China Tests the Limits in the Race for Biotech Power

0:00Donald Trump is rewriting the Washington rulebook and reshaping the global economy. If you're trying to connect the dots behind the headlines, Bloomberg's Trumponomics podcast is here to help. I'm Stephanie Flanders, head of government and economics at Bloomberg. Every week, I'll bring you a smart, focused conversation with reporters and experts from Washington, Wall Street and beyond. Listen to new episodes every Wednesday and follow Trumponomics wherever you listen. Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute. Capturing value and fixed income is not easy.

0:38Bond markets are massive, murky, and let's be real, lots of firms throw a couple flashy funds your way and call it a day. But not Vanguard. At Vanguard, institutional quality isn't a tagline. It's a commitment to your clients. We're talking top-grade products across the board of over 80 bond funds, actively managed by a 200-person global squad of sector specialists, analysts, and traders. These folks live and breathe fixed income. So if you're looking to give your clients consistent results year in and year out, go see the record for yourself at Vanguard.com slash audio. That's Vanguard.com slash audio.

1:14All investing is subject to risk, Vanguard Marketing Corporation Distributor. Bloomberg Audio Studios. Podcasts. Radio. News. Ryan Wallach is 45 years old, a husband and a father of two. For much of his life, he worked as a lawyer and political organizer, even serving as White House counsel under President Barack Obama. But eight years ago, he received a devastating diagnosis. I was diagnosed with ALS in 2017 at the age of 37. My wife, Sandra, and I had just brought our second daughter home when we received the news. ALS, known widely as Lou Gehrig's disease, is a neurodegenerative disorder where motor neurons are gradually lost, leading patients to slowly lose control of their bodies.

2:08For me, this has meant a gradual loss of my ability to walk, use my hands, and speak. At the time, Brian was given six months to live. I couldn't accept that timeline. Instead, I chose to fight with everything I had to change it. Eight years later, I'm still here. Today, Brian and his wife, Sandra, are advocates for the more than 30 ,000 Americans living with ALS. They founded the nonprofit I Am ALS in part to advocate for research funding for a cure. And some of the most exciting ALS research to date is coming out of China. China is trying to have the companies do something that nobody in the world has ever done.

2:54That is China's goal, to be a global biotech leader. That's Bloomberg's Asia health reporter, Carolyn Kahn. She says China is taking a controversial approach to finding cures to diseases like ALS. China sees gene editing in animals as one of the key aspects of biotech development. Gene editing. The U.S. and Europe take a strict approach to gene editing animals, in particular large animals like pigs, monkeys, and dogs. But as China's biotech industry grows, its use of gene-edited large animals has expanded. So for years, this professor Jia Yichang at Tsinghua University was studying to find a solution to ALS.

3:39And his lab was making ALS animal models. First, they were putting the disease into mice, but the mice didn't show any symptoms. It never worked on mice. But then he gene-edited a pig. The pig developed symptoms of ALS and then died about a year later. This was significant because Professor Jia Yichang was able to replicate a human disease into a big animal, which allows drug developers and scientists to test for side effects. By comparing the pig's reaction to that of mice models, Jia discovered a clue, a gene acting uniquely in the mice. That led to the development of a new drug he says could help 90 % of ALS patients.

4:24The U.S. Food and Drug Administration has approved the therapy, named Snug01, for human trials this year. China is betting that drugs like these could help its biotech industry move from creating mostly generic drugs to the far more lucrative business of making patented medications. But the practice of using large gene-edited animals in the drug development process is raising ethical questions. Carolyn says Professor Jia himself was conflicted. He was definitely happy because for all the years' work, you see something that's becoming successful. But he also mentioned he was sorry for the creature to develop that.

5:06But again, back to this argument like what is right, what is wrong, how much can you do this, where should we draw the line, right?

5:17This is The Big Tick Asia from Bloomberg News. I'm Wan Ha. Every week, we take you inside some of the world's biggest and most powerful economies and the markets, tycoons and businesses that drive this ever-shifting region. Today on the show, we find out how far China has come and how far it's willing to go to become the world's biotechnology superpower and whether it could really challenge the West.

5:49China has big ambitions in the biotechnology industry. Over the past 10 years, it's ramped up spending and drug development, and it's made changes to much of its regulatory regime to mirror Europe and the U.S. China's biotech firms have gotten lots of financial help from the government and the explicit support of Chinese President Xi Jinping. In 2016, Xi said the country should become a global scientific and technology power, and he declared biotech and gene editing a strategic priority.

6:23Bloomberg's Carolyn Kahn says until recently, China's biotech industry was known for making generic drugs. Today, though, it's focused on innovation and creating new proprietary medications. Because generic drugs, just to put it simply, doesn't make money. China used to be a distant third to the U.S. and Europe when it came to creating new drugs. But last year, it came up with more than 1 ,200 new formulations, beating out Europe and closing in on the U.S. In 2015, China was home to just five of the world's top 50 innovative drug companies. Today, 20 of the 50 companies that are generating the highest number of innovative drugs are now from China.

7:09China's move to dominate global biotech was formally revealed in 2016 in the country's five-year plan. The plan opened the door for China to begin using what has become one of the most effective tools, bio-breeding or genetic editing. Andy Greenfield is a geneticist and reproductive biologist at the University of Oxford. Scientists have been working on this technology since the 1970s. But Andy says they've only recently learned how to actually edit an animal's genetic code. The most common way to do that these days would be to use CRISPR-Cas9, which is a genome editing tool that we've had now for over 10 years.

7:49Andy says gene editing an animal is complicated enough, but using that animal to cure a disease is more complicated still. It's not always clear which genes need to be targeted to replicate the disease. Figuring that out is expensive and time-consuming. So, for example, DNA, it might be you want to specifically model or what happens when you change one amino acid in a sheep or a goat or a mouse. And that could be tricky because it means that other things could happen in the process of trying to edit that gene, which are undesirable and unwanted. When gene editing technology first started being used, scientists worked almost exclusively on gene editing in mice.

8:33But over time, they began editing the genomes of larger animals. Andy says large animal models are most helpful to scientists when rodents aren't big enough or won't live long enough to be able to mimic a disease. When it comes to neurological disorders, to model human neurological disorder almost requires having a brain which is at least comparable to the human brain, perhaps which develops a condition over time, which isn't always possible in a rodent model where the average mouse only lives for six months. Drugs that treat neurological diseases are prized in the drug development world because they're so difficult to make.

9:12China has several under development, including Snug01. There are definitely a lot of innovative drugs in the pipelines, but the drug development takes, if not decades, at least years. And in that process, you constantly need money to pour into the pipeline. To support making these drugs and its broader biotech ambitions, China has built eight animal research centers since 2010. And it keeps tens of thousands of animals in these facilities. Scientists can apply to them to get a certain type of monkey or a certain type of pig for their research. So the centers, you go to their website, they proudly exhibit what they have.

9:54This animal, this monkey, whatever gene is altered with whatever condition. There are also the biotech companies now trying to gene-edit dogs. As if gene editing wasn't controversial enough, China is also pushing into an even more sensitive area of biological research, cloning. Actually, China cloned the world's first dog with a certain gene-edited disease, and also it cloned the world's first monkey with a certain gene-edited disease. Chinese scientists first edited the genes of monkeys that had sleep disorders, anxiety and depression. They then cloned the animals to create a larger pool of patients with the same ailments, all with the idea of accelerating drug development.

10:43In the top universities or the research institutes, there are scientists doing monkeys, for example, to develop them into having autism. And Carolyn says the companies involved in gene editing and cloning don't just run experiments on the animals. They also sell them. Last year, the global market for genetically modified animals in biomedical research was estimated at$15 billion, more than twice what it was less than a decade ago. And China has become one of the biggest suppliers of lab animals in the world. It has probably the world's biggest population of monkeys that is commonly used in developing drugs and vaccines.

11:25Editing the genes of larger animals like monkeys or the pig that Jia Yicheng used to treat ALS is still controversial in the West. We reached out to the Chinese government for comments. We sent a request three times, but we didn't get any answer from them. We asked how to regulate the industry, especially when there's so much demand on this kind of research. but the animal welfare law is not there yet in place. While the U.S. does allow the use of large animal models, the majority of the 20 million lab animals used in the States are mice. Animal welfare is a major factor, and while Carolyn says it's also a concern for Chinese scientists, it tends to be weighed differently.

12:11I think a lot of scientists believe that what China is doing now, Even the kind of work that is limited to the labs, to the university, to the research institutes, will in the future contribute to China's advancement in the rivalry with the U.S., with Europe. Because China is doing something that is very hard to be done right now in the West. coming up we look at how reliable animal experiments are for developing therapies the alternatives and what the future could hold

12:55today's show is brought to you by vanguard to all the financial advisors listening let's talk bonds for a minute capturing value and fixed income is not easy bond markets are massive murky, and let's be real, lots of firms throw a couple flashy funds your way and call it a day. But not Vanguard. At Vanguard, institutional quality isn't a tagline. It's a commitment to your clients. We're talking top-grade products across the board of over 80 bond funds, actively managed by a 200-person global squad of sector specialists, analysts, and traders. These folks live and breathe fixed income. So if you're looking to give your clients consistent results year in and year out?

13:33Go see the record for yourself at vanguard.com slash audio. That's vanguard.com slash audio. All investing is subject to risk, Vanguard Marketing Corporation Distributor.

14:01and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break. So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens. It's smart, calm and to the point. And it fits into your morning. You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris.

14:37On Apple, Spotify, YouTube or wherever you get your podcasts.

14:50Gene editing is a big, fast-growing business. In the agricultural sector, scientists have found ways to develop cows without horns and salmon that grow faster to adulthood. Gene editing is also growing more popular in the area of scientific and drug research, too, although exact numbers are hard to pin down. But Bloomberg's Carolyn Kahn says one thing is apparent. Genetically engineered animals are increasingly in demand. It is an increasingly important strategy to have good animals, larger animals, animals that can better mimic human disease. And if you want to work on these kinds of animals, China is the place to go.

15:33Carolyn says that's because there's not much oversight in the country's labs. And the main focus is on disease control, not animal welfare. If we're talking about how the animals are treated, I think nobody knows. It's like behind the door, behind the gate. They need to have the environment that is dry and clean and keeps them away from bacteria or bugs. So that's a basic standard. Carolyn says the only real rule China has is not to mistreat the animals. There's actually just one sentence in the regulation which says People who are dealing with the animals in the lab should not tease or mistreat them.

16:16So that's it about animal suffering. Animal rights or animal welfare is still something that is considered to be Western ideology. There isn't a unified animal rights charter, but there are principles developed in the 1950s that most scientists follow. of three R's which apply to the use of animals in research so the three R's are reduce replace and refine so we're meant to be reducing the number of animals that we use in research ultimately with a view to replacing the use of animals in research by other methods and when we do have to experiment on animals we have to ensure we continually refine our experimentation so that It causes the least amount of suffering to the animal.

17:08Now, when we say, can we replace the use of animals, that would mean that there's an alternative, for example, an alternative methodology or alternative experiment that would still yield the same scientific information. And while China is doubling down on using animals more for research, in the West, governments are trying to push scientists in the opposite direction. In April, the FDA released a roadmap to reduce animal testing by pointing to alternatives like lab-grown human organs and artificial intelligence models. And the National Institute of Health points out that the use of animals to model human diseases like Alzheimer's and cancer has had only inconclusive results.

17:51So, for example, today it might be possible to use human organoids, little mini organs that could be grown in a dish using stem cells. So it's possible to use mini kidneys and mini brains, etc. And that may be an alternative. Won't always be an alternative, but it may be an alternative to using an animal. Andy Greenfield says despite advances like the ALS drug developed from a pig in China, it's still not clear how useful gene-edited animals are when it comes to finding cures for disease. You might expect there to be more progress in those countries which permit those kind of diseases, But nothing is necessarily the case, because some of those models that they generate may end up being dead ends.

18:33They may end up not being particularly good models. So I don't think there's any necessity here. But I suspect perhaps the probability goes up that they will at some point find a model which is very, very useful for understanding the human condition. Research is just unpredictable. It doesn't go in a simple linear fashion. A review article by Johns Hopkins Bloomberg School of Public Health found that fewer than 10 % of animal experiments resulted in therapies used by patients. Meanwhile, public sentiment in the West is turning against animal testing. In the U.S. and Europe, activists have shut down labs and forced airlines to halt shipments of primates.

19:15They've also staged protests outside dog breeding facilities that lasted years. I think it's important that in any country, policymakers have an understanding of public attitudes. Though the attitudes that the public will have, I'm sure, will be complex. It will be, well, yes, but only with the following conditions. In the UK, for example, we are allegedly a nation of animal lovers, so we claim. But it depends on the context. If I look out my window, I will see people walking their dogs every day. So there is that sense of love of animals in this country. But we still eat factory farm chickens in this country, where there's been untold descriptions of potential harms to those chickens during their relatively short lives.

20:00Carolyn says in China, the public sees animal testing in a positive light, in large part thanks to the state media. In China, I think, especially state media, when they report on those topics, it's always like a celebration. It feels like this is a technology advancement, right? China is catching up or even be better in this field. So it's always like people celebrating this is a great thing. Rarely anyone doubts or even reads the question of the ethical issues of animal testing, gene modification, especially large animal. But China has come across a red line. In 2019, one scientist, He Jiankui, carried out experiments on human embryos to give them protection against HIV.

20:52So that was a scandal that he can shake not only China, but global scientific community. He was jailed for three years and the government cracked down. Now, experimentation on humans is strictly regulated. But when it comes to animals, pretty much anything goes. Professor Jia, the man who developed the ALS therapy from a gene-edited pig, told Carolyn that he has no qualms about using animals to find cures for humans. He feels so happy that China still is in the direction to support animal research because he believes animal models is not going to be replaced in the near future. Carolyn says the way Chinese scientists see it, animal testing is a necessary part of the process, a way to potentially prevent humans from suffering.

21:45For human patients, there are so many patients quietly dying and no solutions, especially those rare diseases. There's no investment because not so many people need the drugs, right? So that's the rare disease patients, they are really struggling to get enough attention, to get enough help. And they are really frustrated. They are in a kind of situation that those scientists think maybe we should have more sympathy to than a mouse.

22:24This is The Big Take Asia from Bloomberg News. I'm Wan Ha. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. If you liked the episode, make sure to subscribe and review The Big Take Asia wherever you listen to podcasts. It really helps people find the show. Thanks for listening. See you next time.

22:59This is Scarlett Fu. And I'm Paul Sweeney, inviting you to join us for the Bloomberg Intelligence Podcast. Every day, we harness the power of Bloomberg Intelligence to bring you deep dives into the companies that are moving markets, from publicly traded companies like Apple, to those that are privately owned but known by everyone on Earth, like OpenAI. Now, I helped to build Bloomberg Intelligence to what it is today, Scarlett. And now, our analysts are the best in the world, covering more than 2 ,000 global companies. That is your legacy, Paul. And we speak to those in-house experts every day.

23:27They are Bloomberg's go-to authorities on sectors, companies, and legal processes. And we do it all live each weekday, then bring you the best conversations in our daily podcast. So be sure to search for Bloomberg Intelligence on YouTube, Apple, Spotify, or anywhere else you listen. Listen in the afternoons on your way home from work to catch up on the market news you miss during the business day. That is the Bloomberg Intelligence Podcast. I'm Scarlett Fu. And I'm Paul Sweeney. Subscribe today wherever you get your podcasts.