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Why American Entrepreneurs Need to Study China’s Biotech Strategy

Bustling street of China Town in BangkokBustling street of China Town in Bangkok

I spent a week in China for two Fortune conferences—our inaugural Brainstorm Tech International and the annual Fortune Global Forum—which we hosted back-to-back in the beautiful city of Guangzhou, in southern China. My head is still swimming from the experience and, I admit, my own reflections still feel somewhat muddy to me. But one takeaway concerns China’s approach to its homegrown biotech sector.

The approach is a bit like a science experiment, which I’ll get to in a minute. First, though, let me take you to Medprin.

Nestled in a gleaming office complex in Science City, in the New High-Tech Industrial Park, in the Guangzhou Development District, 20 minutes or so from downtown Guangzhou, is one of the pearls of China’s biotech oyster bed: Medprin Regenerative Medical Technologies Co., Ltd. Medprin, cofounded by Yuyu Yuan (who serves as CEO) and Tao Xu in 2008, manufactures biological cells by way of 3D printing.

The company, one might say, prints life.

“We print live cells, layer by layer, and then fold them onto a 3D structure,” explains Tao, a professor of mechanical engineering at Tsinghua University, who is also Medprin’s chief technology officer.

Medprin’s founders, who hold a number of U.S. patents in the area of cell printing, have pulled off some remarkable feats, it appears—including printing a facsimile of cardiac stem cells directly onto the damaged heart of a rat. (According to Tao, the imprinted cells in the experiment proliferated and transferred healthy, functioning cardiac cells to the rodent.)

But while the company says it has conceived of at least “2,000 applications” for its technology, including 3D printing cells for repairing battle wounds in humans—the founders concede they “still have a long way to go” on this front. So right now, they focus on other applications, such as building precise three-dimensional models, drawn from CT scans, of actual patient organs and tissues that surgeons can use for pre-operative practice and training in the case of difficult surgeries. (I saw one of these models—a brain with a cancerous lesion snaked precariously around a cranial nerve—being printed, cell layer by cell layer.) The company also prints tumor chips from actual patient specimens removed during surgery, which can then be used to test different drug therapies, Tao says. Because the tumor chips can be printed, essentially, in unlimited supply, the possibility for fine-tuning a drug therapy is endless.

For now, the company mostly makes money, it seems, by printing biomaterials for implanting biomedical devices—an area, Tao says, “that has a very huge market and very great potential, especially in China.” Medprin manufactures several forms of what it calls “biomimetic-synthetic” material which look and act like real human tissue, with microstructures that resemble human extracellular matrix. The materials are now being used in repairing jaws, faces, skulls, blood vessels, even damaged brain tissue.

It’s cool stuff. Really cool stuff. And I can imagine this company dominating whatever the market is for 3D-printed cells for some time.

Which brings up China’s approach to its growing clusters of biotech startups mentioned up top—or, as I called it, the “science experiment.”

China’s government takes innovators and inventors such as Yuyu Yuan and Tao Yu and places them in the equivalent of a giant Petri dish (economic development districts). It then throws in plenty of growth factors (direct government funding, networking support, connections to customers, heavy promotion to outside investors, and relaxed regulations) and incubates them for years. That’s how companies like Medprin scale up so quickly in a market that, until they came along, didn’t really exist.

It’s impossible to know whether the strategy will work over the long-term. There’s a danger, certainly, when governments try to pick winners—and any kind of state control is likely to inhibit two key ingredients common to business creation and scientific research: human creativity and freedom of choice.

But for now, Americans in this industry should take note of the competition brewing on the other side of the planet. China’s biotech sector is growing—and growing fast.

This essay appears in today’s edition of the Fortune Brainstorm Health Daily. Get it delivered straight to your inbox.