Accelerating Innovation in Biomedicine—An Investigation from Shanghai

How does AI and Shanghai’s policy intelligence foster the creation of a biomedical innovation ecosystem?

This year’s “Government Work Report” for the first time included biomedicine as a new pillar industry, with corresponding plans to promote high-quality development of innovative drugs and medical devices. In the biomedical sector, Shanghai has taken the lead with increased momentum, actively supporting full-chain innovation in the industry. The pace of “going out” and “bringing in” is becoming more stable, and innovative drugs and devices from Shanghai are accelerating their global competitiveness. Why has Shanghai become a hub for China’s biomedical industry? Where are the new growth points in the future?

In the field of innovative drugs, there is the so-called “Double Ten Law”: it typically takes 10 years of R&D and $1 billion in investment for an innovative drug to reach the market, with success rates below 10%. Due to the high barriers, “Chinese people developing their own innovative drugs” was once considered out of reach.

Now, this wish has become a reality, and many innovative drugs are beginning to be exported overseas. Data from the Shanghai Municipal Science and Technology Commission show that by 2025, Shanghai’s biomedicine industry will surpass 1 trillion yuan in scale for the first time, with a manufacturing output value of nearly 210 billion yuan; its international competitiveness continues to improve, with 48 overseas licensing transactions, a 55% increase year-on-year, totaling $33.76 billion, an 85% increase, ranking among the top nationwide.

A number of well-known pharmaceutical companies are growing strong in Shanghai. Along Zhangjiang Science City in Pudong, many companies such as Shanghai Junshi Biosciences and Mawi (Shanghai) Biotechnology are lined up along the street. Industry leaders like Fosun Pharma and Innovent Biologics are deeply rooted in Xuhui, Minhang, and Jiading districts, jointly building Shanghai’s biomedicine development map.

Currently, the competition for biomedicine innovation is accelerating across the board. What enables Shanghai to remain in the top tier of the national biomedicine industry? Our reporter conducted interviews and investigations.

Building Internal Attraction

Shanghai’s ability to lead in innovation density in the national biomedicine industry is inseparable from patience and wisdom. In the 1990s, China’s pharmaceutical market exhibited a typical “dumbbell” structure: one end was domestic generics, low-priced; the other was high-tech imported drugs, with almost no domestic innovation products.

At that time, industry consensus was that cultivating innovative products within such a structure required establishing a complete system covering basic research, talent, clinical trials, regulatory review, and industrial capital. This was not achievable in a few years but required the patience of a generation.

In 1992, Shanghai announced the establishment of Zhangjiang Hi-Tech Park, attracting multinational pharmaceutical companies like Roche, Novartis, Pfizer, and AstraZeneca. Over time, a quality system, production standards, and clinical development concepts for biomedicine took shape locally. Top scientists and engineers also moved to Pudong, forming the initial backbone of Shanghai’s biomedicine industry.

By attracting foreign investment and leveraging local strength, Shanghai built a solid foundation. From the Shanghai Institute of Materia Medica of the Chinese Academy of Sciences and the Shanghai Light Source Science Center to the National Protein Science Facility (Shanghai) and the National Major Scientific Infrastructure for Translational Medicine (Shanghai), the city has created one of the most robust original innovation platforms in China. By mid-2025, Shanghai will have 64 academicians in biomedicine, over 320,000 industry practitioners, 37 municipal tertiary hospitals, 6 national clinical research centers, and 70 clinical trial institutions. The high density of clinical resources and strong scientific research capabilities place Shanghai in the top echelon nationwide.

JPMorgan Chase Greater China Healthcare Industry Research Director Huang Yang commented, “The achievements of Shanghai’s biomedicine industry today are the result of continuous investment, accumulation, and iteration.” Huang said that sustained policy support and basic scientific research investment will attract global talent to Shanghai, leading to capital inflows and a positive cycle of innovation. “With a good ecological environment, the industry will naturally grow.”

The coupling of industry elements also requires wisdom. During the development of biomedicine, Shanghai has continuously innovated policies to promote resource flow, helping innovations move from ideas to products, and optimizing regulation to improve conversion efficiency and reduce costs. Chen Li, founder and CEO of Hualing Medicine, stated, “China used to be a major producer of generics. In recent years, domestic innovative drugs have increased, raising new regulatory requirements. Shanghai has accelerated industry development through policy optimization and mechanism innovation, enhancing innovation value and benefiting the public.”

The case of Hengrui Medicine is representative. In 2005, then R&D director Su Weiguo sketched a small molecule structure on a napkin in a café—this was the prototype of the later globally marketed colorectal cancer drug fruquintinib. However, advancing the trial faced huge challenges: the molecule had to be produced first and then validated through clinical trials. At that time, Hengrui was a small company with limited resources, unable to build capacity for a “possibility.”

In 2016, Shanghai began trialing the Drug Marketing Authorization Holder (MAH) system, one of the earliest regions to do so nationwide. Under this system, drug developers could outsource manufacturing to qualified companies. Fruquintinib became one of the first pilot projects under Shanghai’s MAH system. Cui Yiming, Executive Vice President of Hengrui, said, “The MAH system allowed fruquintinib to be approved at least three years earlier.”

More than 40 drugs and over 30 contract manufacturing companies have benefited from this system in Shanghai.

In 2024, Shanghai issued the “Several Opinions on Supporting Full-Chain Innovation and Development of the Biomedicine Industry,” addressing the common challenge of “getting innovative drugs into hospitals.” The policy states that within one month of national insurance drug updates, hospitals will equip themselves with relevant innovative drugs and devices based on clinical needs and hospital characteristics; it also strengthens the evaluation of innovation responsibilities in municipal hospitals, prohibiting restrictions on innovative drugs and devices based on usage volume or proportion. Thanks to this policy, the efficiency of hospital admissions for innovative drugs has improved, boosting sales and expanding the influence of Chinese innovative drugs.

The “flywheel effect” of the industry is gradually forming, making Shanghai’s biomedicine industry increasingly attractive. In 2000, Hengrui Medicine, which started in Lianyungang, Jiangsu, was listed on the Shanghai Stock Exchange. Most of the funds raised were invested in the Shanghai Hengrui R&D center, marking a significant step from generics to innovative drugs. “The establishment of the R&D center propelled the company onto the path of innovation,” said Vice President and CEO of Shanghai Hengrui, He Feng. As of mid-2025, innovative drug sales account for more than half of the company’s total drug sales.

Building an Outbound Innovation Hub

“Shanghai is one of the cities with the highest concentration of the biomedicine industry in the country, with core parks like Zhangjiang Pharma Valley and New Hongqiao International Medical Center, forming a complete chain from basic research and clinical trials to results transformation. The high concentration of top-tier hospitals and national clinical trial centers provides solid clinical resources for new drug development,” said Zhao Lei, General Manager of Cinda Biologics Shanghai R&D Center.

As a major hub for China’s biomedicine industry, Shanghai is accelerating its rise as a global gateway for Chinese innovative drugs.

Cinda Biologics, founded in Suzhou, Jiangsu, decided in 2020 to establish its global R&D center in Shanghai Hongqiao Qianwan Biomedicine Industry Park. Walking into the park, a strong sense of technology and youthfulness is palpable. “This R&D center is one of the largest biomedical R&D facilities in China, equipped with internationally advanced comprehensive facilities, including a 24/7 R&D building,” Zhao Lei said. It undertakes Cinda’s most cutting-edge global R&D tasks.

Hengrui Medicine is also speeding up its international expansion. Since 2020, Hengrui has completed 15 overseas licensing deals with potential total value exceeding $27 billion. In October 2025, Hengrui’s second R&D center in Shanghai—the Shanghai Innovation R&D Center—was officially launched, featuring top-tier molecular biology and cell biology laboratories, as well as gene and cell therapy R&D and pilot production labs. Chairman Sun Piaoyang said, “This is an important step in our globalization strategy. In the future, we will rely on the innovative ecosystem of Zhangjiang Pharma Valley to accelerate the landing of high-quality projects.”

Several products approved overseas are also based in Shanghai, such as Fuhong Hanlin, whose global headquarters is in Shanghai. CEO Zhu Jun said, “In Shanghai, we feel very secure. We can always find partners to discuss R&D directions and resource sharing, and it’s easy to resonate culturally.”

Sichuan Baili Tianheng Pharmaceutical, which has gained recognition through international cooperation with BMS in antibody-drug conjugates (ADCs), plans to build a factory in Shanghai. Chairman Zhu Yizheng said, “How is Shanghai’s business environment? The fact that so many innovative drug companies choose to settle here says a lot.”

The industry clustering effect has enhanced Shanghai’s reputation in global innovative drugs. Huang Yang often liaises with international investors and notes that many visit Shanghai first when exploring Chinese biomedicine, “Here, they can quickly and comprehensively understand China’s biomedicine industry and easily communicate with more companies.”

Not only Chinese companies are expanding abroad, but global giants are also moving toward Shanghai. According to data from the Shanghai Municipal Science and Technology Commission, by the end of 2024, 19 of the top 20 global pharmaceutical companies and 19 of the top 20 medical device companies have established headquarters or R&D centers in Shanghai.

Fostering a Collaborative Innovation Ecosystem

The number of approved innovative drugs and devices is an important indicator of industry innovation. In October 2025, a set of figures from the Shanghai International Biomedicine Industry Week attracted attention: from 2021 to October 2025, Shanghai approved 31 domestic Class 1 innovative drugs, accounting for 17% nationwide; in the field of cell and gene therapy, 4 products were approved, accounting for 57% nationwide. Additionally, 47 domestic third-class innovative medical devices were approved, representing 20% of the national total. These numbers demonstrate that Shanghai leads the country in the quality of biomedicine innovation.

Looking ahead to the next decade, where are the new growth points for Shanghai’s biomedicine industry? The answer remains: in R&D, in innovation, and in long-term incubation.

Zhu Yizheng believes that biomedicine innovation has a long cycle. “Today’s breakthroughs are backed by decades of data accumulation and scientific research.” The more original the breakthrough, the more time it requires. “Only by focusing on doing the right things patiently can true innovation be achieved.” This industry characteristic also means that Shanghai must not only encourage innovation but also allow companies to innovate slowly. To this end, Shanghai is building a capital system that matches patient R&D.

In 2024, the Shanghai Biomedicine Industry Mother Fund, with a total scale of 22.5 billion yuan, was established. At the Shanghai International Biomedicine Industry Week in 2025, Lu Wen, Vice President of Shanghai Guotou, stated that by October 2025, the combined investments of the Shanghai Biomedicine Industry Mother Fund, Future Industry Fund, and State-owned Capital Fund had reached about 6.6 billion yuan, leveraging approximately 5.5 times. “We focus on investing in innovative drug and device supply chains, brain-computer interfaces, synthetic biology, and other frontier fields, with over 40 projects planned for 2025.”

Liu Dawei, Executive Director of Shangshi Capital and President of Shanghai Biomedicine Fund, further emphasized patience. “We aim to accompany top scientists throughout the process, linking transformation funds, growth funds, and industry M&A funds into a complete chain.” Liu said they will further integrate research institutes, top-tier hospitals, leading industry groups, capital institutions, and entrepreneurs to build a healthy ecosystem—an essential guarantee for the continuous landing of innovative drugs.

Beyond pioneering “from 0 to 1” original innovation, more efforts are being directed toward “from 1 to 10” iterative and scaled innovation. Shen Bo, Executive Director and President of Shanghai Pharmaceuticals Holding Co., Ltd., stated at the 8th Pujiang Medical and Health Industry Innovation Development Summit that Shanghai Pharmaceuticals is promoting the construction of first-class biomedicine innovation incubators and result commercialization platforms, providing scenarios, resources, and markets for innovative enterprises through multi-party collaboration. In September 2024, Shanghai Pharmaceuticals launched the Shanghai Biomedicine Frontier Industry Innovation Center, attracting multiple international pharmaceutical companies, national-level life science institutes, and tech startups, becoming an important regional innovation hub.

The challenge of payment for innovative drugs is also being addressed. Previously, seven departments including the Shanghai Regulatory Bureau of the China Financial Supervision and Administration and the Shanghai Municipal Medical Insurance Bureau issued the “Measures for Further Improving the Multi-Channel Payment Mechanism to Support the Development of Innovative Drugs and Devices in Shanghai”; subsequently, the “Measures for Promoting High-Quality Development of Commercial Health Insurance to Support Biomedicine Industry Innovation” were also issued. These policies strengthen the synergy between basic medical insurance and commercial insurance in payment mechanisms, data sharing, service models, and regulation, supporting the sustainable development of innovative drugs and devices. The consistent logic is that supporting innovation requires multiple payment mechanisms.

Shanghai Meixin Health Technology Group Co., Ltd. is building a one-stop multi-channel payment solution. Its “One-Click Direct Payment” project now covers over 100 innovative drugs, integrating medical insurance, commercial insurance,惠民保 (benefit insurance), charitable donations, and financial installment channels. Chief Innovation Officer Feng Hao said, “The last mile of innovative drugs is not just about who pays but how to make the payment smooth. Payment capability, drug circulation, and service loops are the core of a multi-channel payment ecosystem.”

Currently, policies supporting the development of Shanghai’s biomedicine industry are being intensively rolled out. In September 2025, the “Shanghai Action Plan for Promoting the Full-Chain Development of High-End Medical Devices Industry” was officially released. It aims to systematically address industry bottlenecks through innovation, reform, and empowerment, accelerating the creation of a globally influential high-end medical device industry hub. Moving forward, Shanghai will focus on clinical needs, establishing special guidelines, building high-level R&D platforms, and promoting standardization to develop a full-chain innovation system from basic research to industry clustering. Additionally, policies also support biomedicine companies’ international expansion. The “Shanghai Action Plan to Enhance the International Competitiveness of Biomedicine Enterprises (2024–2027)” explicitly aims to cultivate 2 to 3 Chinese innovative drug companies with over 10 billion yuan in overseas sales by 2027.

A series of strong policies are steering Shanghai’s biomedicine industry toward a new blue ocean. “As China’s biomedicine industry shifts from speed to quality, Shanghai has taken the lead with its approach: leveraging capital and policies to create a stable and continuous resource supply across the industry chain. Here, biomedicine innovation is not a point breakthrough but a full-chain acceleration; industry layout is not scattered but systemically focused; growth is not short-term but long-term,” said Luo Dajin, Director of the Shanghai Science and Technology Commission.