BEIJING - The financial meltdown and widening layoffs in the United States, combined with Beijing's injection of stimulus funds into its pharmaceutical and biotech sectors, could trigger a reverse brain drain in those sectors, according to industry insiders and investors in the U.S. and China.

The declining economic outlook of the U.S., and a Chinese government drive to fund advances in innovative drug research, could create a new wave of American-educated Chinese scientists returning to the motherland to help lead drug development endeavors.

"Chinese are overrepresented in the sciences in the United States," in advanced degree programs and across related professions including healthcare, said Nisa Leung, a partner at the $500 million venture capital firm Qiming.

Some Chinese professionals holding positions at American drug firms, rather than wait out the current economic turmoil, might opt instead to join China's push to expand the pharmaceutical industry and to spark a new era of research innovations, said Leung, who has an MBA from Stanford University and specializes in investments in Chinese healthcare start-ups.

In just one example, Wuxi PharmaTech is preparing to lay off one-fifth of AppTec's 500 employees after acquiring the U.S.-based biologics firm in a $160 million deal (Also see "WuXi PharmaTech Lays Off One-fifth Of U.S. Workforce Months After Acquiring American Biologics Firm AppTec" - Scrip, 3 December, 2008.).

At the same time, officials within Beijing's ministries, at life science incubators being built or expanded across China's east coast, and at universities are stepping up plans to recruit Chinese talent now in U.S. colleges or companies.

Samantha Du, CEO of the Shanghai-based drug development outfit Hutchison MediPharma, said that as a new RMB 6.6 billion government fund for basic drug research and development is allocated to academic centers across China, part of that money will be used to finance head-hunting trips to the U.S. (Also see "China To Invest $1 Billion To Ramp Up New Drug Innovation" - Scrip, 23 November, 2008.).

"Most of the funding for this drug innovation project will go to research organizations and universities including the Beijing Institute of Materia Medica, Beijing University and [Shanghai's] Fudan University," Du said. "This funding will allow these institutes to attract more talent across China and the United States."

"The head of one research institute that received funding told me he is going on a recruiting trip to the U.S. early next year," said Du, who holds a doctorate in biochemistry from the University of Cincinnati and who has filled MediPharma's management ranks with American-trained scientists.

Zhu Shen, founder of the San Diego-based life science consulting group BioForesight, said that leaders in China's central government and in the richer provinces along the east coast are expanding financing for biotech and pharmaceutical start-ups sprinkled across life science parks. High-ranking officials representing these life science parks, in turn, are ramping up drives to recruit Chinese scientists from American universities and from biotech and pharma centers in San Diego, New York, and Boston, said Shen, who holds a doctorate in biochemistry from the University of Colorado and an MBA from Cornell University.

[Editor's note: Shen is also a member of the editorial advisory board for PharmAsia News.]

Thousands of China's science undergraduates have completed advanced degrees in the U.S. since Beijing began lifting its barriers on overseas studies more than a quarter-century ago. The U.S. State Department estimates that more than 10 percent of the half-million foreign students currently enrolled in American universities are Chinese, and data released by the U.S. Embassy in Beijing show that one-third of the Chinese students heading to the U.S. enter science programs. Since the 1980s, a substantial proportion of Chinese graduates of American colleges have elected to remain in the U.S. after obtaining a degree.

But China's economic rise and growing might in world trade, along with preferential government policies, have already sparked a first wave of American-trained Chinese scientists to return over the last decade.

Many of the companies dotting China's life science parks and outposts, including WuXi PharmaTech and Charles River's just-launched preclinical laboratory facility in Shanghai, are headed by Chinese with advanced science degrees from the U.S. (Also see "Charles River Set To Launch First Global CRO Preclinical Testing Center In China" - Scrip, 13 October, 2008.).

Chinese scientists with American diplomas, like Pfizer's Steve Yang, also lead some of the research and development centers built by global pharmaceutical powers in China's burgeoning bioscience incubators (Also see "Pfizer Increasing Size of China R&D Center, Expanding Virtual Research Network Through Alliances With Chinese Scientists, WuXi PharmaTech" - Scrip, 20 November, 2008.).

"These scientists returning to China are doing start-ups and creating CROs that do research for the global pharmaceutical companies," Du said. "They are leading the transformation of the pharma and biotech sectors here, and are helping with the globalization of these sectors in China."

- Kevin Holden (pharmasia@elsevier.com)

U.S. Economic Crisis, Beijing’s Perks, Could Trigger Reverse Brain Drain

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