From Tokyo, Japan and Changsha, China – this is Down to Business English. With your hosts Skip Montreux and Dez Morgan. Hello Skip! Hi Dez. How are you? Ahh, I’m a bit buried with work at the moment, but I’m somehow managing to stay on top of things. Good to hear. And yourself? Hmm. Yeah, I’ve been a little busy myself. The new business year started on April 1st here in Japan, so in addition to my regular teaching duties, I’ve been setting up new language training courses for my clients.
Ah yeah. April in Japan — yeah, always a busy time. And you know, to make matters worse, a few of my coworkers are suffering from severe hay fever and they are not in a good mood. It does not make for a very happy office. Hay fever is a huge problem for many people in Japan, I remember. It is. Wonder why that is. Hm. I can tell you why. It’s because of all the cedar trees the government planted here in the late 1940s, and early 50s, in post-war Japan.
The pollen from those trees is the main cause. Urbanization hasn’t helped much either. Less soil means the pollen stays in the air longer. That makes sense. As cities grow and expand, there is more and more concrete and asphalt in urban areas. Which means less natural soil to absorb all that cedar pollen. Fortunately, there is a wide variety of drugs on the market that can help relieve the pain. In fact, hay fever medication is quite a profitable revenue stream for pharmaceutical companies.
I’m sure it is. Speaking of pharmaceuticals, there’s something happening in China that’s changing the global industry. Oh, what is that? Billions of dollars in foreign investments are pouring into the biotech and pharma sector. Really! I had no idea. In fact, China’s pharmaceutical sector isn’t just growing — it’s reshaping how drug development happens worldwide. Mm. This sounds fascinating! I don’t know very much about this market at all. Let’s do it then.
Let’s get D2B … Down to Business with China's game-changing pharmaceutical and biotech industry. Before we get into your report today Dez, I have a question for you right off the bat. Sure Skip. It’s regarding some of the terminology related to this industry. Okay, and what would you like to ask? What exactly is the difference between pharmaceuticals and biotech? They are different things aren’t they?
That is a great question, Skip. While the two industries are closely related, you’re right — there is a key difference. And what would that be? Pharmaceuticals generally refers to the development and production of drugs using chemical processes. Think of traditional medicines like aspirin or ibuprofen — these painkillers are chemical based medicines. Mm. Got it. And biotech?
Biotech on the other hand, focuses on using biological processes and organisms to develop medical treatments and often involves cutting-edge technologies. What would be an example of a biotech medicine? A good example would be the mRNA technology that went into the COVID-19 vaccines developed by Moderna and Pfizer. Mm. I see. So, biotech is more about using living organisms or genetics to create treatments, while pharmaceuticals rely on chemistry. Exactly.
But there is a lot of overlap between the two. Many pharmaceutical companies also invest heavily in biotech research and development and there’s a lot of innovation happening in this area. So, when we talk about China’s pharmaceutical and biotech industry we are covering a wide range of activities. Yes indeed. From traditional drug manufacturing to groundbreaking advances in gene therapy. And China is making waves in both areas. Are they?
When I think of non-western pharma companies, I always think of India. Well, it’s certainly true that India has a big presence in the sector. In fact India’s Dr. Reddy's Laboratories, based in Hyderabad is one of the world’s top ten makers of generic drugs. Hold on there Dez. That’s one more question I wanted to ask you. What do you mean by generic drugs? A generic drug is an exact copy of a brand-name drug whose patent has expired. Ah. The same product, but without the expensive brand name.
Precisely. Anyway, my report is on China, not India. You’re absolutely right. We have gotten completely off track. Where would you like to start? Let’s start with a little bit of the history behind the pharmaceutical and biotech industries in China. Perfect. What can you tell us about that? Up until the 1980s, most pharmaceutical companies in China were state owned and their business models focused primarily on replicating existing drugs.
So, like Dr. Reddy’s in India, Chinese companies were producing generic drugs. Generic drugs along with Me-too drugs. Me-too drugs? What are they? Unlike a generic drug, which has the exact same chemical make up as the original brand name drug, me-too drugs have a slightly different chemical structure or … or formulation, but work in a similar way. That is a distinct difference. It is. Me-too and generic drugs were the mainstay of the Chinese pharmaceutical industry for 40 odd years.
I’m guessing that was because Chinese companies didn’t have the huge R&D budgets Big Pharma companies in the west had. That was the primary reason for it, yes. But about 10 years ago, Chinese innovation really kicked into high gear and foreign companies began to take notice. In other words, foreign Big Pharma started investing in Chinese companies.
Exactly. Last year, the British-Swedish firm AstraZeneca signed a $1.92 billion deal with China’s CSPC Pharmaceutical Group to develop cardiovascular medicine. And the American giant Merck has a $2 billion agreement with China’s Hansoh Pharmaceutical over an experimental weight loss pill. I always thought Merck was a German company. You know what, so did I. But it seems there are actually two separate companies. There’s Merck & Co based in the US and Merck KGaA based in Germany. Fair enough.
In any case, those are some large investment numbers? It depends on how you look at it. True, they are large sums of money, but foreign firms are discovering that it's much cheaper to do early-stage drug research in China than it is to do it in the US or Europe. So in fact, these investments could be saving them some money. Absolutely. In 2023, China saw a 26.1% increase in clinical trials. That is up from 3,410 trials in 2022 to 4,300 in 2023.
Sounds like a lot of foreign capital pouring into China. According to the market intelligence firm Mergermarket, large pharmaceutical transactions worth $50 million or more involving Chinese firms grew nearly 30% in 2024 compared to the previous year. Again, those look like very strong figures. Which brings me to the company Akeso Biopharma. Akeso Biopharma? Never heard of it. Is it a famous company in China?
Actually, until recently I’d never heard of it before, and I suspect most Chinese people hadn’t either. But the company made headlines late last year when they announced their drug Ivonescimab stopped lung cancer tumors from growing for 11.1 months. It prevents a cancer tumor from growing for almost a year?! That’s great news. It is great news for cancer patients, but maybe not such great news for Merck. Their cancer drug Keytruda only prevents tumor growth for 5.8 months.
Is that the German Merck or the US based Merck & Co? Keytruda is a product of Merck & Co in the US. Sounds like Akeso Biopharma might be some strong competition for them. Maybe. Ivonescimab and Keytruda both work well for some cancers, but Keytruda has proven efficacy across more types of cancer — well, at least for now. And I’d venture to guess that Keytruda is more well known, seeing as it comes from Merck. It sure is.
It’s been on the market since 2016 and has raked in $130 billion in sales since its inception. In any case, it really sounds like Chinese medical research and development is reaching new heights. It is. And it’s no surprise that this breakthrough was in the field of oncology. Why do you say that? Because the oncology sector has been the recipient of the greatest amount of foreign investment. I wonder why that is.
Er, I’m not sure to be honest, but 46% of the 318 deals between foreign and Chinese biotech and pharma companies in 2023 were indeed in this sector. Is that right? Well all in all, it seems that the future of the Chinese Biotech - Pharmaceutical industry is quite bright. Not so fast there Skip, there are two potential dark clouds on the horizon. Oh, what would they be? Firstly, Chinese-made drugs have a very poor reputation at home.
The result is Chinese customers will often opt to buy the far more expensive, imported alternative. But that poor reputation is for generic or me-too drugs. No? True, but it does spill over into the whole pharmaceutical sector. However, moving forward, if new Chinese drugs continue to demonstrate strong efficacy, this view will likely begin to change. No doubt. What was the other dark cloud?
The Trump administration with its ‘keep American capital in America policy’, could really throw a spanner in the works. Right. It seems they are doing everything possible to encourage investment in the US opposed to investment in overseas companies. Which could result in western Big Pharma companies reducing their tie-ups with Chinese companies. Well, we will just have to wait and see if that actually happens. Yes, we will.
And on that note, I think it is time for us to get D2V … Down to Vocabulary. Let’s start with the adjective ‘generic’. A very interesting word. It is a very interesting word. The dictionary defines ‘generic’ as something that is the same as other things in its class or category. Something that’s typical. Yes, something that is typical — not unique. However, in the story Dez reported that in its early days, the Chinese pharmaceutical industry focused on producing generic drugs and me too drugs.
I did. In the pharmaceutical industry, a generic drug is defined as a drug that has the exact same chemical make-up of a brand name drug whose patent has expired. The only thing that is generic about a generic drug is its name. Otherwise, it is identical to the brand-name drug. That’s right. The ‘me-too’ drugs I reported on — they would be similar to the original, but not exactly the same.
So, ‘me too’ drugs fit the dictionary definition of generic, but in the pharma industry, they are not generic drugs. It’s very confusing, Dez. Well, like I said, ‘generic’ is an interesting adjective. However, outside of the pharmaceutical industry, in other areas of business and everyday life, you can use ‘generic’ to describe something that is similar to other things. For example, I could say something like, “The generic dress code in an office is a suit and tie for men”.
In other words, wearing a suit and tie in an office is not unique or special. It is just the norm. Let’s move on to our next D2V item, the idiom to kick into high gear. When something kicks into high gear, it starts working faster, or with more energy. I think it’s easy to imagine that this idiom comes from the world of driving a manual car. Ah, you mean a stick shift? That is a very American term. In the UK we just say ‘a manual’. How boring.
Regardless, in a manual car, when you shift from the lower gear into the higher gear, you are going to go faster. I’m not sure where the kick comes from though. I think it comes from the ‘kick’ or the ‘boost’ of energy you get when you change gears. Yeah, that would make sense. In any case, in today’s report, I said Chinese innovation kicked into high gear 10 years ago. I was saying that innovation started to accelerate rapidly at that time.
If you work in a seasonal business, like a ski resort, you could say business kicks into high gear as soon as there is enough snow on the mountain in the winter. Or if you worked for a luxury brand, you could say sales kick into high gear in November, in the run up to Christmas. Staying with automobile idioms, the opposite of ‘kick into high gear’ is ‘to put the brakes on something’, which means to slow down.
For example, many factories put the brakes on production in January as sales slow down after the Holiday Season. It is though worth pointing out that these idioms are used a little differently. Putting the brakes on implies a deliberate decision to slow down, whereas ‘kicking into high gear’ doesn't necessarily suggest a conscious choice — it could simply mean to pick up speed naturally. That’s a very good point, Dez. Our final item on the D2V list today is the medical term oncology.
Oncology is the branch of medicine that is concerned with the diagnosis, treatment, and study of cancer. In today’s story, Dez reported that the oncology sector in China has attracted the most foreign investment. That’s right. I mentioned that foreign investment in China’s pharmaceutical and biotech sectors was highest in the area of cancer research and drug development. Now, you might be wondering why oncology is on the D2V list, after all it is not really a business word.
Yeah, it’s mainly a medical term. Why is it on our Down to Vocabulary list? Because of its suffix ‘~ ology’. Anytime you hear a word ending in ‘~ ology’ it means the study of something. Biology; the study of life. Sociology; the study of society. Methodology; the study of methods. Exactly.
So, the next time you are sitting in a business meeting and someone says, “We need to rethink our sales methodology,” you will know they are talking about the study or system of methods used in the sales department. Or if you hear “We’re using data from consumer psychology.” you’ll know it means the study of how people think and behave when making buying decisions. That is the power of understanding suffixes — it helps you unlock the meaning of unfamiliar words.
Would you like to help Down to Business English reach more people wanting to improve their Business English skills? Follow Down to Business English on Apple Podcasts, YouTube Music, Spotify, or any place podcasts are found. Leave a rating and a review and tell everyone how much you enjoy the show. Thank you very much Dez for that report on the Pharmaceutical & Biotech industry in China. Not a problem, Skip. I hope our listeners found it useful. I am sure they did.
D2B Members and Apple Podcast subscribers, the bonus vocabulary for today’s episode will drop fairly soon so do watch out for it in your podcast feed. The words and phrases we will be focusing on will be — to stay on top of things, to overlap, inception, to reach new heights, and to spill over. Lots of great business verbs in that list. There are.
So D2B members, if you haven’t already, be sure you have copied the members-only URL from your Membership account page on the D2B website, and have pasted it into your favorite podcast app. Apple Podcast subscribers, you don’t need to do anything. The bonus D2V episode will automatically appear in your Apple Podcast app as soon as it drops.
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And to become an Apple Podcast subscriber, just visit the Down to Business English show page in the Apple podcast app, and click ‘Subscribe’. Thanks for listening, everyone. See you next time. Bye bye. Have a comment or question about today’s show? Don’t be shy… visit the D2B website or Facebook page, and post any comments or questions there. Skip, Dez, or Samantha will be sure to leave a reply. Down to Business English … Business News, to improve your Business English.