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Public funding and private investment for R&D: a survey in China's pharmaceutical industry.

Qiu L, Chen ZY, Lu DY, Hu H, Wang YT - Health Res Policy Syst (2014)

Bottom Line: There is a significantly positive correlation between public funding and private investment in different provinces of China.Further, the effect of the government was focused on private equity and venture capital investment although private fund is the mainstream of this type of investment.With rapid growth of the industry, the pharmaceutical R&D investment in China is expected to increase steadily from both public and private sources.

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Affiliation: State Key Laboratory of Quality Research in Chinese Medicine, Institute of Chinese Medical Sciences, Block 3-406, University of Macau, Av, Padre Tomás Pereira Taipa, Macao, China. haohu@umac.mo.

ABSTRACT

Background: In recent years, China has experienced tremendous growth in its pharmaceutical industry. Both the Chinese government and private investors are motivated to invest into pharmaceutical research and development (R&D). However, studies regarding the different behaviors of public and private investment in pharmaceutical R&D are scarce. Therefore, this paper aims to investigate the current situation of public funding and private investment into Chinese pharmaceutical R&D.

Methods: The primary data used in the research were obtained from the China High-tech Industry Statistics Yearbook (2002-2012) and China Statistical Yearbook of Science and Technology (2002-2012). We analyzed public funding and private investment in five aspects: total investment in the industry, funding sources of the whole industry, differences between provinces, difference in subsectors, and private equity/venture capital investment.

Results: The vast majority of R&D investment was from private sources. There is a significantly positive correlation between public funding and private investment in different provinces of China. However, public funding was likely to be invested into less developed provinces with abundant natural herbal resources. Compared with the chemical medicine subsector, traditional Chinese medicine and biopharmaceutical subsectors obtained more public funding. Further, the effect of the government was focused on private equity and venture capital investment although private fund is the mainstream of this type of investment.

Conclusions: Public funding and private investment play different but complementary roles in pharmaceutical R&D in China. While being less than private investment, public funding shows its significance in R&D investment. With rapid growth of the industry, the pharmaceutical R&D investment in China is expected to increase steadily from both public and private sources.

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Capital sources of Chinas venture capital.
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Figure 9: Capital sources of Chinas venture capital.

Mentions: Similar with most countries, private investment was the main source of China’s PE/VC. In 2012, unlisted companies accounted for 34.03% of the total VC sources and individual sources accounted for 18.87% [20]. The government and state-owned enterprises together accounted for 30.59% (Figure 9).


Public funding and private investment for R&D: a survey in China's pharmaceutical industry.

Qiu L, Chen ZY, Lu DY, Hu H, Wang YT - Health Res Policy Syst (2014)

Capital sources of Chinas venture capital.
© Copyright Policy - open-access
Related In: Results  -  Collection

License
Show All Figures
getmorefigures.php?uid=PMC4066693&req=5

Figure 9: Capital sources of Chinas venture capital.
Mentions: Similar with most countries, private investment was the main source of China’s PE/VC. In 2012, unlisted companies accounted for 34.03% of the total VC sources and individual sources accounted for 18.87% [20]. The government and state-owned enterprises together accounted for 30.59% (Figure 9).

Bottom Line: There is a significantly positive correlation between public funding and private investment in different provinces of China.Further, the effect of the government was focused on private equity and venture capital investment although private fund is the mainstream of this type of investment.With rapid growth of the industry, the pharmaceutical R&D investment in China is expected to increase steadily from both public and private sources.

View Article: PubMed Central - HTML - PubMed

Affiliation: State Key Laboratory of Quality Research in Chinese Medicine, Institute of Chinese Medical Sciences, Block 3-406, University of Macau, Av, Padre Tomás Pereira Taipa, Macao, China. haohu@umac.mo.

ABSTRACT

Background: In recent years, China has experienced tremendous growth in its pharmaceutical industry. Both the Chinese government and private investors are motivated to invest into pharmaceutical research and development (R&D). However, studies regarding the different behaviors of public and private investment in pharmaceutical R&D are scarce. Therefore, this paper aims to investigate the current situation of public funding and private investment into Chinese pharmaceutical R&D.

Methods: The primary data used in the research were obtained from the China High-tech Industry Statistics Yearbook (2002-2012) and China Statistical Yearbook of Science and Technology (2002-2012). We analyzed public funding and private investment in five aspects: total investment in the industry, funding sources of the whole industry, differences between provinces, difference in subsectors, and private equity/venture capital investment.

Results: The vast majority of R&D investment was from private sources. There is a significantly positive correlation between public funding and private investment in different provinces of China. However, public funding was likely to be invested into less developed provinces with abundant natural herbal resources. Compared with the chemical medicine subsector, traditional Chinese medicine and biopharmaceutical subsectors obtained more public funding. Further, the effect of the government was focused on private equity and venture capital investment although private fund is the mainstream of this type of investment.

Conclusions: Public funding and private investment play different but complementary roles in pharmaceutical R&D in China. While being less than private investment, public funding shows its significance in R&D investment. With rapid growth of the industry, the pharmaceutical R&D investment in China is expected to increase steadily from both public and private sources.

Show MeSH