In support of a multipolar biopharma world: Guest Commentary

Why a strong U.S. sector can still thrive next to a stronger China

While participating in a recent PhRMA Forum panel on “China’s leading edge: what’s at risk,” I was struck by how quickly the conversation slides into a zero-sum frame: The U.S. leads only if China is contained. Coming from outside both the U.S. and China, I see a different possibility: a multipolar biopharma world in which the U.S. continues to thrive even as China becomes meaningfully stronger.

Can we reconcile having a strong U.S. industry with the successful emergence of China? And can China be a catalyst of positive change across the global industry, even if this implies some level of rebalancing away from the U.S.? Arguably, this is the most important question for the future of the global industry.

To answer it, we have to start with an uncomfortable fact: despite science and patients being global, biopharma’s economics have become increasingly U.S.-centric.

A global industry orbiting the U.S.

Conceptually, the biopharma industry is a truly global one: a best-in-class drug that works in a Chinese patient will work in an American, a French, or a Nigerian patient. But the economics are not.

Picture the industry as a solar system: the U.S. is the sun, with all other markets, including China, orbiting its gravity. Such is the attraction power of the U.S. market.

With ~350 million people (~4% of the world), the U.S. now generates over 55% of innovative Rx revenues for the top 15 biopharmas (up from ~45% in 2015) and about 75% of profits.

That centrality has created dense high-wage clusters, with Boston/Cambridge and the San Francisco Bay Area each employing over 115,000 people. In addition to talent, the U.S. ecosystem is powered by vibrant capital markets, strong institutions (NIH/FDA) and a large single market with favorable pricing.

Whatever its downsides, the U.S. ecosystem has been extraordinarily effective at bringing global discoveries to their full potential.

Europe’s decline shows the cost of a one-center industry

As U.S. centrality has risen, Europe’s share of the global biopharma revenue pool has fallen. It did not have to be that way.

Europe has the ingredients to remain a co-equal pole: a larger population (~450M), world-class universities, a deep industrial base, several global pharma leaders, and important biotech hubs such as those in Switzerland, the U.K. and Germany.

The problem is not scientific capability; it’s structural incentives. Compared with the U.S., Europe has (1) shallower venture and public capital markets, pushing many biotechs to rely on U.S. financing; (2) a regulatory system often perceived as slower and more conservative than the FDA; and (3) a deliberate choice to keep prices for innovation flat or down through HTA and reference pricing, widening a transatlantic launch-price gap often estimated at 30-70% versus U.S. list prices.

The result is visible in the numbers: Europe’s revenue share has declined from ~40% (2015) to ~25% today, with much of the shift accruing to the U.S. and some to China. Investment follows that gravity, and manufacturing and R&D footprints increasingly do too, in striking proportions.

This increasing U.S. centricity, while a driver of many positive outcomes, comes at a real cost.

 ●       For years, incentives steered biotechs and big pharma toward rare diseases and narrower oncology/immunology indications — faster trials, premium pricing, small populations — while much of primary care was deprioritized because the ROI was less compelling. Only recently, with GLP-1s, has the industry re-learned how large metabolic disease and obesity can be.

●       Pipeline and launch decisions have increasingly followed local ROI. As the pricing gap between the U.S. and the rest of the world widened, investment tilted further toward the U.S., with some launches outside the U.S. delayed or canceled and some companies shrinking their geographic footprint in smaller markets.

●       This concentration has not solved the industry’s underlying inefficiency. Despite rising spend, R&D productivity has remained stubbornly flat. According to a recent McKinsey report, inflation-adjusted R&D outlays rose ~44% from ~$170 billion in 2012 to ~$247 billion in 2022, while novel approvals stayed around ~43 per year on average, and attrition-adjusted cost per new asset is estimated at $2.3-$2.8 billion.

Step back and the pattern is clear: the past decade largely shifted revenue and investment toward the U.S., at Europe’s expense (and, to a degree, Japan’s expense). With Europe unlikely to embrace meaningfully higher innovation pricing amid fiscal and security pressures, these dynamics would probably have continued — absent China’s emergence.

Enter China…

Whatever one’s views of China’s political system, its ambition to become a global biopharma leader is legitimate. A large, aging population needs access to innovation, and the country seeks higher-value manufacturing and research jobs. China’s ecosystem still has weaknesses, including dependence on global economics given lower domestic pricing, yet its innovation capacity and speed have become impossible to ignore.

Many frame this as a zero-sum contest for U.S. hegemony, and the U.S. is justified in reducing points of strategic leverage, especially in areas like API manufacturing where dependency creates real risk. Biosecurity concerns are real as well, though at the fringe of the broader biotech ecosystem.

But it does not follow that bridges to the China innovation ecosystem should be severed.

A world in which innovation can emerge from multiple competitive (and sometimes collaborating) centers could be more fertile for patients and for scientific progress — if it drives higher productivity and a gradual shift from “low volume/high price” toward “larger volume/moderate price.”

The U.S. should treat China not only as a rival to constrain, but also as a catalyst to improve what remains an inefficient industry: more frugality where appropriate, leaner organizations, faster decision-making, and — crucially — regulatory modernization that increases throughput without weakening safety and quality.

Collaborating where it makes sense and competing by getting in better shape in the “China Oktagon” should be the name of the game.

So what could change to disrupt the status quo?

Assuming a path of collaboration and competition between the U.S. and China, and a revival of Europe, we could envision a world where…

●       Innovation becomes more abundant. China (and broader Asia, including South Korea), GenAI-enabled discovery, and renewed participation by other economies expand the pipeline. “Me-better/me-faster” becomes the norm; true breakthroughs remain less certain and may depend as much on GenAI progress as on any single geography.

●       Biotech goes hybrid. Companies increasingly cherry-pick talent and capabilities across regions, and the West absorbs parts of the “China recipe” (frugality, speed, execution mindset). That requires more bridges between the U.S., Europe and China — not fewer.

●       Regulators scale throughput without lowering rigor. As pipeline flow grows, agencies will need new ways of working to raise approval capacity. China’s NMPA has already reached roughly 70 chemical/biologic approvals in 2025; the FDA appears closer to a ceiling around ~55. Meeting a higher-volume future will require capacity, modernization and sustained focus on safety and quality.

●       The industry becomes more global, and pricing begins to rebalance. Major pharmas reduce their 55%+ reliance on the U.S. market as Europe, China, Japan and others capture more of the pie. New viable commercial pools emerge: e.g., Southeast Asia rising with its roughly 700 million people; the Middle East bridging to China; Europe accepting cost-efficient Chinese-origin drugs. Big biopharmas consider duplicate portfolios for different geographies to manage pricing pressure and most favored nation (MFN) risks.

●       The economic model is reset. As a narrowing of the pricing chasm is possible only if development costs fall materially, supply-chain duplication costs driven by national security can be absorbed, and commercial models evolve — likely AI-enabled — to lower cost and improve customer experience.

In that world, new mechanisms will be needed to protect and reward true breakthroughs, or market forces could drive a race to the bottom. That is the primary risk of a world where China can rapidly follow on any discovery with me-better/me-faster alternatives, effectively eroding economic surplus for innovative participants. We have seen this in other industries and it’s a risk the industry should keep front of mind.

Done right, the potential upside is large: a more productive industry that reaches many more patients, faster.

Franck Le Deu is founder and Managing Partner of KerZheng Ventures, a Venture Partner at Aulis Capital, and a Senior Partner Emeritus with McKinsey & Company. He’s been based in China for over 20 years.

Signed commentaries do not necessarily reflect the views of BioCentury.