China has had a prickly relationship with mRNA. Throughout the pandemic, the Chinese government said no to mRNA vaccines. Then came the scrapping of zero-Covid which heralded China’s reopening to the world. In May this year, Chinese CSPC Pharmaceutical Group produced China’s first mRNA vaccine for Covid-19.

Shortly after, in July, US pharma and biotech company Moderna announced an investment to “manufacture mRNA medicines in China for the Chinese people”. Construction on the facility began in November. According to Chinese-language publication Yicai, the investment is understood to be worth roughly $1bn. fDi was unable to independently confirm this figure. 

China for China

“We learned during the pandemic that health challenges anywhere can represent a threat to everyone, everywhere,” a company spokesperson told fDi. “This facility is an important step in our efforts to deliver on our mission of creating the greatest possible impact for people through mRNA medicines.” It constitutes Moderna’s first large-scale investment in the country. The company declined to comment further.

Alicia García-Herrero, chief economist for Asia-Pacific at French investment bank Natixis, notes that it was not so much the inability to make mRNA vaccines that had previously spooked foreign pharma investors but rather a national-level procurement policy that subjects them to “very low acquisition pressures”. 

Over recent years, Beijing has centralised drug procurement, prompting a race to the bottom between foreign drugmakers and local players.

In July this year, China’s minister of commerce Wang Wentao hosted a roundtable with foreign pharmaceutical companies, reassuring them of China’s business environment. In attendance were representatives from 12 pharma and biotech multinationals, including Germany’s Bayer, Anglo-Swedish AstraZeneca, France’s Sanofi and Pfizer from the US.

“The Chinese government places great importance on attracting foreign investment and continues to optimise the business environment,” Mr Wang said.

In June, China’s CSPC Pharmaceutical Group also signed a strategic partnership with Pfizer to produce a local brand of Covid-19 drug Paxlovid.

In Moderna’s case, Ms García-Herrero says that the Chinese government has been “very smart”, as the topic is no longer on the radar and they can now reap the benefits from mRNA medicines, while foreign companies, like Moderna, producing mRNA vaccines don't have the demand anymore, at least not the Covid demand, she says.

“The jury’s still out as to whether [companies like Moderna] will make money in China,” she adds.

Healthcare priorities 

Overall, there has been an uptick in greenfield projects in the life sciences sector in China this year, according to greenfield investment tracker fDi Markets. In June, German science and technology company Merck announced that it was expanding capacity at its site in Nantong, Jiangsu province. 

Zhouchen Mao, head of research and advisory at think tank Asia House, notes that at the national level there has been a lot of talk around the falling birth rates in China, its ageing population and the need for foreign investment in biotech and life sciences. China was overtaken by India as the latter became the most populous nation this year, according to United Nations data. 

“There’s always a level of pragmatism” in Chinese policy-making he notes, invoking the late Chinese president Deng Xiaoping’s quote: “It doesn’t matter if it’s a white cat or a black cat, as long as it catches a mouse.”

Amid a lot of headwinds in the Chinese economy, there are also tailwinds, Mr Mao notes, and healthcare “is one of those tailwinds”.

The Healthy China 2030 initiative, launched in 2016, has enshrined healthcare as a developmental priority. The Chinese government’s spending on public healthcare as a share of its gross domestic product stands at 5.7%, according to the latest figures from the Organisation for Economic Co-operation and Development.