Effect of China’s Talent Scheme on Life-Science Innovation

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The impact that the migration of talent is having on life sciences companies’ ability to innovate and differentiate themselves worldwide is a topic of constant concern. Of particular interest are the increasing flows between the United States and China. China’s “1,000 Talents Scheme” and similar initiatives at the local level were specifically designed to help the country become a world leader in innovation. Such programs incentivize people who are among the top 10 practitioners in their field to return to China during the next decade. Anecdotal evidence suggests that this talent draw is actively reaching into the private sector. Meanwhile, the nation continues to build new institutions of higher education to produce significant quantities of highly trained scientists and engineers.

In September 2010, the executive search firm J. Robert Scott informally polled executives from pharmaceutical, biotechnology, medical device, diagnostic, and healthcare services organizations in the United States and China about these schemes to lure top talent. Senior professionals contributed their opinions by taking a short online survey.

Will Innovating China Impede Progress in the United States?

It is not surprising that a country with a population the size of China’s aspires to service its local markets’ growing need for healthcare services, medical devices, drugs, and so on. In fact, it is natural for China to take measures to do so as quickly as possible, and government programs to lure talent back make perfect sense in this context.



How much will China’s internal growth affect what happens in the United States over the short to medium term? One way to find an answer is to look at the current state of China’s healthcare system and where it is best poised to truly make an impact. According to several executives who provided feedback, China’s programs to develop and attract top talent do not pose a significant threat to US-based life-science companies in the next decade. But a significant percent think they will significantly contribute to making China a truly powerful industry innovator, especially in the areas of drug development, medical devices and diagnostics, drug discovery, and health services. This sentiment, coupled with the Chinese government’s significant subsidization of healthcare infrastructure, may indeed have strong, positive implications for China’s leadership position in the field.

Western and other developed life sciences markets are clearly not going away any time soon. Although they will no doubt grow less quickly than China’s market in the immediate term, it would be surprising if China’s expansion were to severely handicap their growth over the next 10–15 years — especially given the fact that many of the new innovators in China’s life sciences arena have been operating for under 10 years. It is therefore unrealistic to think they will be able to grow these sectors overnight, especially on a global scale.

The fact is that excellence across the entire R&D continuum cannot flourish in China overnight. Thus, investments will necessarily be focused on niche areas that can develop more quickly in China than elsewhere. Development and production businesses that rely on inexpensive labor, for example, beg to be built in China right now. Life-science companies need to identify their strongest competencies within R&D that will take the longest to migrate out of the United States and sharpen their focus on those capabilities. It can be expected that much primary decision-making around drug discovery and development, as well as the related core infrastructure, will remain in the United States and other Western countries for at least another 15 years.

In addition to the time it takes to lay the foundation for a fully functioning life-science ecosystem, there are some inherent and perceived impediments to China’s ability to innovate quickly. The top systemic obstruction today is China’s hierarchic business and research culture, which is seen to impede true creativity across the industry. Closely related to that point are ongoing concerns over relatively high levels of corruption and fraud in China’s academic institutions, along with its relatively weak commitment to enforcing intellectual property rights protection. In addition, despite the tremendous levels of support and funding from the central government, executives report that there remain inconsistencies in terms of how that support is distributed at the local and academic levels. Finally, although the sheer number of students coming out of China’s top institutions is impressive, executives doubt whether quantity will match quality in terms of developing talent that appreciates “the big picture” and can truly make China a world-class center of innovation.


 

Impact of “Brain Drain”

It has been my company’s experience that people at the PhD level or with significant expertise will not move abroad for new opportunities without looking carefully at the overall attractiveness of where they are going. We primarily expect to see the continued departure of entrepreneurially minded talent heading to China to start new businesses. Executives who commented on the top factors luring talent away cited an increased availability of funding for research in science and technology in China compared with the United States as well as ability to work on more forward-looking projects in China. From a life-science leadership perspective, however, it may take up to 20 years before enough people with tangible experience in building infrastructure, discovering and developing new drugs, or building significant shareholder value have moved to China to be the managerial heart and soul of fully integrated, Chinese-based companies. The top hiring issues in the United States and China today are shown in the box on the right.

Meanwhile, finding people with a global viewpoint to embrace and manage the dynamic changes happening in places such as China will remain an issue for US-based life sciences companies. Organizations will continue to find well-rounded, entrepreneurially minded people with a proven ability to adapt to new markets and situations among the pool of talent that has studied abroad, taken job rotations in other Western countries, or worked on special projects in developing markets. But when it comes to building teams in China, this experience may not be enough.

Interestingly, the hiring needs of up-and-coming Chinese organizations are very similar to those of early-stage companies my company works with in the United Staes. Their focus will inherently be on the here and now rather than the world beyond. Directors and CEOs are acutely aware that their need to find the right talent at the rig
ht time won’t subside during early years. So nascent businesses must be nimble and sometimes take a risk in recruiting someone with more modest experience, but ample intelligence, creativity and drive, to take the helm. It is reasonable to expect that such highly motivated and entrepreneurial executives may be able to execute quite successfully and eventually emerge as world-class managers in China. Along the way, they can help change mindsets by encouraging innovation and valuing creativity rather than simply “achieving minimum targets,” which is often viewed as the acceptable benchmark for local and foreign-owned life-science companies in China.

TOP HIRING ISSUES

United States

  • Funding, lack of capital, high labor costs, and cost of running or maintaining operations
  • Finding people with a global viewpoint and vision to embrace and manage the dynamic changes happening like those in China
  • Finding innovative scientists, or people with an entrepreneurial spirit, passion, and vision

China

  • Budget constraints
  • Identifying people with sufficient management and business expertise
  • Finding people who are loyal and trustworthy

A Changing Landscape

The full effect of China’s 1,000 Talents scheme remains to be seen. But the prevailing opinion says that similar programs should be designed and implemented to keep foreign-born talent in the United States and that such programs should be created by the life sciences industry at large. Although most agree that the United States has a significant enough lead in R&D to remain an industry leader for at least the next decade, there is no question that China’s momentum will continue to grow. Rather than purely focusing on retaining foreign and other talent, the industry needs to invest in developing capabilities that will enable US life-science professionals to continue to adapt with speed and global sensitivity to the ever-changing business landscape.

 

About the Author

Author Details
Erik R. Lundh is managing director at J. Robert Scott, 425 Market Street, 22nd Floor, San Francisco, CA 94105; 1-415-955-2671, erik.lundh@fmr.com. The company is a global executive search firm with offices in Boston, Hong Kong, New York, London, San Francisco, Singapore, and Shanghai.

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