SHANGHAI - Calling the start of the new millennium "the century of human medicine," John Lechleiter, Eli Lilly's chief executive officer, predicted that Chinese scientists would help shape the era, but also said that the government needs to advance its intellectual property regime in order to unleash innovation.

"The life sciences - from the decoding of the human genome to the application of information technology - have experienced a Golden Age of discovery in recent years," Lechleiter said this week in the high-tech coastal city of Shanghai.

"I believe China will make a significant contribution to medical innovation in this century," he forecast.

Lechleiter, an organic chemist by training, added that he foresees "more opportunities in a high-value, knowledge-based industry that builds on China's enormous scientific human capital."

The head of Eli Lilly, who outlined his vision of China's future in the globalizing arena of pharmaceutical research and development, suggested that the country's rise would depend on a better legal framework to protect, for example, patents on innovative drugs.

"Lilly is making a strong bet on the future of innovation in China," Lechleiter said. "Rising incomes in China are driving dramatic growth in demand for healthcare, which in turn is creating tremendous opportunity for healthcare companies and investors in China."

"China," he said, "is emerging as a vital element of Lilly's optimistic vision of the future."

Lilly posted $270 million in sales across China last year, with a focus on some of the fastest growing therapeutic areas in China - oncology, diabetes and central nervous system. Lilly has sped up the launch of new products over the last several years, and since the late 1990s has invested more than RMB 2 billion in the country.

The Indianapolis-headquartered drug maker has begun forming partnerships with innovative Chinese companies including Hutchison MediPharma and contract research organization Shanghai ChemExplorer (Also see "Hutchison MediPharma and Eli Lilly Sign New Discovery Deal" - Scrip, 1 December, 2008.).

Lilly has also begun linking an expanding array of Chinese scientists into its globe-spanning virtual research network. Eli Lilly's Robert Armstrong, one of the earliest advocates of replacing the R&D silos of traditional pharmaceutical companies with research networks that stretch from West to East, said in an earlier interview that Lilly is racing to construct a "dynamic matrix of partnerships across the globe aimed at R&D."

Armstrong, who is Lilly's vice president of global external research and development, predicted that China is poised to have some breakout companies (Also see "Global Spread Of Technologies, West’s Economic Downturn And East’s Rise Will Fundamentally Change Pharma Giants By 2020" - Scrip, 28 May, 2009.).

Lilly's CEO said this week that: "Lilly is also the first and to date the only global pharmaceutical company to create a venture capital fund focused entirely on life sciences and health care investments in China." Lilly Asian Ventures, a $100-million fund, "has become one of the most active venture capital investors in China's biopharmaceutical industry."

"In the two and a half years since its founding, Lilly Asian Ventures has made six investments and deployed more than $40 million. This fund is yet another example of Lilly's approach to helping to seed China's own biopharmaceutical industry, which will ultimately lead to better medical care for the people of this nation," he noted.

"Over the next five years, we intend to launch 15 new products and line extensions," Lechleiter disclosed. "We have the largest, highest-quality pipeline in our history: 64 molecules in the clinic - double the number at the end of 2006 - and 29 in Phase 2 and 3."

Meanwhile, Lechleiter added, "China is uniquely situated to play a key role in global pharmaceutical research and development."

The Chinese market for pharmaceuticals is currently ranked the 7th largest in the world - and could jump to number three as soon as next year.

"China is also a growing center of biopharmaceutical research and development," Lechleiter said. "In the past decade or so since I have been coming to China, I have been astonished at the rate and comprehensiveness of the transformation across the country. This is true in virtually all sectors of the economy, and certainly true for the pharmaceutical sector."

"Most of the pharmaceutical companies a decade ago," Lechleiter said, "were large, state-owned enterprises producing generic medicines for the domestic market.

"Since that time an impressive array of companies has developed across China, a vibrant and diverse mix of firms, large and small ... as generic producers have been joined by a variety of biotech and other research-based enterprises, many focused on exports."

The globe's leading pharmaceutical players have helped boost innovation in terms of chemical and biotech drugs in China. "We've done this through our investments ... and by integrating Chinese companies and talent into our global research and development networks," he explained.

"Every country wants to share in the benefits of the biotechnology revolution, but all countries are not equally prepared to do so. As nations around the world compete for investment in R&D, China is well-positioned to take advantage of innovation-driven growth," Lechleiter said.

With its strengthened focus on becoming a global scientific power, China is now in second place worldwide in terms of the size of its R&D force.

"A growing number of Chinese scientists educated in other countries are returning home, adding to the tremendous human capital of this country and setting the stage for further innovation-driven growth. The 'brain drain' has become the 'brain gain' here in China," Lechleiter said.

"As China seeks to expand its R&D base, what can this nation do to build its great potential to participate in the global innovation economy of the future?" he asked.

"Above all," he said, "there must be strong protection of intellectual property. China has made significant progress in intellectual property protection, developing a patent regime aligned with international systems. This is an essential first step to help foster innovation, but it is indeed just the first step. "

The nation still needs to develop and perfect "an integrated approach to establishing, protecting and enforcing intellectual property."

This, Lechleiter explained, "is essential for innovation to thrive in any country, and that is true for China as well."

Specifically, Lilly's leader said, "regulatory agencies need to be aligned and to play a role in enforcement, preventing registration of generics when patents are involved."

"Legal proceedings must be prompt, fair and transparent - this includes evidentiary rules - to add to the predictability of enforcement."

"Creating and maintaining the conditions for innovation to flourish is challenging and complicated work - work that is never finished," Lechleiter said.

- Kevin Holden (k.platt@elsevier.com)

Lilly CEO, In Shanghai, Predicts Better Patent Protection Will Unleash Scientific Innovation Across China

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