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A decade ago, China had just a few hundred pharmaceutical drugs actively in development. Today, China has thousands of drugs in active development and is continually increasing investment to make even more. This transformation was not, however, a foregone conclusion: China faced incredibly high barriers to growing its pharmaceutical industry including weak research investment and a highly fragmented market of small drug development firms. However, through engineering an environment conducive to pharma innovation, China went from developing 2% of all drugs globally to 25%. Over the same period, the U.S. decreased its share from 45% to 36%, according to Evaluates internal data. A boost in funding and regulatory changes opened the door, but access to the right talent has taken China across the threshold into a pharmaceutical golden age. Scientists from China and other parts of Asia used to come to the U.S. to work for the biggest drug companies and with the brightest minds. Now, many experts are heading East to fill Chinas labs, and this return began well before the current administration took office. The result? A huge increase in the quality and quantity of novel Chinese medicines in development. Licensing deals To understand the threat China poses, look to major drug companies product portfolios. Increasingly, instead of acquiring homegrown innovations, pharma giants including Novo Nordisk, Merck & Co., AstraZeneca, and most recently Pfizer are entering into high-profile licensing deals with Chinese firms. In 2024, 31% of big pharma licensing deals involved a Chinese biotech and that number is projected to grow this year. China now offers a dizzyingly abundant source of innovative, high-quality therapies atby pharma standardsreasonable prices. Could the U.S. pharmaceutical industry, long a shining example of innovation on the world stage, soon be eclipsed? While Chinas pharma industry is close to becoming the world leader, the U.S. still holds key advantages to maintain dominance. Where China Has The U.S. Beat There are three hot spots of innovation in next-generation therapies where Chinas lead is becoming pronounced: Bispecific Antibodies (Bispecifics): Engineered antibodies that bind to two different targets simultaneously, offering a novel way to fight cancers. They garnered billions of dollars in sales last year and 56% of those currently in development originated in China, according to Evaluates internal data. Antibody-Drug Conjugates (ADCs): These antibodies deliver a highly potent chemotherapy drug directly to cancer cells. The ADC market is projected to reach $50B by 2030 and 55% of those currently in development originated in China. Chimeric Antigen Receptor T-Cells (CAR-Ts): T-cells modified to recognize and kill cancer cells. The CAR-T market is expected to reach over $21B by 2030 and 51% of therapies currently in development originated in China. GLP-1s Notably, despite the increasingly crowded nature of the obesity and diabetes space, Evaluates internal data shows 46% of GLP-1 therapies in development are from Chinese sponsors. Merck, for example, made its first move into the obesity space not by developing its own drug but by licensing a Chinese GLP-1 pill late last year. Questions remain, though, about whether Chinese players can catch Western pharma leaders which have a huge head start in the obesity space. Realistically, its unlikely that the U.S.or any other countrywill beat China in these top three areas, though many of these Chinese drugs will be acquired by U.S. companies before they reach the market. Despite Chinas formidable drug development pipeline, the nation still faces outsized challenges around financing innovative and late stage trials, multiple competitors racing to patent highly similar versions of a single drug, and pricing pressure from generic versions of drugs whose patents have expiredall of which might stall Chinas influence. U.S. Pharmas Secret Weapons While China ramps up novel cancer treatments, the U.S. remains a powerhouse with the infrastructure, academic institutions, and regulatory systems that will ensure it continues to play a critical role in the global market. While the U.S. does not have an overwhelmingly large global share of the development of any kind of drug, it still has a significant portion of many of the largest, and most exciting types. These include: Radiopharmaceuticals: Radioactive molecules injected into the body for both targeted cancer irradiation and medical imaging. Theyre already a multi-billion-dollar market, and the U.S. controls 40% of those currently in development. Traditional Small Molecules: The foundation of medicine (Lipitor is an example), these drugs are still extremely widely used and the U.S. controls 37%of those currently in development. Discovery advantages Beyond dominating in these two treatment types, the U.S. has a few key advantages that will be its saving grace in the competition for biopharma dominance. The United States ace-in-the-hole is making initial scientific discoveries. It is still the best at finding new disease processes and ways of designing drugs while Chinas strength is iterating on already-established successes. Take the aforementioned ADCs and CAR-Ts: these innovations were discovered in U.S. labs and China has run with tweaked versions. While China is starting to break ground on developing new biology, the U.S. still has the drug discovery edge. Secondly, U.S. investors are willing to take risks. While the Chinese state is working to create a strong environment for biotechs, private investors in China are more risk-averse than their Western counterparts. So, there is opportunity in the U.S. to support potentially high-growth areas, such as cell and gene therapy. Thirdly, dont underestimate manufacturing. Since the announcement of potential tariffs hitting the pharma industry, a number of large drug companies have announced huge investment in their U.S. manufacturing sites. Many of these were almost certainly in the cards already but more investment in the U.S. will help bolster the wider industry. The Biosecure Act also supports this effort, enforcing stricter regulations on the supply chain. Innovation insurance Finally, dealmaking is innovation insurance. U.S. big pharma is well used to sourcing innovation and drug development programs through dealmaking, so one can argue that simply extending their gaze East to draw from the new pool in China is not such a shift anyway. Many, if not most, of the next generation therapies are likely to be acquired from abroad before completing their late-stage trials in the U.S. and reaching the market. Continued international licensing will ultimately benefit the bottom lines of American companies. Chinas genie is out of the bottle and there is no doubt that the countrys ability to develop innovative drugs will continue to thrive. As the landscape diversifies, both countries will play crucial roles in advancing pharmaceutical innovation. Both the U.S. and China hold unique advantages; now is the moment America can reinvest in theirs to come out on top.
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Hello and welcome to Modern CEO! Im Stephanie Mehta, CEO and chief content officer of Mansueto Ventures. Each week this newsletter explores inclusive approaches to leadership drawn from conversations with executives and entrepreneurs, and from the pages of Inc. and Fast Company. If you received this newsletter from a friend, you can sign up to get it yourself every Monday morning. Modern CEO is coming to you today from the Cannes Lions International Festival of Creativity. What started 60 years ago as an advertising awards program has evolved into an annual gathering of media and marketing executives that is increasingly attracting business leaders from different industries, including CEOs. Any CEO who wants to grow, innovate, and stay culturally relevant will benefit from being here, says Shelley Zalis, founder and CEO of the Female Quotient, a community of women in business that hosts a lounge at the event. Tony Capuano, president and CEO of Marriott, concurs: Cannes Lions is where the worlds most powerful creative conversations happenonstage, over coffee, and in every meeting along the Croisette [Canness main street], says Capuano, who is speaking on a panel with former NBA star Carmelo Anthony at Stagwells Sport Beach activation and moderating a session on food and travel at the JW Marriott. For me and our team, its an essential moment to tap into the energy of global culture, explore how brands are shaping behavior, and build partnerships that help us connect more meaningfully with travelers around the world, he adds. Cannes: a creative compass Part of the appeal of the confab is the robust presence of technology giants that are dominant marketing platforms (Alphabets Google Services segment, for example, which includes revenue from search, YouTube, and other ad sources, saw 2024 revenue climb 12%, to $304.9 billion), developers of the generative artificial intelligence (gen AI) tools that are transforming content creation, or both. Amazon, Canva, Meta, IBM, Microsoft, and Salesforce are among the tech companies popping up in lounges and meeting spaces, and the festival is honoring Adobe CEO Shantanu Narayen as its Creative Champion of the Yeara new award that seems designed to ensure the participation of a major tech CEO at the proceedings. The impact of gen AI on creativity will be a major theme this year, attendees say. The event also offers an opportunity for business leaders to discuss broader issues, such as political and economic risk. Judy A. Smith, founder and president of strategic advisory firm Smith & Company, is speaking on a panel about building and protecting a brand in uncertain times. Smith, who is attending Cannes Lions for the first time, says she sees value in being able to meet and hear from so many decision-makers in a short period of time. Its a great way to stay on top of emerging trends and see whats shaping the future of the industry, she says. To be sure, those who recommend Cannes Lions as part of the CEO conference circuit are firm believers in the power of creativity and creative leadership in corporate ranks. In a world shaped by perception, confidence, and social connection, creativity is not a department. Its a leadership tool, says Claudia Romo Edelman, who will unveil the latest edition of her We Are All Human Foundations Hispanic sentiment research in Cannes. If youre serious about driving change, theres no better place to sharpen your vision. Is Cannes a must-do for you? Should CEOs outside the media and tech ecosystem make the trip to Cannes? You can decide for yourselves: Modern CEO will deliver a few extra dispatches from the event this week with insights and takeaways from panels, interviewsand maybe a few parties. And if you have questions you want me to ask the CEOs I meet, send them to me at stephaniemehta@mansueto.com, and Ill try to work the answers into my newsletters. Listen, watch, and read more: Postcards from Cannes What small businesses can learn from Cannes Lions The Brand-New World podcast explores AIs mastery over the world of advertising Why Unilever won Creative Marketer of the Year at Cannes Lions last year
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If artificial intelligence is going to take over the world, it may need a rebrand. Not only do many of the company logos look like swirling vortexes, but because no one has the patience for its name, a mouthful of eight syllables, we have fallen back on the now-ubiquitous initialism: AI. Those two letters have been on everyones lips for the last several years, but they dont exactly roll off the tongue. Try saying them without sounding like an awkward amalgam of Fonzie (Ayyyy!) and Bart Simpson (Ay, caramba!). Vowels in English just dont play well together; string too many of them in a row and you soon sound like Old MacDonald having a farm. Sorry, EU, UAE, and IEEE, but abbreviations need some meaty consonants thrown in to give them some heft, la U-S-A! Sam Altman and Jony Ive may learn this the hard way should their newest venture in AI (i.e., io) end up evoking the Lone Ranger (Hi Yo, Silver!) or Ed McMahon (Hiyo!). AIs written form has issues as well. Like many such constructions, AI initially had periods after both letters to hammer home its status as an abbreviation. Those periods were firmly in place in the title of Steven Spielbergs 2001 A.I. Artificial Intelligence, which went with a belt-and-suspenders naming approach to really make sure that the audience knew what the movie was about. To this day, some stodgier publications like The New York Times and The New Yorker still insist on the A.I. formulation in their house styles (the latter, as a matter of fact, only just stopped writing Web site this year!). But the rest of the world has dropped the periods in favor of the sleeker AI convention. In this decade, for instance, over 5,000 U.S. trademark applications have contained AI while only 76 specified A.I. A problem, though, occurs when the period-less AI is expressed with the use of a similarly-hip sans serif typeface. Without those helpful serifs, AI is, to the human eye, indistinguishable from Alas in Al Pacino. (Eerily and fittingly, though, computers can tell the difference.) [Screenshot: courtesy of the author] An analysis of U.S. baby name data reveals that names starting with Al peaked in use in the 1990s, meaning that there are many thousands of thirtysomething Americans who live in fear that writing their nickname Al on one of those Hello my name is stickers will inspire confusion, or worse, mockery, from a younger Gen Z coworker. Paul Simon wouldnt have a chance with You Can Call Me Al today. NBC Sports made lemonade from the lemons of this AI/Al confusion at last years Paris Olympics, delivering custom highlights narrated by an AI version of sportscaster Al Michaels. But the difficulties dont end with the Alans and Alberts of the world. Consider that the definite articlethe theof Arabic, the worlds fifth-most-spoken language, is Al and you start to grasp the full extent of the situation. One might think that a solution might lie with the British tendency to express acronyms and abbreviations with an initial capital rather than all-caps (Nato rather than NATO). But using Ai just opens new cans of worms ranging from Ai Weiwei to Adobe Illustrator. And thats even before taking into account the recent propensity of high-ranking government officials to mistake artificial intelligence for A.1. Steak Sauce. Sadly, following the mid-twentieth century origin of the term artificial intelligence, no clever Madison Avenue ad man came up with a catchy nickname like, say, artelligence, and so were stuck for now with AI. If various tech pundits are to be believed, we have just a few years before the arrival of artificial general intelligence (AGI). But in that time perhaps the worlds best and brightest branding and marketing minds could be assembled in a sort of modern-day Manhattan Project to come up with a replacement for the term AI with which to welcome our new robot overlords.
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