, with corporates, with other place. And that's why we setting up several innovation hubs here. We are in the process of setting one in Shanghai, one in Guangzhou. And I think more will follow."